Tracking rewards program changes before they happen
There are ways to use your rewards before you lose them
By Randy Petersen
Cashing In
Randy Petersen is editor and publisher of Inside Flyer, which is
considered the leading publication in the world about frequent traveler programs. At CreditCards.com, he writes
Cashing In, a weekly feature in which he answers readers' questions about credit cards rewards programs.
Dear Cashing In, I see that Citi is going to increase the amount of
points needed to cash in a plane ticket. How can I avoid having my credit card
issuer reduce the value of my rewards? Are there any laws that protect rewards
savers from devaluation of their points? -- Craig
Dear Craig,
Citi made a change to its Thank You Rewards program recently, and that
wasn't the only program Citi changed. For instance, CitiMiles recently issued
this notice to its cardholders:
"Travel Rewards Transaction Fee - As of 3/1/09, a transaction fee of $39
will be applied to all tickets redeemed using CitiMiles (at (800) 99-MILES).
This fee applies to each ticket issued for both cardmember and companion
tickets."
At the same time when announcing this new transaction fee, the minimum
number of miles for travel rewards increased to 2,500 CitiMiles for each round-trip
ticket, which means that trips with less than 2,500 miles between departure and
destination will use a minimum of 2,500 CitiMiles -- changing the value
cardholders can get from their rewards.
Citi cardholders aren't alone. The Delta Airlines SkyMiles program
recently dropped its popular "Always Double Miles" on eligible
everyday purchases.
No rewards protection laws on the books
There are no laws to protect reward savers from point devaluation. In
the case of airline frequent flier programs and their credit card-based
programs, attempts to regulate them years ago through the National Association
of Attorneys General (NAAG) failed as it kicked the regulatory process back to
Congress, which pretty much gave airlines immunity from these types of laws. With
Congress responsible, it is highly unlikely -- no matter the extent of
government involvement in private enterprise -- that any protective measures
would be put into place for what is commonly referred to as "grandfathered"
changes. This would mean that while these programs have a right to change their
requirementsat any time, any loyalty currency earned before any change would
have to continue at the "old" rules and redemption. While very
high-minded, it is likely that such a complicated system would lead to ending
the programs altogether rather than protecting the cardholder.
Because of the lack of protection, it comes down to members keeping more
informed and more savvy about maximizing their rewards before changes to their
rewards programs take place.
But before we look at how to protect yourself, let's be a little fair. While
we don't like change, it is clear that these programs have done nothing against
what they established about the rules up front. While I'm not big on the most
recent Citi Thank You Rewards changes, if we look at the fine print-- fine
print that we agreed to when we enrolled -- we would notice this caveat: "Thank You
Network or any portion thereof may be revised or terminated with 30 days prior
written notice."
The truth is that when this program changed, Citi did
give its members 30 days notice. That is why I stress the need to be flexible. For
example, had you been given the 30 days notice, you could have quickly reserved
a future reward trip. Unfortunately, members don't always read the materials
regarding program changes, and often stumble upon them just days before the
actual change (when all hope of planning for the future is lost).
Don't be the last to know about program changes
This is where using the Internet can help
tremendously. With every rewards program, there are online topics, threads or
communities that spring up to alert members to program changes, and people quickly
form strategies on how to best take advantage of the situation.
Here's an example: Members of the popular FlyerTalk.com travel community
are pretty vigilant about the Thank You Rewards program, and a thread was started in early January to offer advice and strategy for the change that took
place March 1. The thread now has nearly 1,500 different
comments and has been viewed nearly 75,000 times. Members "subscribe"
to that thread or the forum and get updates as new information and advice is
posted. If flexible, one would have figured out how to book a ticket to use in
the future, redeeming at the current reward prices before the changes took
place.
Coalition rewards programs protect your points
Another way to protect yourself is in your choice of credit card reward
programs. With programs offered by Citi, Capital One and others, when a change
is put forth in the rewards, there really are few options. However, if you were
to look at what is sometimes referred to as "coalition"" rewards programs -- like those sponsored by American Express Membership Rewards or
Diners Club Rewards -- what you'll find is that changes come from the partners,
rarely from the program itself.
With coalition membership rewards programs, your rewards are protected since
they have any number of airline and other merchandise partners, which don't all
change at the same time. For instance, maybe Delta changed some of its reward
levels (as they have), but you would still have the ability to use Continental
Airlines (which did not change its awards at the same time as Delta) or even
Frontier, JetBlue or Southwest.
Having a number of other program partners like
this helps insulate you from single changes, as can happen with Citi, Capital One and even the Delta SkyMiles credit card. In addition, these types of programs
allow you to hold your points in a main account so that you can selectively
move them to a specific reward program when the timing is best. Plus, various
airline partners of a membership reward program have been known to offer
transfer bonuses of up to 50 percent, meaning you're able to increase the value
of your rewards. Or various partners will at times offer special travel rewards
at a discount price, allowing you to move just the number of points you need into
that particular partner for redemption, and leaving all your other points
available for other promotional offers.
I hope this helps. To recap: 1) Use the Internet to track changes so you
don't miss the news, and take advantage of communal advice on the strategies of
any change; and 2) Review from time to time which program you belong to, and
whether it has enough flexibility among its reward offers to not pin you down
when changes come about.
The Wall Street Journal refers to Randy as "... the
most influential frequent flyer in America," while The New York Times tagged him "the world's leading expert on
airline frequent flier programs." Randy is editor and publisher of Inside Flyer magazine -- considered the leading publication in the world about frequent traveler programs. He is a regular speaker at
business travel seminars and conferences around the world; and is often called upon by the industry itself for
his comments and suggestions about the future of frequent traveler programs.
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