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Are you holding a lot of points or rewards on your reward credit card?  If so, you may want to carefully consider turning in those points or redeeming the rewards that you have earned soon.  With new credit card rules going into effect, the price of redeeming those credit card perks may increase dramatically.

The Reason For The Changes

The reason why the redemption of credit card perks may be changing is partially due to the new credit card rules that are taking effect.  Previously, the banks were raking in lucrative fees from individuals that overdrew their bank accounts, went over their credit limit on their credit card, or neglected to get their credit card payment to the bank on time.  Because of the massive amounts the banks were bringing in with these fees, they could afford to be generous to their loyal and responsible credit card holders by offering them rewards for using the company’s products.

The new credit card laws that are currently taking effect has the potential to severely cripple the bank’s abilities to cash in on the problems of their most troubled borrowers.  The banks can no longer automatically enroll all of their customers in “overdraft protection” that allows the bank to charge a $29 to $39 fee for each instance of going over the balance available for the account and they can no longer raise interest rates at any time for any reason and apply the increase to the entire balance of the account.  Because these lucrative options for making huge amounts of money with little effort have been taken off of the table by the federal government, the banks are now looking for other ways to keep their profits high.

What You May Expect

Many of the changes coming to rewards credit cards that have been talked about in the media lately are things that many cardholders may not have noticed until the change affected them personally.  Increasing the amount of points needed for the redemption of items such as tickets, home appliances, and gift certificates is one way that many banks are planning on changing the redemption rules.  Another method is reducing the amount of time that a person has to earn these points before they expire, allowing the bank to decrease the number of large redemptions that they process while simultaneously eliminating points that they would have eventually had to redeem by allowing them to expire for no credit at all.

Other changes may be noticed much more quickly.  Another change being discussed is increasing the annual fee that is charged to the accounts of people with rewards credit cards.  Many of these credit cards were issued to credit card holders with good credit histories and often have a very small or no annual fee attached to the credit card.  In order to increase their profits, the banks may choose to implement annual fees on all credit cards, including rewards credit cards, to recoup some of the money that they will be losing on overdraft charges.  Although this may seem unfair to the people that have always paid their bills on time and have been good customers of the bank, to the banking industry its just business and they have a responsibility to their shareholders to maximize their profits.