Credit Card Rewards Used To Be a Great Deal — Here's What's Changed
Credit card rewards give cardmembers a way to earn cash back, points or travel perks on their purchases. Over the last five years, things have changed and getting the most out of these rewards isn’t what it used to be.
According to The Wall Street Journal (WSJ), premium credit card issuers have raised annual fees while tightening rules around rewards and perks. Some cardholders now deal with additional spending requirements, restrictions on airport lounge access and more conditions for redeeming statement credits.
Check Out: This Seemingly Smart Credit Card Practice Can Cost You Points—But There's an Easy Fix
Sign Up Now: Start Growing Your Net Worth With Smarter Tracking
Here’s a detailed look at what’s changed — including higher fees, different reward structures and higher spending requirements.
Higher Annual Fees
Some premium credit cards now cost more to own than they did five years ago. “Many card issuers have raised the cost of card membership while reducing the value of card rewards,” explained Ali Zane, CEO of IMAX Credit Repair Firm.
In a separate WSJ report, the publication pointed out that issuers say higher fees allow them to offer better benefits; however, taking full advantage often requires cardholders to track and manage rewards carefully.
Rewards Are Now Statement Credits and Perks
Instead of offering points or cash back, some credit cards now offer statement credits and perks on certain purchases. This could be credits for dining, hotel stays, subscriptions or shopping at specific retailers.
WSJ noted that statement credits are becoming more popular because they’re cheaper to offer than points or cash back. Certain retailers will even subsidize the credits because it gets their brand name in front of high-spending cardholders.
“Issuers stopped competing on points and started competing on credits,” said Nyah Chapman, data engineer and founder and CEO of LUXE Intelligence, a personal AI concierge for dining, travel, experiences and more. “Stated value went up. Realized value went down, because it fragmented into a dozen small tasks.”
Some Rewards Points Lost Value
Some credit card issuers and travel loyalty programs have changed the way cardholders can redeem points. This has made certain rewards more expensive or less valuable.
“Card issuers change the value of rewards points by implementing dynamic pricing and increasing the number of airline and hotel transfer partner rewards,” Zane explained.
Dynamic pricing means the number of points needed to book a flight or hotel can fluctuate based on demand, availability and travel dates. Cardholders may need more points to book the same trip than they did in the past.
Welcome Bonuses Require More Spending
A credit card welcome bonus, also called a sign-up bonus, is a one-time reward that issuers give to new cardholders who open an account and spend a set amount of money in a specific time period.
“Minimum spends to get welcome offers went up,” Zane said.
Maximizing Rewards Requires More Effort
Getting the most out of your credit card rewards now means more planning and paying attention to the fine print. This means tracking expiration dates, meeting minimum spending requirements and making purchases at certain retailers to take full advantage of your benefits.
“Some cash back and flexible points cards give cardholders flexibility to get reward value, but cardholders may need to actively manage card accounts to avoid losing reward value,” Zane said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: