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Rewards cards getting less generous

Some rewards credit cards are no longer offered and others have stingier terms.

By Karen Datko May 4, 2010 7:00PM

Oh, the poor credit card companies. Reined in somewhat by the Credit CARD Act, they’re looking for new ways to make money. Your rewards card may be in their sights.


Among the changes personal-finance writers have noticed:


Some cards are simply going to the big shredder in the sky, including the Charles Schwab Signature Visa with 2% back on anything you buy.

Some rewards are more complicated. CBS MoneyWatch blogger Linda Stern says the revised Chase Freedom rewards program offers a generous 5% but for different types of purchases each quarter -- purchases at home furnishing stores, garden centers and drugstores in the spring, for example.


It’s an improvement on the previous version of the card -- 3% cash back on categories that changed with little notice, but it’s not as good as the 5% cash-back offer in the good old days. The Buck blog says: “While the increased predictability is certainly a boon, whether the 5% is as good a deal as the older 5% option depends on your spending patterns.”


Watch out for restrictions on rewards and also rewards forfeitures. Make a late payment and you may lose earned rewards for that billing cycle, or rewards can be reduced because of inactivity, says Diana Ransom of SmartMoney, who details some of those changes. Some cards will restore your rewards if you pay a fee.


What’s a rewards credit card customer to do?

  • Review the terms and conditions. Also, has a post that outlines recent changes in credit cards’ terms.
  • Cash in “early and often,” Stern recommends. Left unused, the value of rewards may shrink or even disappear.  
  • Also, Stern says, once you’ve reached a reward limit, switch to another card “and cut them off. Two can play that game.” We like the way she thinks.
  • And, if you’ve read a personal-finance blog or two, you know to never carry a balance on a rewards card -- or any card, for that matter.

While some credit card rewards are shrinking, rewards for some debit cards are expanding, although they can be confusing as well. “Some are straightforward cash-back offers, others are tied to checking accounts or similar products, while some have complex relationships with retailers that offer discounts,” says

Some credit card rewards programs have actually improved in recent months. Both Citi and Chase have upped the mileage rewards on some credit cards. However, better rewards are sometimes available only to the best customers.


Has your rewards card gotten less generous? If so, how?


Related reading:



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