Reduction and Elimination of Credit Card Rewards on the Rise

There is an increasing trend of credit card companies to reduce and, in some cases, eliminate their popular reward programs entirely. At one time, rewards programs were one of the most effective promotional tools used by card issuers to get people to sign up for their cards. Nowadays, rewards incentives are simply too costly for the card issuers to maintain and the reduction and outright elimination of credit card rewards programs is on the rise.Consumers who are using credit cards simply to get rewards need to stay on top of what rewards programs are being eliminated and what changes are being made to the programs utilized in the past. As the economic crisis continues to put more and more financial pressure on banks and credit card issuers, borrowers and cardholders are more likely to see even more changes to rewards programs in the near future.Great Rewards No Longer

It wasn't so long ago that credit card companies were aggressively promoting their incentive programs to entice new card applicants. As airline incentive programs were starting to be eliminated from many airline companies, credit card companies jumped in and offered double rewards points for frequent fliers as well as more cash back incentives for their customers. Card issuers were battling to remain competitive and were offering more and more incentives than ever before.

Financial Fallout

When the recent economic crisis began to emerge, the fallout hit the card issuers very hard financially and, as a result, began to quickly pull back on their rewards programs. Some merely began changing the rules, hitting consumers with shorter expiration periods and smaller caps on the rewards customers were earning. But others began to make major changes, starting with the dissolution of their rewards programs entirely in order to save money. Double mile programs were dropped from many card company programs, leaving customers to pay more cash money upfront for supposed free flights.

Reduction of Airline Miles and Other Rewards

Other travel rewards have been reduced or cut out all together. For those consumers who used to receive free stays at select hotels for one or two nights, they are more likely to earn a monetary credit instead. In some cases, the credit will not pay for even one hotel night stay, let alone cover the cost of the two-for-one deals that were the cornerstones of rewards programs for so many years.

There are still some rewards programs available but, at best, it appears that consumers will have to spend more on purchases just for the privilege of earning less in rewards points. Card issuers contend they are only eliminating those incentives that were the least popular among customers so they can focus on more popular rewards programs, including the ever popular cash back rebates. But even the cash back incentive programs have been seeing more changes. Typically the best cash back rewards programs provided rebates of up to 3% back on all purchases. Now, credit card companies are only offering the 3% rate for a very short promotional period, then dropping it down to 1% after the introductory period has ended. Other cards will only give cash back rewards when customers buy certain items, such as groceries, gas, or other specific things instead of getting cash back on all purchases.

This article is a guest post contribution from Steve Sildon, Senior Editor for CreditCardAssist.com. Steve is a frequent contributor in the personal finance blogosphere, writing about credit-related topics such as credit card rewards programs and small business financing.



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