Devalued or Denied: Credit Card Rewards Disappoint Customers

Report highlights customer problems with credit card reward programs

A new report indicates that many customers feel misled by claims made by credit card rewards programs.

The Consumer Financial Protection Bureau (CFPB) released a report analyzing rewards programs offered by credit card companies as incentives and noted that in a number of cases, those programs end up being devalued or promised benefits are later denied.

“Credit card companies promise upfront benefits for signing up and using their rewards card, but often bury complex terms in the fine print for using the rewards,” said CFPB Director Rohit Chopra. “The CFPB will be looking for ways to protect people's points, stop bait-and-switch scams, and promote a fair and competitive market for credit card rewards.”

The CFPB has taken action against credit card issuers such as American Express and Bank of America for engaging in unfair, deceptive, or abusive acts or practices related to rewards programs.

Rewards programs are often used to attract customers to cards with an annual fee or a higher interest rate - customers are pitched the rewards program as a way to offset or pay for the higher cost of using the card. The CFPB report found that in many cases, rewards are devalued over time (more points are needed to redeem) or complex terms and conditions render rewards effectively unusable.

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