The New York State legislature have passed the New York Credit Card Rewards Consumer Protection Act, which restricts the size of any rewards used to promote a credit card for low interest rates. It would seem that the legislation is intended to protect consumers from inflated credit card fees and fees that can frequently be found on the back of a credit card statement.

New York State lawmakers approved a bill that requires credit card companies to disclose their rewards programs to customers. In an effort to reignite the public’s appetite for travel, credit card companies have lately been using promotions that offer added rewards but have hidden terms that make you spend a lot more money than you think.

Several weeks ago, New York State Governor Andrew Cuomo signed into law the most comprehensive consumer protection legislation in the nation. The bill, which took effect immediately, caps interest rates at 30% on purchases with credit cards from all issuers.. Read more about when did credit cards come out and let us know what you think.

New York Legislature Has Passed Credit Card Rewards Consumer Protection

The New York legislature passed the Consumer Protection Act for credit cards with rewards

Gary Leff 25. June 2024

In early 2024, a New York State senator introduced a consumer protection bill to protect bank points. It prohibits the expiration of bank points and requires banks to give consumers 90 days to use their points for rewards on credit cards if their account is cancelled by the consumer or the bank.

I noted last summer that the legislation had passed the Senate. The bill has now passed the Senate and State Assembly and is awaiting the Governor’s signature. There seems to be no reason why it shouldn’t be signed.

Problem: If your bank card is cancelled, your points have nowhere to go

If you have an American AAdvantage or United MileagePlus account and cancel your co-branded credit card, you will have miles remaining in your American or United account. However, giving up your bank reward card is equivalent to cancelling the account where the points are stored. You’ll lose your points.

If you have multiple cards from the same bank, you can usually combine all your points into one account (American Express does this automatically). So losing points is only a problem if your last bank account is cancelled.

Depending on the issuer, you may have a grace period to use your points. At Citibank, for example, you have 60 days.

But if the bank closes your account, you may not be able to do anything with your points at first. In most cases, unless there are allegations of fraud, you can either access the short-term account to pay it off or receive a refund for the accumulated balance. In this case, however, the bank has the steering wheel in its hands. And you have to follow everything you get.

What this bill does

This law prohibits the expiration of bank credit card points (most bank points do not expire these days) and requires banks to give consumers 90 days to use their credit card points if the account is closed by the consumer or the bank.

For some banks, this is not a problem at all. For example, if your American Express Membership Rewards card is closed and you have another Membership Rewards card, all your points will stay with you. But if not, this bill would help.

Currently, the issuer gives you 30 days to use your unused points unless you are a member of an Amex rewards program, and otherwise gives you no grace period to use them. Similarly, the grace period at Citibank is currently only 60 days. In both cases, this law requires the bank to give its customers 90 days.

However, this only applies to consumers in New York. And that’s not the case if the issuer seizes the points and claims they are victims of fraud or other program rule violations. In this case, the bank can still deduct points without the consumer being able to spend them.

This is particularly useful for consumers who want to cancel a credit card or for whom a card has been blocked for non-use.

If Lucky from One Mile at a Time was a New Yorker and his Citibank points were taken away because his card was closed after the law took effect, that would help. But he’s not a New Yorker, and the law isn’t in effect yet, so he’s still in trouble.

Here is the relevant wording,

Require that credit cardholders be notified within 15 days of the cancellation, closure, termination or modification of a credit card account and establish a 90-day grace period (from the date of mailing of such notice) for the use of accrued credit card points, except in the case of fraud or misuse of a credit card or related bonus program by the credit cardholder ;

(3) prohibit agreements that provide for the loss of credit card points;

It would be nice if banks did this for everyone

If you are not a New Yorker, you will not be able to benefit from the provisions of this bill (if Governor Cuomo signs it). But it would be nice if the banks respected that for everyone.

This doesn’t accuse anyone of abusing the program, it just creates a bigger window for people to use their accrued points when they stop using the card (their choice or the bank’s).

Nonetheless, it appears to be a fairly low priority law that protects fairly wealthy participants in credit card incentive programs from known risks (for those who have done their homework).

Lake View from the Wing

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