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Comments (11)
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Save/ShareKudos to the Wall Street Journal for pointing out yesterday an important side effect of the financial problems of Citigroup and other banks:
Credit-card rewards programs are vanishing, especially for travel.
On March 1, Citibank will make a key change to its ThankYou Rewards program for its credit-card holders. You'll have to spend a certain amount each month on your card before you'll be able to earn points for travel.
And travel rewards will become more difficult to redeem, according to a story broken by the Frugal Travel Guy. For example, today you can redeem ThankYou Points for different types of tickets once you've reached a threshold, such as by redeeming 90,000 ThankYou Points for a business-class ticket worth up to $2,700. But under the system the company is about to set up, you'll need to have 100 points per every $1 of airfare. So a $2,700 business-class ticket will now require 270,000 points.
(Citibank defends its move by saying that it will now include the price of taxes and fees as part of its reward. Right now, members have to pay the airline taxes and fees for reward tickets.)
Other news items:
"Last month, American Express eliminated double miles for shopping in a broad range of categories on its Delta SkyMiles card." This may be partly driven by Delta's merger of its frequent flier program with Northwest's program. (The blog One Mile at a Time has sound advice on the best uses of American Express Membership Rewards.)
"Chase scaled back the cash-back bonus opportunities on its Freedom card for new customers."
"Capital One's new No Hassle Rewards Card requires customers to spend at least $1,000 a month in order to earn double miles for each dollar above that threshold. (Customers earn one mile per dollar spent on all other, non-travel purchases.)"
Banks partly blame the airlines, some of which are hiking the mileage thresholds required to redeem free flights.
Banks are also getting more likely to revoke your points before you get a chance to use them. Says the Journal:
If you're late, not only will you likely see your interest rate jump, but you'll also probably forfeit reward points. Under American Express' Membership Rewards program, for example, members who pay late will forfeit their points for that month (although they can reinstate those points by paying a $29 fee).
The short take: Don't bank those points. If you have a stockpile of rewards points, consider redeeming them for rewards now before they are likely to be devalued.
MORE
In a related point, the value of travel points earned in the iDine program have been cut in half, says the mileage blogger Gary Leff.
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Thanks for the information....good to know. I love to travel...but like to do it frugally. I like to use Discover Cash Back to pay for rental cars etc. It's too bad that travel rewards are disappearing.
Posted By A Frugal Friend on January 14, 2009, 11:31 PM
Hope that Citi can stand.
It cut off 50% staff in my regions. Too shock.
Posted By ngan hang on January 15, 2009, 6:20 AM
Citibank sent us notice that our Hilton Hhonors card will be going up to a rate of almost 23 percent! We have top tier credit, never had an over limit or late fee. When we called and asked why,we were told it was a new policy and if we didn't like it, we should cancel the card. Because we often pay off travel balances over time (cruises, ect.) we are canceling the card. I love it when companies try make good customers cover others bad debt. Bye-bye Citibank card!
Posted By Tricia on January 20, 2009, 1:11 PM
What does being a good customer get you? A change of rules in the middle of the game and a slap in the face. And remember, they made up the rules at the beginning of the game ( credit limit, apr, etc.). Now that they are running scared there is no loyalty to you, the good customer. These companies will be paid off asap...Citibank, Am Ex, Bk of Am, etc.
Posted By Martha on January 20, 2009, 5:04 PM
I work in the "credit card industry", and I am a Frequent flier mile card user, so I understand what people get mad about with rewards credit cards, I've had a hard time myself when trying to redeem miles for flights, but Unfortunately, what a lot of people don't realize, is that there are a lot of credit card customers who DO NOT pay their cards in full, or on time. Delinquencies are going up at record rates. Also, the bad economic conditions are causing more bankruptcies, and foreclosures. Do you think someone in danger of losing their house will pay a credit card ? NO. The credit card will be the last thing they pay.
And don't forget that there is a lot of credit card fraud out there. HUNDREDS OF MILLIONS of dollars in losses each year. Customers don't have to pay for fraudulent purchases, so that is eaten by the bank, or the merchant. The Airline won't reimburse a bank for fraud.
All this increases the cost of credit. People forget that Banks are businesses, they have to make a profit for their shareholders. They're not a charity. Banks have employees they need to pay too.
When the airlines lose money, people don't spend as much as they use to, or travel as much, revenue on the rewards credit cards for the Airline, Hotel, and credit card bank goes down. So they have to compensate somehow by raising fees, interest rates, or by raising the redemption limits higher.
So if you don't like what your bank is doing, shop around, get a different card, there are many other credit cards out there, check out Bankrate.com.
Posted By Mark on January 20, 2009, 7:11 PM
I just redeemed US Air frequent flyer miles (50,000) per person to fly to Germany. I was not able to get a ticket on US Air and could not book their partner airlines over the internet. Therefore, I had to call an agent to get a free? ticket on Lufthansa through US Air. The cost to obtain a ticket, shocked me. I was charged $193 for the free ticket. Supposedly this is for taxes, using an US Air agent for booking, and an additional fee for getting the free ticket. Does this sound right? I think it is highway robbery by US Air.
Posted By Lydia R on January 20, 2009, 8:32 PM
I have never had a problem cashing in miles...however, it is important to schedule your trip way in advance...I did it 5 months in advance for Thailand and no problem.
Posted By Arlene Futterman on January 21, 2009, 8:54 AM
We've had no problems using our Frontier Airlines Master Card. We've kept our bill paid and used the accumulated miles several times. Frontier is so easy to work with also.
Posted By Bart Mortensen on January 21, 2009, 5:04 PM
i'd like to know how this affects Citi's American Airline MC. its not a Thank You reward card.
Posted By s.l.jones on January 22, 2009, 12:21 PM
Finally got to 65,000 Capital One points and went to get the $599 credit to my account to defray the three $1,225 tickets we purchased. Sure enough, we now need 122,500 points to get a reduction!
Another thing they are doing is breaking everything down into tiny pieces -- we also purchased three $165 tickets at the same time, each was listed separately. Because $165 is just over the $150 tier-1 (15,000 points) maximum, it would have taken 35,000 points to get $165 in credit.
So when CapitalOne asks, "What's in yerrr walllet?", the correct answer should be
"NOT MUCH, AND YOU?"
Finally, if you google "Capital One" + rewards + scam, the ONLY thing that appears in the 1st page of hits and on MOST of the 2nd page, is www.capitalone.com propaganda, so it appears that they are trying to control the bad press (possibly with google's paid assistance?).
keywords: rip-off, scam, bait-and-switch, CapitalOne, credit card
Posted By Carey on February 7, 2009, 9:24 AM
Yes, it's been a disappointment for frequent travelers like me to know that travel reward points are disappearing. Let's hope the recession clears off soon and old golden days are back again with in no time!
Rambo
Posted By edebitpay, llc on July 21, 2009, 12:06 AM