US watchdog warns credit card issuers not to devalue rewards

[BumRushDaShow]

Source: Reuters

December 18, 2024 12:34 PM EST Updated 2 hours ago


Dec 18 (Reuters) - Credit card companies that devalue or cancel the rewards points, cash back or miles that cardholders have earned may be breaking the law, the top U.S. watchdog agency for consumer finance warned on Wednesday.

In a policy circular, the U.S. Consumer Financial Protection Bureau said prohibitions against unfair, deceptive and abusive practices mean authorities may punish card issuers that slash the value of such rewards based on fine print, hidden terms or technical glitches.

The CFPB distributes such circulars to other agencies, including state attorneys general and local regulators, that enforce federal consumer financial laws.

As of 2022, three-quarters of all general-purpose credit cards were rewards cards and many consumers choose which to apply for and use based on the rewards offered, according to the CFPB.

Read more: https://www.reuters.com/business/finance/us-watchdog-warns-credit-card-issuers-not-devalue-rewards-2024-12-18/

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Link to CFPB CIRCULAR - Consumer Financial Protection Circular 2024-07 Design, marketing, and administration of credit card rewards programs

[FredGarvin]

1. "rewards"

Just another scam that Dumericans can't understand

[JBTaurus83]

2. I Find Quite a Bit of Value in Rewards Schemes

My partner and I pay our cards off in full each month avoiding any interest payments to the credit card companies. Once one of us unlocks the travel points on a card, the other opens a different one. Other than the nominal annual fees, there hasn't been any downside since we don't carry interest accruing debt.

We have paid for two trips to Mexico completely with points, and we are going a Vegas/Hawaii/Vancouver trip next summer 100% covered with points. This is a huge benefit to us since we are working class, I am a civil servant and partner is self employed. There are also other perks for us like free streaming services for 12 mo, free Instacart membership, free luggage etc. I think where people run into a problem is accruing large balances and paying more back to the card companies than what they earned in points. If you are smart with them, you can actually take advantage of the financial institutions. Of course, the GOP will probably now allow them to back out of their promises to consumers. I'll definitely be keeping an eye on how they handle regulations on these offers.

[SWBTATTReg]

3. Thanks for the helpful tips!!

[blue neen]

4. Thanks. Keep us posted.

You know the ratfinks will try to find some way to screw us over!

[Mosby]

5. It's the retailers paying those extra fees

For your points etc.

Did you know that?

[NowsTheTime]

6. That could be..the credit card companies can't afford it...

[Igel]

8. The retailers tend to pass those on, actually.

It makes for a small increase overall where the benefits are channeled to those that are part of the program.

At least when the credit card company doesn't eat the cost because it gets them greater volume (which, as any supply/demand curve will tell you, might make for more income even at a lower profit per $).

Businesses used to not accept credit cards that had too high swipe fees; then they were, by rule, told they couldn't and the reward schemes skyrocketed.

[Earthrise]

7. You are my new hero! I manage to get $500 - $800 in cash cards each year

by using our credit card and always paying at the end of the month. We use them to pay for meals when we travel and to splurge on things we wouldn’t buy at full price. You are way ahead of me in terms of cashing in points for air travel.

[LetMyPeopleVote]

9. Welcome to DU