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The Wall Street Journal published an article last week that I was surprised I didn’t hear about – Banks Make Rewards Plans Less Rewarding ^[3]. It covered, among other things, how credit card issuers have been playing with their reward plans to reduce their liability. In other words, they’re making the points you’ve already earned worth less and less, so they have to payout less and less in rewards!

If you’re a Citibank Thank You Rewards member, the name of Citi’s reward program, then expect to see your points worth a little bit less. At the moment, it only costs 20,000 Thank You points for a domestic coach airline ticket worth up to $400. On March 1st, you will convert points on a 100 points to $1 value, meaning a $400 ticket will cost you 40,000 points. They’re not the only one though, every credit card issuer is making changes. Some are changing their sign up promotions, others are playing with their points conversion schedule, but they’re all doing something.

Here’s the WSJ’s recap:

There are two lessons:

1. Try to get a cashback card, rather than a points card. Points you have to accumulate until you get enough to convert it into something, cash is cash.
2. Spend your points ASAP because as card issuers feel the pressure, they’ll start finding “invisible” ways like this to boost profits. It’s like how airlines had baggage fees, it was “invisible” because it didn’t happen at the point of sale, it happened much later after you were committed. By reducing the value of points, you don’t have much of a choice anymore because you’ve already earned the points. Is it dirty? Maybe, but that’s business.

Check out the article, it goes into a bunch of other issuers and into greater detail.