Credit Card Reward Programs Changing

January 29, 2009, Written By Sarah Hefner

If you plan to use your Citi credit card Thank You points to book a flight for a summer vacation, do it soon because Citi is changing its redemption rules on March 1. Cardholders of other reward cards should pay attention, because Citi is not the only issuer making changes.

On March 1, Citi’s Thank You Network shifts from a fixed point system to a variable point system, and redemption will require 100 points per $1. Hence, a $400 flight will require 40,000 points. Under the current fixed point system, you can redeem 20,000 Thank You points for any domestic coach flight up to $400 in value.

Citi is not the only issuer to change its reward structure. In October of 2008, Capital One dropped its tiered system for a more simple calculation of adding two zeroes to the cost of the flight or the hotel room. A $300 flight requires 30,000 points. A $100 hotel room requires 10,000 points.

Capital One is promoting this as a simpler way of understanding and using your points. It is much simpler, but it can also be more costly for cardholders redeeming their points. For years, the industry standard has been 25,000 points for a domestic roundtrip airline ticket.

The changes are reducing the value of your reward points used for travel, so experts advise making sure your reward structure hasn’t changed and that you know what your conversion will be before you use your points to book travel.

Those who follow the industry’s trends say it is interesting to watch how issuers find new ways to make money: A few years ago, issuers raised standard fees and changed the fee structure; they added the default clause in the terms and conditions, and gave themselves permission to raise rates at any time for any reason; Now the changes are subtler and require cardholders to pay attention to the notices they receive in the mail, or they could get caught by the changes. Even if these changes haven’t happened to your card yet, experts caution cardholders to be aware of them and know what to look for. If one issuer makes a change, often many of the others will follow.

Here are some additional changes recently made by credit card issuers:

*This month, Chase added a $10 monthly fee and increased the minimum payment from 2 to 5% for cardholders who have carried a large balance for over two years and pay only the minimum each month, creating an outcry from affected cardholders.

*Citi has increased the conditions to receive bonus miles. A year ago, Citi PremierPass Elite Level offered 15,000 bonus points if the first purchase was made within 60 days of the account opening. Today, the same card offers 20,000 bonus points after $600 in purchases within three months. Those who don’t reach the minimum purchase are not eligible for redeeming the bonus miles.

*Discover has also increased conditions to receive bonus miles. Discover once offered 12,000 bonus points. Now, it offers 1,000 Bonus Miles each calendar month that you make a purchase for 12 months from the date your account is opened, with a cap of 12,000 Bonus Miles.

To help understand the details of redeeming the earned rewards, read the terms and conditions of any rewards card for which you apply.


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The information contained within this article was accurate as of January 29, 2009. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Sarah Hefner

Sarah Hefner has written for several publications as well as serving as an editor to various writers. She graduated from the School of Communications & Journalism at Auburn University with a Bachelor of Arts degree in Public Relations.
View all posts by Sarah Hefner