How you can lose your credit card rewards

Rewards represent a primary weapon in a credit card company's arsenal when it comes to getting -- and keeping -- you as a customer. Whether they're promising points, miles or cash back, rewards ensure the credit card companies that you'll keep pulling out the plastic.

But sometimes it seems the issuers don't really want to give you those rewards you've spent so much to earn. A veritable laundry list of ways your card company can chip away at the value of your rewards -- or even take them away -- lies tucked into the fine print of your card's terms and conditions. During research for this story, WalletPop heard from a disheartening number of readers who said they'd been denied their rewards.

When Rich Stambolian, a writer, photographer and graphic designer in New York, decided to close his six-year-old Sears card last year, he was owed roughly $140 in rewards. He asked what would happen to them and was told gift cards in that amount would be mailed to him. A year and numerous frustrating phone calls later, Stambolian says he has nothing to show for it. "They were like, 'We don't have any way to track them,'" he told WalletPop He countered that he'd been a loyal customer for years, to no avail.

Stambolian says he spent nearly a year following up diligently and filing claims as suggested by Sears' phone reps, but he concedes that he's probably never going to see that $140. "It's terrible that this happened. I could have bought something cool with that money," he says. WalletPop tried to find out what happened to Stambolian's rewards, but we didn't have any more luck than he did. Sears' media relations directed us to Citigroup, the bank that handles the retailer's card program. A call to Citi's media relations requesting information had gone unanswered by the time we published this. [UPDATED: A Citi representative contacted WalletPop after this story was published, saying they do not comment on individual customers' accounts.]

Unfortunately, Stambolian is far from the only American to be cheated out of credit card rewards owed to them. What's more, says Beverly Harzog, spokeswoman for CardRatings.com, in many cases, companies get away with this because the tactics they use are legal. (This was not the case with the runaround Stambolian claims he received, though).

Harzog says it's up to the customer to wade through all the fine print, both when they first get the card as well as when their company sends them any information in the mail. "Changes of terms and disclosures might be hidden with your monthly statements, or they might send them in separate mailings," Harzog says. "These things can change on the fly." CardRatings even printed a roundup of all the tricky ways card companies can separate you from your hard-earned rewards.

According to Harzog, one common reward-reducer involves setting expiration dates after which points or miles can't be redeemed. Another one is making it impossible to access your rewards or even canceling them if your card is in what's called a "penalty" status -- a designation some issuers will slap on you for as small a mistake as one late payment.

Many issuers also implement spending caps or tiers; with the former, after you hit a certain level of reward, you're cut off even if you keep spending. With the latter, you'll have to spend a certain amount -- which can be more than $1,000 -- before you can start earning rewards at the advertised rate.

Sometimes, as Peter Donohoe found out, even reading the fine print isn't enough to save you. Donohoe, an investment adviser in Massachusetts, had a GMAC credit card that would give him a rebate of $50 off his mortgage (which was held by GMAC) for every $2,500 he charged. For six years, all went well and Donohoe knocked close to $1,200 off his mortgage. Everything changed suddenly when GMAC had to be bailed out by the government in 2008. The company abruptly closed Donohoe's account, and the approximately $20 he had earned towards his next $50 rebate simply vanished.

"I did call GMAC, and was told due to GMAC restructuring the account had been closed," Donohoe related in an email to WalletPop. "Not much of an explanation, but this happened when GMAC was getting bailed out by the federal government, so I think they may have had bigger fish to fry."

Unfortunately, many of the consumers with whom WalletPop spoke said they didn't bother to pursue their rewards, or gave up after an initial attempt at reclaiming their points led to a dead end. "I have yet to contact Citi because I am just so sick of the corporate mumbo-jumbo...My time is simply too valuable," Lisa Jey Davis admitted via email. Davis, a public relations professional in Los Angeles, says she wasn't told her pool of "Thank You" points would disappear when she entered into a payment plan with issuing bank Citigroup.

According to Ruth Susswein, deputy director of national priorities for the watchdog group Consumer Action, it's to your benefit and those of your fellow cardholders if you keep complaining. Think about it: What are the chances you're the only one being gypped out of your points?

Your first stop should be the card company itself, Susswein says. "If you're a valued customer, particularly someone who carries a balance but isn't using your entire credit line, you're someone who may still have some leverage," she says. "It would be worth contacting the card issuer. You may find that they're willing to deal a little bit by extending or returning the benefit."

If contacting the issuer doesn't resolve the matter, contact the federal regulator. Until the consumer protection agency mandated by the recently passed financial regulation bill is installed, your best bet will probably be the Office of the Comptroller of the Currency, which oversees most of the banks that issue credit cards.

Even if what the issuers are doing is technically legal, Susswein says it's a good idea to let the agency know what kind of sneaky stuff they're doing. "Customers should also complain to groups like ours that monitor these sorts of things," says Susswein. "We do surveys of credit card companies, and we want to stay on top of what's most troubling to consumers."

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