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Credit Card Applications » News » Other » Credit Card Companies Change Reward Policies

Credit Card Companies Change Reward Policies

December 03, 2009 | Updated on December 03, 2009
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The content is accurate at the time of publication and is subject to change.
This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the Citi.

Recent interest hikes imposed by banks and credit card companies all boils down to their main goal. Seemingly, the usual drill follows a lure them, catch them, and leave them strategy. If a particular product or service does not produce enough profit to sustain a business, financial institutions end the program or raise fees.

The newly enacted Credit CARD Law, which takes effect next year, does not make credit cards safer compared to previous months. The emergence of the said reform legislation clearly suggests that banks will find more ways to make up for revenue they lost.

Bank of America now announces an increase of its annual fees from $29 to $99 after it promised its customers it will not raise its rates before the law goes into effect.

On top of these hikes, card providers changed their policies in how card holders avail rewards. These stringent rules have eliminated in-flight upgrades and free hotel accommodations for card holders.

The following are changes made to some credit cards rewards program that might be helpful to consumers:

1. Most card companies like Bank of America, Discover, American Express, Chase, Citibank, and Capital One plan to invalidate rewards points in billing cycles wherein an account was delinquent.

2. Discover Bank will revoke all points a consumer earned under the rewards program if he or she is late in payments for two consecutive months.

3. The three-tier cash program from Discover has been reduced to two tiers. The company's previous scheme entitled consumers to 0.25% savings for the first $1,500 spent, 0.5% for the next $1,500, and 1% for any transaction above $3000. The new program now offers just 0.25% for the first $3000 spend and 1% for any transaction above the said amount.

4. The rebate for American Express' Blue Card cash-back program is now 1.25% instead of the previous 1.5%.

5. American Express plans to increase its maximum fee under the Membership Rewards Program, from $75 to $99. This is the amount account holders would need to be able to transfer points to a US airline loyalty program.

6. A few policies for the Citibank travel redemption program were implemented. While a $400 domestic round-trip airline ticket required cardholders 20,000 points, today, redemption for the said item will cost consumers 40,000 points.

These changes have been an unpleasant surprise to most credit card customers. These might not be the last changes, however, because card companies have the right to alter the terms of their program -- or even cancel it -- at any time they desire.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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