REWARDS CARDS. Credit-card rewards programs remain as generous as ever before, but all of the experts whom we interviewed tell us that the terms and redemption rules of travel miles and points programs have become increasingly confusing over the past 3 years. (You should keep in mind that they already were confusing 3 years ago.)
Reward flights that used to cost 50,000 miles now cost at least 60,000 miles. In most cases, reward flights are available only on certain days and at certain times, and they pertain only to flights to certain cities. What’s worst of all is that the airlines and credit-card issuers can change the values, destinations and flight times from day to day and give you no warning and no explanation. In other words, you might spend 2 years saving 75,000 credit-card miles for a winter trip to Florida, only to reach the threshold and discover that the trip now costs 95,000 miles or that your airline doesn’t have reward flights that go to Florida during the winter. You also might save your miles for an international trip, only to find that your miles can be used only for domestic trips.
Experts say Delta Airlines has the most confusing rewards system of them all. The airline removed its SkyMiles reward chart from its website in 2015, so you have no dependable way that you can plan for how many miles that a Delta reward flight will cost you.
“The cost of an award flight is whatever Delta says it is today,” Steele says. “Can you imagine going shopping, looking at a price tag, getting to the register and finding out that price is different? How do you make a decision based on that?”
Experts tell us that travel-rewards programs are so tricky that the experts recommend such programs only to consumers who have the time to monitor travel-rewards blogs that break down the details of the best deals.
“It’s got to be a hobby; you have to keep abreast of it,” Steele says. “If you don’t know what you’re doing and you don’t understand it, then it’s very easy to find yourself with a poor value.”
As travel-rewards credit cards become more confusing, cash-back credit cards, which reimburse you when you make a purchase, are becoming more generous, Schulz says. The latest cards typically deliver 2 percent cash back on all purchases, compared with 1.5 percent 3 years ago. Most cash-back cards also give you 2 percent to 6 percent back on purchases that you make within certain categories, such as gas stations, supermarkets and restaurants. The cards typically have categories that rotate every 3 months and quarterly limits (typically $1,500).
“Cash back is a safe haven for people who just want their rewards program to be easy and straightforward,” Steele says. “That’s an outgrowth of the frustrations that people have with travel rewards programs.”
As of press time, one of the best cash-back credit cards that we found was the Citi Double Cash Credit Card, which provided 1 percent cash back on general-purpose purchases and an additional 1 percent when you pay your monthly bill on time. What’s more, no limits existed on what cardholders get in cash back. As of press time, Citi Double Cash Credit Card also had no annual fee.
SUBPRIME CARDS. The improving economy made banks increasingly willing to lend money, not only to consumers who have impeccable credit but also to others who might have less-than-stellar credit.
Experts tell us that secured credit cards, which are credit cards that require a refundable deposit from the consumer and generally have a spending limit at that amount, are more common than ever before. Secured credit cards typically are the type of credit card that’s available if your FICO score is 640 or less.
We found that a few secured credit cards now give you as much as 2 percent cash back on purchases at restaurants and gas stations and 1 percent elsewhere. We found two secured credit cards, the Capital One Secured and the Discover it Secured, that have no annual fees. Secured credit cards didn’t include rewards before and typically have an annual fee.
“It’s a nice incentive for people who are just getting started with credit or getting back on their feet with credit,” Schulz says.
Besides secured credit cards, unsecured credit cards, which often charge annual, monthly and setup fees instead of a single refundable deposit, also exist. In the past year, Consumer Financial Protection Bureau (CFPB), which is responsible for consumer financial protections, started to crack down on unsecured credit cards’ exorbitant fees. Unfortunately, CFPB’s action on behalf of consumers in this regard might be in jeopardy. The Trump administration said it might seek to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act—a move that would scale back CFPB and eliminate oversight of subprime credit cards.
CFPB reviews the credit-card market every 2 years and enforces the Credit Card Accountability, Responsibility and Disclosure (Credit CARD) Act of 2009, which makes it difficult for credit-card issuers to raise APRs. What’s good news is that experts tell Consumers Digest that the Trump administration doesn’t plan to repeal the Credit CARD Act any time soon.
“It’s possible we could see more subprime cards with predatory terms, but if people don’t get them, they won’t last long on the market,” Ganotis says.
Greg Tasker has written for AAA Living, Frommer’s Budget Travel and Parade, among other publications.