The Truth About Credit Card Reward Programs
Credit card rewards programs aren't for everyone. Find out what's best for you.
May 11, 2009 — -- Americans have a long-standing love affair with credit cards and banks have made their cards even more appealing through loyalty reward programs that promise everything from cash back to free flights, as long as you spend a certain amount.
"GMA" financial contributor, Mellody Hobson discusses the diminishing value of these programs and what pitfalls to look out for when choosing a rewards program credit card.
These reward programs have become commonplace in the credit card industry.
According to Affinity Solutions, a company that creates and manages such programs, 40 percent to 45 percent of all existing credit cards are linked to some sort of reward program.
Unfortunately, as with most industries, the credit card industry has been hard hit by the faltering economy.
In order to cut their expenses related to these programs, issuers have taken actions to change the terms of their reward programs.
Changes include increasing spending thresholds for rewards, reducing the points earned for a purchase, increasing the points needed to redeem an award, or shortening point expiration periods. Some examples can be found with the most popular cards:
