If you’ve tried to earn or use credit card rewards in the past decade, you probably won’t be surprised to hear a lot of criticism. But a new report from the Consumer Financial Protection Bureau found that the number of complaints has increased by 70% compared with before the epidemic.
The report highlights a host of common issues that most rewards enthusiasts are used to dealing with—bait-and-switch marketing, unresponsive customer service departments, and ongoing depreciation that causes credit card points to lose value in value year over year.
The CFPB reports that more than 1,200 complaints related to credit card rewards programs were filed with the agency in 2023 alone. Here’s how things unfold and how to get the most value from your rewards.
Bait marketing for reward programs
According to the CFPB, most consumers apply for credit cards based on marketing materials that explain the benefits they will receive. However, some consumers have reported that they applied for a discount card but received “shoddy promotions.”
The CFPB’s full report complains that the requirements outlined in the fine print of the rewards program’s terms and conditions don’t match the marketing materials: “They advertise [bigger reward offers] everywhere in big, bold letters. And then somehow they mix [smaller reward offers] ] link is surreptitiously placed in front of you,” the CFPB shared in a complaint.
Reward depreciation
You apply for a credit card promotion, like a welcome bonus, which tells you it’s worth a certain amount, but by the time you use your points, the amount needed to book a flight or hotel room has increased. This means that the value of the promotional offer has decreased from what it was originally marketed to you.
Reward depreciation is nothing new, especially when it comes to airline miles, hotel loyalty points, and other types of rewards you use for travel.
Many programs that once made it easy for users to see how many points or miles a specific redemption would cost are now touting their new “dynamic pricing” models as a way to get more value by booking for off-peak travel times. The CFPB specifically mentions travel incentive programs in this section of its report.
“Travel providers have long demanded more miles or points for the same service, thereby reducing reward value,” the CFPB wrote. “While miles and hotel points were often redeemable for fixed rewards cards in the past, many loyalty programs have Moving to dynamic pricing, it’s difficult to predict the number of awards required for a flight or room.”
One customer complained that they applied for a card and spent years trying to get the miles needed for a $100 gift card, but when they tried to use the miles, the miles needed increased by 25%.
redemption problem
The report also found that consumers experienced problems using rewards due to customer service issues and technical glitches.
technical error
Credit cards often advertise the option to transfer points and miles to merchant partners, which may provide more value at redemption than would be available through the card issuer. However, its value depends on the conversion being fast and accurate, as travel offers can change quickly.
The report cited technical issues that delayed or prevented redemptions. In one case, “consumers reported being unable to transfer their rewards when the redemption portal was closed for a week.”
Customer service issues
Customers complained that they spoke to multiple customer service representatives over the phone and were given conflicting information. Other customers reported waiting “months” to receive solutions to rewards-related issues.
Another common problem cited by the CFPB is the “doomsday loop,” in which card issuers offload issues to third-party merchant partners who are also unable to resolve the issue. From there, consumers move back and forth between card issuers and merchants, getting caught in conflicting information loops that often end up going nowhere.
Rewards expire or disappear
Finally, the CFPB reports that card issuers “confiscate, expire, revoke or otherwise take away hundreds of millions of dollars in rewards value each year.”
The CFPB goes a step further and says that 4% of credit card account holders lose at least some of their rewards each quarter. This is usually caused by reward expiration, but can also be caused by unexpected account closures.
In one extreme example shared by the CFPB, a consumer mistakenly closed a credit card account while holding nearly 1 million points. Card issuers initially told them that the rewards would not be reinstated under any circumstances, although the bank eventually refunded their hefty points balances.
The CFPB also noted that card issuers may offer ways to reinstate expired or revoked points, but only if the consumer pays.
Make sure you get tips on what your card issuer says
If you’ve missed out on rewards in the past, or you’re about to deal with rewards-related issues, these tips can help you prevent a rewards fiasco and ensure you receive all the benefits you’re entitled to.
Read all the fine print
Before applying, read all the fine print on your new card and its rewards program. Doing this can help you spot any unexpected rules or “gotcha” wording, especially when it comes to earning welcome bonuses or spending rewards. It will also indicate any restrictions that may limit the rewards you receive.
Additionally, research your card’s rewards program so you know the (approximate) value of your points and the steps required to redeem them.
This is especially important for travel rewards programs, which may have additional fine print, blackout dates, capacity checks, or other hoops to jump through before redeeming.
Make sure you receive your welcome bonus
Keep in mind that most welcome bonuses require a certain amount to be spent within a few months of opening an account, but the timing for these offers starts the day you get approved for the card, not the day you receive it in the mail.
This is an important distinction because once you’re approved, it can take 10 to 14 days to receive your physical credit card in the mail. But knowing the exact timeline for when you’ll earn your bonus and tracking your spending can ensure you hit the minimum spending threshold in time to qualify.
Compare your rewards balance to spending
While you may not have the time or energy to track the rewards you earn per dollar spent, you should have a rough idea of how many rewards you should be earning based on your purchases and the accounts you open. You pay by credit card.
Fortunately, card issuers tend to make this part relatively easy if you’re willing to put in the work. You can track your monthly purchases using your credit card’s online account management page or your card-issuing bank’s mobile app.
Stay informed about reward expiration dates
Regularly record expiry dates that apply to rewards you earn, especially travel rewards programs. Rewards from most card issuer-specific programs (such as American Express Membership Rewards, Capital Miles and Chase Ultimate Rewards) do not expire if your account remains open and in good standing.
In most cases, airline miles and restaurant loyalty points may expire if you don’t use them or earn rewards. They typically mature within 12 to 36 months.
Also note that some very simple actions can “restart” the clock for certain types of expiring rewards. For example, you can often restart your schedule by earning more miles by shopping through the airline’s branded portal, dining out through a frequent flyer dining program or using your rewards for small redemptions.
Many hotel loyalty and frequent flyer programs allow you to redeem points for non-travel options, which makes this last tip relatively easy, including things like magazine subscriptions or merchandise.
Where to complain about rewards
If you have a problem with your credit card issuer or its rewards program, you can file a complaint with the CFPB on its website or by calling (855) 411-CFPB (2372).
Make sure to write down all the details so that you can explain your situation and issues clearly and concisely.
bottom line
While the new CFPB report doesn’t highlight any specific laws that credit card issuers are violating, it does show that the agency takes consumer complaints about rewards programs seriously.
That could mean more action or oversight of the incentive program in the coming months or years.
If you’re looking for credit card rewards, try to stay on top of your rewards balance, expiration date, and other details to avoid losing any rewards. You can do this by monitoring your account, tracking your spending, and reading all the fine print on card offers before applying.
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