New York Rewards Law Shields Millions of Credit Card Points

Did you know that 4% of credit card account holders lose access to their rewards every quarter? The new York rewards law, which took effect on December 10, 2023, aims to change this concerning trend. This landmark legislation specifically protects consumers from suddenly losing valuable credit card points that can amount to hundreds or even thousands of dollars in value.

We've all heard horror stories about rewards disappearing without warning. In fact, this credit card law was inspired by two New York residents who lost over 1 million Citi ThankYou points—valued at more than $50,000. Under the new credit card rewards legislation, issuers must now provide 45 days' notice before any program modifications and grant consumers a 90-day grace period to redeem their points. Additionally, the NY rewards law prohibits companies from including waivers in their terms that would limit this redemption period, essentially overriding previous agreements that denied consumers ownership rights to their hard-earned rewards.

New York enacts credit card rewards law to protect consumers

The New York rewards law marks a significant development in consumer protection for credit card holders across the state. After a two-year waiting period since its signing in December 2021, this pioneering legislation has finally taken effect.

Law takes effect December 10, 2023

On December 10, 2023, New York General Business Law § 520-e officially became active. Governor Kathy Hochul announced the implementation, stating, "Protecting New Yorker's wallets is a top priority and we're helping families save money this holiday season". This legislation amends the state's general business law, creating unprecedented protections for consumers' hard-earned rewards points.

Applies to all credit card rewards programs in NY

The law's scope is comprehensive, applying to all credit card agreements involving New York cardholders entered into, renewed, modified, or amended on or after December 10, 2023. Furthermore, New York has become the first state to enact notice and grace period requirements for credit card rewards programs. Consequently, this legislation affects not only credit cards themselves but also their associated reward programs, which can sometimes be governed by separate agreements.

Aims to prevent sudden loss of points

At its core, the credit card rewards law addresses a fundamental consumer concern - the unexpected loss of valuable rewards points. According to officials, "For many people, a sudden loss of rewards can amount to the loss of a significant amount of money".

The law targets several specific scenarios where consumers previously risked losing their points:

• When rewards programs are modified in ways unfavorable to consumers

• When accounts are canceled or closed

• When programs are terminated

• When consumers voluntarily close their accounts

Notably, the legislation clearly defines what constitutes a "modification" - any change that eliminates points, reduces their value, affects point accumulation, limits rewards availability, or otherwise diminishes the program's value to the cardholder.

The legislation overrides most credit card loyalty program agreements that previously included provisions stating consumers have no ownership rights in their reward points or that rewards programs could be modified or terminated without notice. Moreover, the law makes it illegal for credit card issuers to circumvent these protections through waivers in their terms of use.

For New Yorkers who actively use rewards credit cards, this law provides valuable protection against the equivalent of hundreds or even thousands of dollars in potential lost value.

Credit card companies must notify users and offer grace period

The new credit card rewards law establishes strict notification requirements for issuers, ensuring consumers have ample time to use their accumulated points before changes take effect.

Issuers must give 45-day notice of changes

Under the NY rewards law, credit card issuers must provide notice to cardholders "as soon as possible" whenever an account or rewards program is modified, canceled, closed or terminated. Particularly, this notification must be sent within 45 days after the change has been decided upon by the credit card issuer. The notice requirement applies to any changes that remove or lower the value of points, or make it more difficult for cardholders to build points.

Consumers get 90 days to redeem points

From the date the notice is sent, cardholders receive a 90-day grace period to redeem their accumulated points under the original terms and conditions. This three-month window gives consumers sufficient time to "redeem, exchange, or otherwise use" their previously accumulated rewards. Even if the original terms provided for points expiration in certain circumstances, the credit card company cannot deny consumers this mandatory 90-day redemption period.

Law applies to account closures and program modifications

The credit card rewards legislation covers several scenarios:

• When rewards programs are modified to be less favorable

• When accounts are involuntarily closed by the issuer

• When programs are terminated entirely

• When consumers voluntarily close their accounts

Nonetheless, these protections do not apply in cases of fraud or misuse of the credit card account by the cardholder.

No waivers allowed in terms and conditions

The legislation explicitly prohibits credit card companies from circumventing these requirements. Any agreement between an issuer and a cardholder that attempts to waive, limit, or disclaim the rights established by this law is "void as contrary to public policy". This provision ensures that credit card issuers cannot avoid these consumer protections by placing waivers in their terms of use or any separate agreement.

For New York cardholders, the statute effectively overrides most credit card loyalty program agreements that previously claimed consumers had no ownership rights in their reward points.

Consumers can avoid losing points with smart strategies

While the NY rewards law offers significant protections, savvy cardholders should still take proactive steps to maximize their rewards. Understanding how to safeguard your hard-earned points complements the new credit card rewards legislation.

Redeem points before closing accounts

Closing a credit card account typically means forfeiting any unredeemed rewards immediately. Although some issuers provide grace periods, this varies widely by company. With Citi ThankYou rewards, cardholders have 60 days after closing an account to use accumulated points. Rather than risking loss, redeem your rewards before initiating account closure—regardless of whether the credit card rewards law applies to your situation.

Compare redemption options for best value

Not all redemption options deliver equal value. When transferring points to airline or hotel programs, transfer ratios significantly impact your rewards' worth. While cash redemptions typically yield 1 cent per point, strategic transfers to partner programs can potentially double, triple, or even multiply value tenfold for premium travel bookings. Consider these factors when redeeming:

• Transfer ratios to loyalty programs

• Limited-time promotions or transfer bonuses

• Seasonal pricing variations

• Saver-level availability for flights

  
  

Avoid delinquency to maintain eligibility

Late payments can jeopardize your rewards. Most credit card issuers withhold rewards during delinquency periods, with no guarantee of reinstatement once payments resume. Furthermore, bankruptcies can result in complete point forfeiture. To protect your rewards under the credit card points law, maintain timely payments and keep accounts in good standing.

Transfer points when possible

Instead of losing points when closing an account, explore transfer options. Many programs allow point transfers between cards in the same rewards system—for example, moving Chase Ultimate Rewards between different Chase cards. Capital One permits mile transfers between accounts, regardless of household status. Co-branded airline or hotel cards offer another advantage—points already transferred to loyalty programs remain yours even after account closure, though program-specific expiration policies still apply.

Ultimately, although the credit card rewards act provides important protections, maintaining vigilance over your points ensures maximum value regardless of regulatory changes.

Officials and experts support the new credit card law

Following the implementation of the credit card rewards law, state officials have voiced strong support for the consumer protections it provides.

Quotes from Governor Hochul and lawmakers

Governor Kathy Hochul emphasized the timeliness of the legislation: "Protecting New Yorker's wallets is a top priority and we're helping families save money this holiday season. With this law taking effect, New Yorkers can rest assured that they won't lose the credit card rewards they've earned".

State Senator Shelley B. Mayer, who championed the bill, highlighted its importance: "For many people, a sudden loss of rewards can amount to the loss of a significant amount of money. Individuals will now receive notification and a grace period to use their rewards when an account is being closed, thereby increasing transparency for all New Yorkers".

Assemblymember Nily Rozic affirmed: "New York consumers deserve the security of knowing their credit card rewards will not be unexpectedly terminated. The new law and resulting regulations will require credit card companies to provide a 90-day grace version so they can be sure to make use of their hard earned rewards".

Statements from NY Division of Consumer Protection

Secretary of State Robert J. Rodriguez, who oversees the Division of Consumer Protection, pointed to the practical benefits: "With holiday shopping in full swing, many consumers are using their credit cards to rack up rewards under the assumption they can be redeemed at any time. But that's not always the case. This new law will protect consumers by guaranteeing them a minimum grace period to use those rewards".

The NY rewards law represents a culmination of efforts that began in December 2021, when Governor Hochul initially signed Senate Bill S133B.

Public response and consumer advocacy

Indeed, the credit card rewards legislation has been met with enthusiasm from consumer advocates who have long criticized the sudden termination of rewards programs. The credit card points law addresses concerns about transparency and fairness in how these programs operate.

As the credit card law became effective, many New Yorkers expressed relief at having legal protection for their accumulated rewards—benefits that often represent substantial monetary value earned through years of loyalty and spending.

Conclusion

The new NY rewards law stands as a landmark achievement for credit card consumers across the state. Certainly, this legislation addresses a critical gap in consumer protection, ensuring millions of dollars in rewards points no longer vanish without warning. The 45-day notification requirement coupled with the mandatory 90-day redemption period gives cardholders adequate time to utilize their hard-earned benefits. Additionally, the prohibition against waivers demonstrates lawmakers' commitment to preventing companies from circumventing these vital protections.

Despite these robust safeguards, cardholders should still employ smart strategies when managing their rewards. Redeeming points before closing accounts, comparing redemption options, maintaining timely payments, and transferring points between eligible accounts remain essential practices. For those looking to maximize their benefits, Rewards Credit Cards offer numerous opportunities to earn valuable points while enjoying the law's protections.

The widespread support from Governor Hochul, state legislators, and consumer advocates underscores the significance of this consumer-friendly legislation. Most importantly, everyday New Yorkers now enjoy unprecedented protection against arbitrary program changes and unexpected point expirations. Therefore, this law represents a meaningful shift in the balance of power between credit card issuers and consumers, ensuring rewards rightfully remain with those who earned them. Though currently limited to New York, this legislation may well serve as a template for similar consumer protections nationwide, ultimately benefiting millions more cardholders across America.

FAQs

Q1. What does the new credit card rewards law in New York entail? The law requires credit card issuers to notify cardholders within 45 days of any changes to their rewards program, such as modifications, cancelations, or terminations. It also provides a 90-day grace period for cardholders to redeem their points under the original terms.

Q2. Can I use my credit card rewards points to pay my bill? While not all credit cards offer this option, many allow you to redeem points for statement credits. Check your card issuer's website or app for redemption options. Keep in mind that redemption rates may vary, and there might be minimum thresholds for redemption.

Q3. Do credit card rewards points expire? Expiration policies vary by program. Many credit card rewards points don't expire as long as your account remains open and active. However, some airline and hotel loyalty programs may have expiration policies if there's no account activity for a certain period.

Q4. What happens to my rewards points if I return a purchase? In most cases, you'll lose the points, miles, or cash back earned from a purchase if you return the item. However, there may be exceptions, such as when you return items for store credit or exchange them for items of equal or greater value.

Q5. How does the new law protect consumers from losing their rewards? The law prevents credit card companies from suddenly terminating rewards programs without notice. It mandates a 45-day notification period for any program changes and provides a 90-day grace period for consumers to redeem their points. Additionally, it prohibits companies from including waivers in their terms that would limit these protections.