If you charge a pricey purchase on a rewards credit card, you probably expect to earn a lot of rewards points. But it doesn’t always work out that way. Legislation that took effect in 2010 requires card issuers to be up-front about most card fees and terms—but those consumer protections don’t apply to rewards programs that offer cash back, points, airline miles or similar perks. Issuers still can change program terms with little or no notice and hide confusing rewards rules in the small print.
Rewards-card issuers can unilaterally declare that rewards points or miles suddenly are worth less than in the past. They quietly can add new rules that allow points or miles to expire. And they can impose rules that cause rewards balances to be forfeited when consumers make missteps, such as being late with consecutive payments. What to do…
Choose rewards cards issued by banks that tend to be transparent with rewards-programs terms. These include Capital One, Bank of America and US Bank, according to our recent survey. Avoid those such as Barclays Bank that tend to make their rewards programs difficult to understand.
Read rewards-program terms carefully, including any footnotes. Read any program updates that are mailed to you as well.
Lean toward cash-back cards over rewards cards that offer points or airline miles. Issuers cannot devalue the cash you already have accumulated in a cash-back card rewards account.
If you are late with a payment or make some other misstep with a rewards card on which you have accumulated a sizable rewards balance, contact the card issuer to see whether you have put your rewards balance at risk. If you have, ask what you can do to minimize the negative consequences.
Redeem rewards balances before canceling rewards cards. Fail to do so, and those rewards likely will be lost.