How to protect your credit card rewards as CFPB responds to a surge in customer complaints

The Consumer Financial Protection Bureau (CFPB) is turning its attention to credit card rewards programs.

The agency’s focus on rewards follows a 70% uptick in consumer complaints regarding credit card rewards since before the pandemic. In May, the CFPB released a report spotlighting common consumer complaints and held a joint hearing with the Department of Transportation on airline rewards programs in the U.S.

The goal? “Ultimately, we want to make sure that every family is getting what’s promised and that we really have a fair, competitive, and transparent [credit card] market,” said CFPB director Rohit Chopra at the joint hearing.

Here’s a closer look at the most commonly cited credit card rewards issues and a few actions that can help you avoid problems with your rewards credit cards today.

4 common complaints about credit card rewards programs

These are the topics the CFPB found most frequently among cardholder-submitted rewards complaints:

1. Not receiving rewards

Some cardholders reported feeling like part of a “bait and switch” when they signed up for a card because of a marketed offer, only to never receive the promoted rewards — often because of requirements included in the card terms.

The CFPB calls this “unexpected promotional conditions.” Here are a few examples:

• Different bonus offers depending on where you apply for a card (a specific website, a marketing email, social media ad, etc.)

• Finding you’re actually ineligible for a targeted limited-time offer

• Uncertainty about what counts toward a required spending minimum, so you’re unable to earn a bonus

2. Rewards devaluation

If you’ve ever owned a travel credit card, you may be familiar with how big of an impact devalued rewards can have on your travel plans. Just a few recent examples include Delta’s revamp of its SkyMiles program, American Airlines’ move to limit how members can earn award miles, and airlines’ recent shifts from standard award charts to dynamic pricing.

These types of changes make it harder to book travel with your rewards, as the points you’ve already earned are suddenly worth less. Credit cards that earn airline miles or other travel loyalty program points are big offenders, but devaluation isn’t exclusive to travel rewards.

The CFPB includes changes to any type of rewards program with little notice within this category, as well as credit cards with minimum redemption requirements, where you may only be able to redeem rewards when your balance reaches $25 in cash back, for example.

“This not only creates confusion about the true value of the points, but also raises questions about fairness,” CFPB director Chopra said.

3. Inability to redeem rewards

While some cardholders are concerned with the value of their rewards, others are unable to redeem rewards at all.

The CFPB report highlights consumers who were left on hold for hours with customer service or waited months to resolve issues with their credit card rewards. Some cardholders were ultimately unable to use their rewards at all when the card issuer and travel partner or merchant were unable to resolve their account issues.

Other complaints in the report include technical issues with online accounts and portals, delayed point transfers that made it impossible to take advantage of limited-time travel deals, and more.

4. Losing rewards access

The final theme highlighted by the CFPB is lost credit card rewards, stating that “issuers forfeit, expire, revoke, or otherwise take away hundreds of millions of dollars in earned rewards value each year.”

In some cases, points expired after an account was left inactive or they were lost when the issuer closed a cardholder’s account (by choice or not). Issuers can generally close an account without any advance notice, leaving some consumers surprised.

How to protect your credit card rewards

The CFPB hasn’t yet taken any action against credit card companies, airlines, or other stakeholders in the business of credit card rewards. And while regulation or enforcement may be key to some issues raised by cardholders, you can also better prepare yourself against conditional or unclear offers before you face any problems.

Here are a few ways to prevent common rewards issues from impacting your rewards value.

1. Always read the card terms

Don’t rely on marketing materials to give you the full view of a credit card offer. Always read the terms and conditions to determine whether the card is a good fit for your budget and spending.

If you’re opening a card with an introductory 0% APR, look for details about how long the intro period lasts, balance transfer fees that may apply, and how the ongoing APR is applied after the intro period.

For a welcome bonus offer, make sure you know the minimum required spending threshold, how long you have to meet it, and any restrictions on eligible purchases that apply toward the bonus. Issuers also frequently limit how often you can earn a welcome offer — you may be ineligible for the bonus if you’ve received a welcome offer on another card from the issuer in the last 48 months, for example.

You can find these details in the card terms on the issuer’s site. When you navigate to the card information page, you’ll see links to documents that explain all of the offer details. Issuers use different language when linking to these documents, so look for words like: rates and fees, pricing and terms, credit information, offer terms, program terms, or benefit details.

Sometimes the card terms and conditions are separate from the terms of a card’s rewards program. Here’s what each one entails:

• Credit card terms and conditions: This is where you’ll find standard details like the APR, card fees, minimum interest charges, and more. Issuers are required to organize much of this information in a standardized format. That makes it easier for you to find and compare the fees you could incur, your interest rate and when it applies, penalties, how your minimum payment is calculated, and other details across different cards.

• Rewards program terms: You might find details specific to a rewards offer within a card’s regular terms document or listed on the issuer site as a separate document. Here, you’ll find the important details about rewards offers that may not be listed elsewhere. This includes eligibility requirements, a rundown of purchases that don’t count toward the offer, expiration details, how to make sure you qualify, and more.

2. Use your points

One of the best defenses you have against credit card rewards devaluation is using your points. Just like cash under a mattress isn’t going to increase in value, points and miles left in your account long-term won’t grow more valuable, either.

Given how widespread dynamic award pricing is among airline and hotel loyalty programs, the number of points or miles it takes to get the redemption you want can evolve quickly — and there’s no guarantee you’ll find a better redemption rate in the future.

There are more reasons to use your points regularly, too. If your card does have expiration policies that you’re unfamiliar with, using your points can ensure they don’t expire before you can redeem them. It can also keep you from forfeiting a big stash of points you may forget about when closing an account or points you could lose access to if any issues arise with your account.

Consider setting goals for your rewards as you accrue them. If you’re planning a big international trip this summer, for example, wait to open your travel card a few months before so you can meet the required spending threshold and secure your welcome bonus.

Then, once you’re ready to book your trip, go ahead and cash them in. Even if you don’t have enough points or miles before your trip to cover the cost in full, you can still get a significant discount on your airfare or hotel stays.

3. Find the right type of rewards for you

If you’re more exasperated than exhilarated by the thought of strategizing how to score the best value for your points, take that into consideration when you compare rewards credit cards.

Devaluation and uncertainty around how much your points and miles are worth can complicate the process for anyone — whether you’re a seasoned travel rewards user or looking for your first rewards card.

A cash-back credit card is likely the simplest option. Cash back, unlike many points and miles rewards, is a fixed currency — so you’ll always know exactly how much you have to redeem at any given time. For maximum simplicity, you might even opt for a card that earns flat cash back, like the Capital One Quicksilver Cash Rewards Credit Card or Wells Fargo Active Cash® Card.

Rewards cards that earn points toward a flexible rewards program (rather than an airline or hotel program) may offer some stability, too — though you will still need to read your card agreement and understand the value of each redemption option.

American Express, for instance, publishes a rewards calculator you can use to find exactly how much your Membership Rewards points are worth based on different redemption options. You can also differentiate those rewards values by the card you have — such as the American Express® Gold Card or The Platinum Card® from American Express.

Take Chase as another example. The Chase Ultimate Rewards points you earn with the Chase Sapphire Preferred® Card and Chase Sapphire Reserve® are worth 1 cent each when you redeem for cash or gift cards (as stated in the cards’ rewards program agreements). But their value is boosted by 25% or 50%, respectively, when you use your points to book travel through Chase Travel. That means that no matter what you redeem those points for using Chase Travel, they’re worth 1.25 cents and 1.50 cents.

4. Stay flexible when you redeem points and miles

If you do want to keep earning points and miles toward your preferred airline or hotel program, the best way to get maximum value for your points is to keep your travel plans open.

When you’re determined to fly out at an exact time on an exact day, or you can only travel on holiday weekends, you’ll likely get diminished rewards value when you book. But if you don’t mind flying during off-peak times or shifting your hotel stay to a few days after the holiday, you’ll probably find your options open up a lot more.

There’s little we can do as consumers when airlines and other travel programs devalue their rewards across the board. But keeping a flexible itinerary can at least help you save money and get as much value as possible from your rewards card.

What else are regulators looking into?

The CFPB’s focus on rewards is one of a few credit card topics the agency has recently addressed.

One big concern is interest rates, as Americans currently owe more than $1 trillion in credit card debt. In recent reports and at the joint hearing with the DOT, regulators raised issues with interest rate competition and transparency. The largest credit card companies tend to offer the highest interest rates, the CFPB points out, while lower interest rates are more commonly found from small banks and credit unions. What’s more, the highest interest rates are often found on popular rewards cards, while the cards with lower interest rates are typically lesser-known (and less-marketed) non-rewards cards.

The CFPB also recently ruled that buy now, pay later (BNPL) companies are credit card companies, and consumers have the same protections when using them as they do with their credit cards. Now, BNPL lenders must share regular statements with users. And if you make a purchase with BNPL, you have the right to dispute the charge and receive a refund when you return a purchase.

This article was edited by Alicia Hahn

Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank’s website for the most current information. This site doesn’t include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.