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Credit Card Rewards May Lose Sparkle, But Not Value

Credit cards may lose some of their benefits, but in general, rewards will become more personalized and remain just as valuable.


We’ve seen plenty of glitz and glamour from credit card rewards in the last few years: massive sign-up bonuses worth thousands of dollars, access to a growing list of exclusive airport lounges around the world, and even “Hamilton” tickets. But are we nearing the end of this golden era?

Signs of cooling rewards offerings have started popping up: Discover recently eliminated a handful of card benefits, including extended product warranty, purchase protection and auto rental coverage. One of the biggest sign-up bonuses ever, offered by Chase Sapphire Reserve, was slashed in half in early 2017.

Still, credit card experts say that although some of the details of the sign-up bonuses and ancillary benefits may change in the future, people's favorite rewards — the cash back and points that cardholders tend to value highly — aren’t going anywhere. In fact, they might become more valuable because they’ll be more personal.

Card issuers rely on rewards heavily to entice new customers. In fact, in some cases they might even be willing to lose money with generous reward offers just to increase their customer base.

Here’s what you need to know about the future of credit card rewards:

All credit card benefits aren’t valued equally

“People just don’t care about certain rewards,” says Mike Berinato, vice president of research and consulting for Market Strategies International, a financial services research and consulting company. Berinato dubs the addition of less-valued benefits, including access to events and concierge support, as “feature creep” — he says there are so many hidden benefits that people often aren’t even aware of them and therefore don’t value or use them. Indeed, that’s why Discover said it dropped some of its card benefits.

Market Strategies recently published a report showing that 80% of card users are “unclear” about the benefits on their primary credit card. “You don’t need 14 benefits; you need the right two or three,” Berinato adds.