The Checkout

Reward Card Challenges

Today, there are rewards credit cards for just about anything. Just by using your card you can earn cash or discounts for buying books, gas, cars, toys, pet supplies, crafts, trips, coffee, etc.

But sometimes, consumers have complained that these cards are just not very rewarding. Cardweb.com, a Web site that monitors the credit-card industry, reports on a new survey by Disney Rewards Visa (another rewards program, of course), which found that while 41 percent of moms have rewards credit cards, 53 percent of this group have not redeemed their points. Why? The survey, conducted by Harris Interactive, found that many were frustrated by the restrictions their card carries while one-third were unsure of the rewards that their credit card offers.

Consumer advocates have long complained that credit-card companies have made it difficult to redeem the rewards--that the burden is usually on the cardholder to request the reward. So, recently, some cards have been automatically granting the rewards when the credit-card holder reaches the requisite number of "reward" points. That's supposed to be one of the benefits of the new American Express Clear card; cardholders get an Amex shopping card worth $25 for every $2,500 of eligible spending. As the card's Web site says: "Cardmembers will enjoy a nice surprise when they open their mailbox and find their shopping card has arrived." That's also the principle behind Amazon's Visa card. A $25 Amazon gift cerfiticate is automatically sent to cardmembers once they reach 2,500 points.

Sounds great. But does it work? That's what Washington Post reporter Chris Lee asked in a recent e-mail:

"Here's a pet peeve of mine. Perhaps some of your readers share it. It's about credit card companies who hook you with a promotional feature of their card -- and then fail to follow through on the promotion. In my case, I signed up several years ago for a major credit card offered through Amazon.com. The hook was that every time you spent a total of $2,500 on the card, they would ship you a voucher for $25 to be used on Amazon.com. At first, the vouchers came like clockwork. But in the last year or two, they've been as scarce as the ivory-billed woodpecker. I've repeatedly hit the $2,500 mark and not received a voucher. When I've called the credit card company to inquire, they unfailingly say that their records show that the vouchers went out. They've got my correct address, so missed mail isn't the issue. Strangely, in this world where retailers love to do everything online, neither Amazon.com or the credit card company would agree to my request that they simply send me an e-mail with a promotional code good for $25 at Amazon.com whenever I hit the magic $2,500 mark. It's no surprise I guess. While they want to make it easy for me to spend my money, they'd like to make it hard for me to spend their money. I signed up for the card because the voucher hook sounded like a good deal. Now I just feel frustrated."

Lee said he's had to call about five times to report a missing voucher, and "only once did a promised voucher actually show up as a result." He called again earlier this month when the voucher promised in his statement in May or June never arrived. "Weirdly, the credit card company rep. transferred me to an Amazon.com rep, who seemed to think I was calling about a purchase I had made. He kept asking for my order number. I explained the situation and he said they would look into it and get back within a day or two."

Eventually, Lee heard from Amazon, with this e-mail response: "Thanks for writing to us at Amazon.com. The Amazon.com card is issued by Chase for Amazon.com customers. When you use your Amazon.com card, you receive 3 reward points per dollar for almost all Amazon.com purchases (except for items sold by Nordstrom, Eddie Bauer, Spiegel, Ultimate Outlet, Borders, Waldenbooks, and Newport News, for which you'll receive 1 reward point per dollar) and 1 reward point per dollar for all other purchases..." The e-mail went on to describe the card but not address Lee's specific problem.

So Lee again called Chase, the issuer of the Amazon card. He finally found a slightly more helpful representative who promised to "refund" his points and then send out another $25 voucher. "I'll believe it when I see it," Lee said. Meanwhile he asks, have other readers had similar problems? Speak up now--one way or the other--and give any tips to make the redemption process easier.

I have one tip--based on Chase's in response to Lee's problems. Chase spokeswoman Jessica Iben said Amazon's reward certificates come in unmarked envelopes for security purposes. Lee said he doesn't understand the reason for that, since his credit-card bill--"loaded with security-sensitive information--comes in a recognizable envelope." Even so, that means you need to open all your mail, even letters you think are junk.

By  |  August 30, 2006; 7:01 AM ET Credit Issues
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Comments

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"Even so, that means you need to open all your mail, even letters you think are junk."

Thanks for stating the obvious.

As for reward cards, I've always received the awards I requested from my MBNA card.

Posted by: Non-debtor | August 30, 2006 9:12 AM

I have two cash back cards. I mostly use American Express because it pays more, but I do have to wait until my one-year anniversary plus a couple of months before I see the money. But it does show up automatically as a credit on my bill. The other is a Chase Visa - that one simply gives me a 1% credit every month based on the last month's purchases. By the way, they both have no annual fee.

Posted by: Get a cash back card | August 30, 2006 9:19 AM

At IndexCreditCards.com we reported on this same survey about rewards, but I have to say that the results didn't make me feel that there was anything wrong with the card companies' offerings, but instead something wrong with the cardholders. If they couldn't find any rewards they wanted, why did they have the card in the first place? Also, if they were saving up for a bigger award, this qualified in the survey as not using their points--which is technically true, but there is still an intention to use the points in the future. Overall it's kind of a nutty survey, probably because its main point seemed to be to promote the Disney Rewards card as better than other rewards cards.

I'm not defending all credit card companies -- God knows many load up on fine print that can make your rewards less attractive than they seemed on the surface. But consumers should take at least some responsibility for knowing what they're getting.

While I'm sure the Post reporter you mention has had the Amazon reward problems mentioned, I have to say that I've had this same card for years with never a problem. Got a rewards certificate last week actually. (It's true about the plain envelope, though; you'd never know what was inside.) One person's experience isn't necessarily indicative of what everyone can expect.

However, the bizarre customer service experience your colleague had when trying to resolve the issue sounds pretty typical for customer service across all industries these days.

Justin McHenry
Research Director
IndexCreditCards.com

Posted by: Justin McHenry | August 30, 2006 9:41 AM

I agree about the cash-back cards - I have a National City CashBuilder, and they attach a 1%-of-purchases check to my bill (so no mail confusion) whenever I request it, or every january if I never request it. Easy, effective, and I can use the cash however I want.

Posted by: Anonymous | August 30, 2006 9:42 AM

I have a Hilton Honors points card from Citibank. Two days, exactly, after my statement posts to the web site, the points appear in my Hilton account. Every month for 5 years.

Posted by: Tim | August 30, 2006 10:12 AM

I happen to have an Amazon.com visa card and I have received every one of my rewards so far. There have only been about 5 so far (come on, I'm 23) so I've got nothing to complain about

Posted by: Bobby | August 31, 2006 11:49 AM

I have a Chase Visa and have had no problems getting my rewards ($25 dollar check or gift card every 2,500 points.) I do have to go on-line to request it, but I'm fine with that. It's very simple, and I receive the check or card within a week or so of ordering it.

Posted by: Judy | August 31, 2006 12:27 PM

The Amazon Visa's 1% reward is pretty standard and nothing to brag about. However, you're restricted to Amazon purchases. It's better to use a card that gives you a reward everywhere you shop. The Citibank Dividend card gives you 2% back on gas stations, pharmacies, grocery stores, and utility bills (excluding telephone but including cable). And 1% back everywhere else. I have both cards, guess which one I actually use? Hint: I only got the Amazon Visa for the one-time $30 off coupon.

Posted by: Ken L | August 31, 2006 12:28 PM

I have a Discover Card and when I chose to cash in my dollars/points, I get my gift card in less then a week.

Posted by: Discover | August 31, 2006 1:30 PM

Actually, to Ken L's point, the Amazon card gives you a "pretty standard" 1% back on purchases from anywhere, it gives you a much heftier 3% back on purchases from Amazon. Therein lies the attraction. Not that the $30 off your purchase when you sign up isn't also nifty...

Posted by: Bob L. | August 31, 2006 2:13 PM

I also have a Discover credit card, and have never had a problem getting the rewards.

Posted by: Mike T. | August 31, 2006 2:22 PM

I've had a Discover Card for 10 years. I've got my cashback reward for the last 10 years with no problems, either requesting it online or via phone. You can determine if you want cash, credit to your account, or double your value if used at selected vendors. I love it.

Posted by: Not a problem | August 31, 2006 2:30 PM

I have a Chase Freedom card, and my rebate is posted automatically to my account every month, so I don't have to do anything. Not as exciting as receiving a gift card in the mail, but no chance of losing said card either. They don't offer that card anymore, but the Chase PerfectCard looks like it may be the successor to the Freedom card.

Posted by: Andy M. | August 31, 2006 2:38 PM

I have a Citibank rewards card. They used to just credit your account every month with the reward that you earned. Now you have to request a check after you accumulate $50 or more. Used to be automatic and easy, now it's a hassle. We all need to complain about these things more or else they will continue to make these less and less rewarding.

Posted by: Grant | August 31, 2006 3:35 PM

I cancelled my Amazon.com credit card because the hassle of getting rewards outweighed the rewards themselves. So I shopped around. Now I'm fond of the National City Gas Rewards Plus card -- 4% from all gas station purchases, and 1% from all other. The reward is credited (in $5 increments) on each statement. No muss, no fuss, and no annual fee.

Posted by: St. Paul | August 31, 2006 4:41 PM

Interesting topic. This is the reason that I'm a fan of cash back credit cards that simply automatically credit your account every year for the total amount of your rebate for the year.

On a related note, our website recently conducted an online survey regarding consumer attitude toward gas rebate credit cards. Some interesting results here:

http://www.cardratings.com/origresearch.html

Best Regards,
Curtis Arnold
Founder
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
Phone: (501) 663-0314 x3

Posted by: Curtis Arnold | August 31, 2006 6:09 PM

To piggyback on the post about Citibank, they just give you your reward every month on your statement. I have the ExxonMobil Mastercard--no fee--and they give me a monthly cash rebate on all my purchases. If you have a car and want to stick it a little to the oil companies, a gas card is the way to go.

Posted by: CPS | September 5, 2006 11:23 AM

I had to weigh in when I saw the mention of "restrictions" on the Disney Visa card. I have to admit I bought this one hook, line and sinker when my first child was about 3 because there was no annual fee and I KNEW we'd be going sooner or later. Well, we saved points for about a year and a half and then stayed 5 nights at a mid-range Disney hotel for free and paid for numerous meals with our "Disney Reward Dollars." Restrictions? The only restriction I found was that you couldn't use the Reward card (which is like a credit card) at the side walk ice cream vendors! Otherwise the dollars were good for hotel, park tickets, meals and store purchases. Until my kids are older, this is the only card we will use. Incidentally, my husband and I both have LL Bean Visas and have had no problem at all getting and using the reward vouchers (but there are just so many fleeces one needs!). The other GREAT feature of the Disney card is points can be accumulated up to 5 years whereas the LL Bean coupons have a 12 month expiration so it is harder to save up for a larger purchase.

I have recommended the Disney card all over the place!

Posted by: stonebury | September 5, 2006 11:58 AM

Can't beat the Citi Dividend card for rewards. (It was formerly AT&T Universal.) We get 5% for purchases at gas stations, grocery stores, and drugstores, 1% everywhere else. You have to request the award check, but I have had no problems with that. You can get a maximum of $300 back in a year--which I have done by around November the past two years.
I also have an LLBean card (free shipping), and Amazon card (3% on their purchases, as mentioned). All of them have worked fine. I gave up on Discover because it took too long to accumulate points.

Posted by: Diane | September 5, 2006 12:10 PM

I have a Capital One business Visa. I get 1% back on everything except cash advances and check purchases. The program works extremely well, although you have to spend $20k to earn enough 'miles' to see anything back. I go for the cash rather than the overpriced + outdated merchandise or flights (although the flight program is excellent - no restrictions on airlines, schedules, etc). I've never had 'miles' expire. When you reach a cash-back reward level and claim it, you see a check in 3 or 4 days. Thumbs UP.

Posted by: MicroBiz | September 5, 2006 12:49 PM

I've had an Amazon Rewards card for years and never had a problem with the gift certificates in the mail. I agree that it would be more convenient to receive the gift certificate code by email, but so far I've never had a problem and remain a big fan of my Amazon card as the gift money can be used for just about anything and really feels like a reward (unlike plain cash, which I understand is more useful).

Posted by: AmazonFan | September 5, 2006 1:32 PM

Myself, I was in the same frustrating situation as many of these commenters: I was surprised with silly, limiting terms on a rebate card. I wanted to find the best rebate or reward or cash back credit card. But after beginning to study the terms on a few cards, WHOA, it's overwhelming. But, I knew that like many of these shopping situations, the more you research, the better deal you'll get.

Fortunately I found a site that did the work for me at http://www.LendersRated.com/creditcards.htm

I think it's exactly solves many reward card seekers problem. Hope this helps...
Leafgreen

Posted by: Leafgreen | September 5, 2006 3:28 PM

The unmarked envelope is very similar to a tactic used by electronic manufacturers with rebate checks. The "checks" are printed on a postcard that looks very much like a piece of promotional junk mail. They are very easily overlooked, "this couldn't possibly be my $50 check."

So they(the manufacturer) offer rebates instead of discounts because x% won't file. Then we make the process multi-step and complex (an original of this document, a copy of that document) so we turn down x% for filing incorrectly. Then we make the check look like a junkmail postcard so it gets thrown away.

If that doesn't stop them the check we took ten weeks to send expires in 45 days. Pretty soon this rebate offer doesn't cost the manufacturer much at all!

Posted by: CW | September 5, 2006 4:05 PM

I cancelled my Amazon card because of a similar bait & switch tactic - they sky-rocketed my interest rate, with no warning and for no reason. When I called to complain the rep basically told me to deal w/it. So I cancelled the card.

Posted by: Edith | September 5, 2006 4:23 PM

I have 3 cash back credit cards -- chosen so as to maximize the cash back rewards I get for my spending profile (the categories in which I spend the most money).

I've used cash back cards for years and have never had a problem -- other than the fact that the credit card companies can change the reward structures at will, just like Citi recently did with the Dividend Select card.

But when the reward structures change, I've always just done a reanalysis of what the best mix of cards is for me. After having done this again back in August (due Citi changing the Dividend Select), I was inspired to build a tool that would make it easy for anyone to do the same analysis I'd done.

I've made that tool available for free at http://www.CreditCardTuneUp.com/ -
"Credit Card Tune-Up: Maximize Your Cash Back Rewards".

The way it works is you just plug in your monthly spending profile by category (gas, restaurants, utilities, groceries, etc.) and it returns a list of the leading cash back cards sorted from best to worst by your expected annual reward. The tool also calculates the optimal mix of 2, 3, 4, etc. cards for your situation. It has business and student cards too. You can try it out at http://www.CreditCardTuneUp.com/ .

Posted by: Joel | September 30, 2006 3:01 AM

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