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Frustrated With Your Credit Card Rewards Redemptions? So Is the CFPB | Credit Card News & Advice

If you’ve ever felt frustrated with your credit card rewards, you’re not alone. According to a new report by the Consumer Financial Protection Bureau, consumers reported several problems with their rewards programs, such as “rewards are often devalued or denied after program terms are met.” New problems have also emerged due to the growth of co-branded credit cards and rewards programs, which allow consumers to transfer miles or points.

As a result of these complaints, the CFPB held a joint hearing with the Department of Transportation on May 9 to discuss the possible regulation of airline rewards credit cards and frequent flyer programs.

CFPB and DOT Hearing Breakdown

The CFPB report outlined numerous problems that were then discussed in the joint hearing. According to the report, common consumer complaints included:

  • Credit card issuers impose vague or hidden conditions that keep consumers from receiving rewards.
  • Companies devalue rewards.
  • Consumers encounter redemption issues with earned benefits.
  • Companies revoke previously earned rewards.

“It’s clear that these programs contain a considerable amount of value. (And) like anything of value that is transacted in our economy, it’s important that it’s handled fairly,” Transportation Secretary Pete Buttigieg said at the hearing.

CFPB Director Rohit Chopra criticized these programs, calling them unfair, confusing and unnecessarily complex. Chopra said the CFPB “has a number of goals for this market,” which are to protect people’s points against devaluation, stop bait-and-switch tactics, examine exclusive deals and promote competition on interest rates.

Discussing the value of points, Erin Witte, director of consumer protection at the Consumer Federation of America, said, “For a consumer at the outset, it’s hard to compare because these values and the points that are assigned, it’s not clear how they translate to dollars. So when someone is comparing offers … that opacity, that difficulty of understanding is something that can make it difficult when selecting (an offer).”

Morgan Harper, director of policy and advocacy at the American Economic Liberties Project, also pointed out that “when these programs started in the ’80s, there often would be planes that were flown at only 60% capacity. Now, they’re flown at over 80% capacity. You don’t have space to redeem a lot of these rewards, so then it puts a lot of these bigger players in this position to devalue the rewards that consumers have earned.”

In response to the hearing, the American Bankers Association issued a statement accusing the CFPB of “putting politics over policy to the detriment of the very consumers it is charged with protecting.” The group added, “If the Bureau wants to truly help consumers, it should start by defending the credit card reward programs that Americans use every day to stretch their dollars and help make ends meet.”

How to Maximize Your Airline Rewards

If you already have an airline credit card but you’ve experienced some of the problems outlined by the CFPB, try these tips to get the most out of your travel experience.

  • Be flexible with travel dates. If you try to book a trip during peak seasons, you might not have as many redemption offers. Try booking during what the airlines call the shoulder season – off-peak dates for your destination – and with plenty of time in advance. Also, be aware of blackout dates. 
  • Compare airfare prices. With points and miles varying in redemption value, you might actually find a flight that’s cheaper when paying in cash versus rewards. When booking with rewards, you have to use the issuer’s portal or airline’s website. This means you could miss out on deals from third-party sites like Kayak or Priceline. If you find a deal on one of these sites, compare it with how many points or miles it will cost you, then choose the best option. 
  • Don’t hoard your points. Since a pressing issue with points is their devaluation, it’s best not to hoard them. Spend them before they lose their value!

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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