Frequent Flier Mile Hassles
Within the past week I've received three complaints about Capital One's new rewards policy for its cardholders. Two of my colleagues and a reader say the company has significantly cut their mileage benefits; the reader said his values were cut in half.
Here's his complaint: "I have accumulated 180,000 points, which under my agreement was worth 2 round-trip tickets to Australia valued at 85,000 each up to a max of $1,700 each." Now, he says, "the new, improved plan" will require 340,000 points for the same tickets, or double the points he previously needed.
Here's another complaint from my colleague Leslie Walker who writes the .com column:
"Am I the only Capital One credit card customer who gets irked every time I see those 'What's in your wallet' commercials on TV touting its 'no hassle miles' reward plan? As I see it, Capital One's new frequent-flier miles are a total hassle. I've been steaming ever since Capital One sent me a notice last year saying it was changing the formula for redeeming those 'no hassle' miles for airline tickets. The net effect was a big devaluation of my miles. By my calculation, they are now worth half what they were, at least to the places I want to go."
Walker continued in an e-mail: "The devaluation was applied retroactively, so customers like me who had amassed a lot of points really got the shaft. I had more than 100,000 miles, with plans to use them to fly to Europe this summer. But my miles are no longer worth enough to get the two tickets to Rome I was eligible for just a few months ago. Now I don't even have enough miles for a single ticket to Italy!"
Walker noted that Capital One tried to mollify customers by crediting accounts with extra miles during the transition. "And to be fair, the company also boosted the number of miles we now earn, from 1 mile per dollar spent to 1.25 miles. ... That's helpful going forward, but of no use for existing balances," she said.
"The company sent me a confusing letter last September that didn't make clear how much devaluation was occurring. It did offer a brief window--a few weeks--during which I could have booked travel using the old miles formula. But I wasn't ready to book and had no clue how much devaluation was occurring until I went to start redeeming miles last week."
Capital One's oldest redemption plans were tied to travel distance; some plans required 35,000 miles, for example, to fly to Florida. Some of its more recent plans used a formula that multiplied the ticket price times 90 so a $100 ticket would cost 9,000 miles.
Under the latest "No Hassle" plan, cardholders need 15,000 miles for tickets priced up to $150; 35,000 miles for tickets priced between $150 and $350 and 60,000 miles for tickets between $350 and $600. Any flight over $600 requires miles equal to 100 times the ticket price so an $800 ticket would take 80,000 miles.
Walker calculated what the changes meant to her: "Capital One's old formula gave you a ticket to anywhere in Europe worth up to $1,000 for only 50,000 miles. Today, a $1,000 ticket to anywhere costs 100,000 miles--twice as many. And making it worse, air travel to Europe is more costly than a year or two ago. So a ticket to Rome today likely would cost at least 150,000 Capital One miles--roughly three times what it took last year."
Walker added: "I know travel costs are escalating, so Capital One--and for that matter all the airlines--are going to have to do something to hold down costs in their frequent-flier programs. But I sure wish Capital One had not applied the changes retroactively, or at least had given customers clear notice--and more time than a few weeks--to use the old miles before devaluing them so abruptly."
Capital One spokeswoman Pam Girardo said the company did give advance notice--two months. She added that the new formula offers some of the lowest redemption thresholds in the market. She did acknowledge that some flights could require more miles than before, but that's why the company gave out bonus miles and bumped up the rate at which consumers can earn their miles. Some cardholders are earning 1.25 miles for every $1 spent, up from 1 mile for every dollar; some are earning as many as 2 miles for every $1). Girardo also said Capital One has eliminated many of the previous restrictions, including the requirement that the passenger stay over on Saturday night. And consumers have more airline choices, she said.
Walker wonders if Capitol One's changes are "a taste of what's to come in the many frequent flier programs that are over-extended and facing rapidly escalating reward costs."
Meanwhile, here's my advice, for what it's worth. If you feel particularly aggrieved about your miles, it wouldn't hurt to call Capital One and discuss your concerns with a customer-service representative. Maybe the representative will give you some hassles, but maybe, just maybe, you'll get some extra miles instead.
January 26, 2006; 10:40 AM ET
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