The New York Senate recently passed a bill that is expected to give New York residents a 90-day grace period to redeem credit card rewards after their account is changed, canceled, closed, or terminated. The bill will address issues where a cardholder’s account is closed without notice for inactivity, default, or delinquency – in such case, the cardholder may not have the opportunity to redeem his or her credit card rewards. While the bill has passed through the Senate, it is currently awaiting approval from the State’s Assembly.
Most credit card issuers that offer reward programs include terms and conditions regarding point/reward redemption when an account is closed or no longer active. For example, one bank states that points will not expire “as long as your account is open,” but the cardholder will lose all of his or her points if the account status changes or the account is closed for reasons that include delinquency. Under the bill, a notice must be sent to the cardholder within 15 days of the cancellation, closure, termination, or modification of the credit card account. The cardholder will have 90 days to redeem, exchange, or use the rewards.
Takeaway: This bill protects New York State residents from losing the rewards they earned through credit card purchases. Card issuers may be wise to start considering updates to its terms and conditions that give cardholders a grace period to redeem their rewards, otherwise more states may follow New York’s lead. For now, however, cardholders should redeem or transfer their rewards before cancelling or changing their credit card account.