Reward Cards: More or Less Rewarding?

Is it your imagination that your reward cards just aren’t as rewarding as they used to be? Maybe, maybe not. At Credit.com we’ve been following reward card trends, and while we are encouraged by the new offers we are seeing, it’s a mixed bag.

The Bad News

Reward programs may be getting skimpier: 10% of consumers surveyed in May 2010 by Credit.com reported that their card issuers had reduced their rewards program (11% said the same thing in our February survey).

And if you do earn rewards it can be tough to book a ticket. IdeaWorks published a survey in May showing that for travel dates from June through October 2010, award seats aboard Southwest were available 99.1% of the time, but seats on Delta were only available 12.9% of the time and USAirways came in dead last at 10.7% of the time. Ouch!

Use them or lose them: Choose a card that will give you rewards you will actually use. I once accumulated enough miles on my Alaska Airlines reward card for a round-trip ticket, but by the time I had done so, my sister had left Alaska and I had miles I couldn't use. If in doubt, pick a flexible program that lets you book travel on any airline, for example, or one that lets you choose miles or cash.

Watch out: If you think you may have trouble paying your bill for your reward credit card, cash it in right away or you may forfeit your rewards if you fall behind.

The Good News

Travelers are getting nickled and dimed with extra fees for everything from an emergency exit row seat, to checked baggage, to in-flight entertainment. But reward cards may be one way to avoid at least some of these fees. For example, American Express Delta SkyMiles credit cardholders can check one bag free (up to 9 people in group) and Continental OnePass cardholders get a similar benefit. But these cards carry hefty annual fees ($85 – 95) so you have to do the math.

Higher rewards may carry higher fees. Example, the Capital One Venture Card gives you 2 miles per $1 spent but carries an annual fee of $59 (waived the first year). If you want a no-fee card, you'll get 1.25 miles per $1 spent.

Bottom Line: Do a check-up on your credit card reward program and find out whether it’s still the right card for you. If not, shop for a new one. But don’t be too fickle. Opening and closing accounts can affect your credit scores, so don’t assume you'll just dump the current card and pick up a new one before the annual fee kicks in. It's better to choose a card you will stay with for a while.

Have you noticed any changes to your reward cards? Are you using your rewards card differently these days?

Gerri
Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes
budgeting, debt recovery and savings information online. She is also the
co-author of Debt Collection
Answers: How to Use Debt Collection Laws to Protect Your Rights.

Tagged as: airline miles, airline rewards card, cash rewards, credit cards, pay bill, rewards, round trip ticket

Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.comTalk Credit Radio. Reach Gerri at creditexperts@credit.com.