Credit Card Issuers Cutting Back on Reward Programs

If you use a credit card for its rewards program, be prepared for new restrictions or even a complete shutout of your card’s ability to earn airline mileage, valuable points, and hotel stay freebies.

After hiking up interest rates and slamming new fees on cardholders, credit card companies are now going after popular rewards programs. Citi is one of the first big issuers to begin making changes to some of its rewards programs. Consumers with the Citi Hilton HHonors credit card need to earn at least 12,500 points, up from 10,000, in order to get a free hotel stay. The Citi mtvU Visa card, popular amongst college students and the younger crowd, now have to earn 12,700 points, up from 10,000 points, in order to earn $100 reward back. One of the biggest blows is to the Citi Home Depot Rewards MasterCard, which has been made inactive since Oct 31 and cardholders are urged to redeem points by January 31, 2010 or they expire.

I wouldn’t be surprised if other issuers follow suit in rewards program cutbacks in order to take some pressure off expected losses. Credit card companies are stretched to maintain profitability and are further tightening credit access in anticipation of the coming credit card reforms.

Is there anything I can do?
Costly credit card changes have been pounding cardholders for the last few months now and now rewards programs are on the chopping block. There isn’t much you can do if the issuer decides to change the terms of your rewards credit card, but you can make the most of it. Its a good idea to start cashing in on your rewards card’s points and miles because your issuers may soon discontinue your rewards program or limit your earning ability, and you don’t want to lost out on potential flights, vacations, and redeemable points stashed in your credit card.

If you are planning to spend on credit, you might as well use your rewards card as often as you can so you can make the most of the current terms before the issuer cuts back on your earning power. Stick to earning points you can redeem that are especially useful to you, such as a particular hotel chain’s offers or gasoline rewards. Also, do the math on a rewards offer to ensure it is worth it. And you can always close down your rewards card if the program isn’t worth it, but keep in mind that it will take a blow to your credit score.