Your bank may pull a fast one with your credit card rewards
To sweeten credit card offers that come with annual fees, banks are increasingly promising richer rebates, airline miles and other rewards.
What isn’t advertised is that banks can strip away those rewards for any number of reasons.
It could be you made a late payment or that your account was inactive for too long. The rules vary wildly, but most programs have at least one catch that can result in a rewards wipeout. You may not even notice your points are disappearing if you’re not looking.
Despite recent credit card reforms, there are still few regulations governing rewards programs. So as you consider new card offers, or look to make the most of current accounts, here’s what you should know.
WHAT TO WATCH FOR
— EXPIRATION DATES: It’s common for rewards to expire after a set time. Bank of America and Citi, two of the country’s biggest card issuers, allow five years to use your points.
That might seem like a generous window, except few cardholders are in the habit of redeeming points regularly. It’s not clear how much value in rewards go unused every year. But only about a quarter of eligible cardholders say they redeemed points in the past year, according to the market research firm Synovate.
— INACTIVITY, LATE PAYMENTS: These are two other ways you can lose points. At Discover, for example, all rewards are erased if an account is inactive for 18 months or if you’re late on a bill for two straight months.
Your rewards could also be held hostage for a late payment. At Bank of America, you can’t redeem your points if you’re 60 days or more late. You also can’t earn points, since you also lose charging privileges. Once you’re current, you get access to all your previously earned points.
At American Express, you need to pay a $29 reinstatement fee to get back any points lost for the month you were late on a payment.
Filed under: marketing by Specialist