Visa and AmEx are making minor changes to the way you redeem rewards and your points will lose value

Americans have accumulated millions of credit card points that they can use for airline tickets or hotels or convert into cash.

But the value of credit card points has fallen in recent years due to inflation.

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According to the card issuers, a credit card point collected via online banking was previously worth around one cent.

However, according to the Bureau of Labor Statistics, a penny has lost about 20% of its purchasing power since 2018.

According to a Wall Street Journal report, the points have lost about the same value.

For example, if a person earned 50,000 Capital One points in 2020 and still hasn't spent them, they are now worth about 41,300 points in the bank's system.

According to annual reports from credit card companies like American Express, Capital One and JPMorgan Chase, credit card holders accumulated more than $34 billion worth of points in 2023.

Biting inflation

Inflation hits consumers the worst when users redeem points directly through the bank's portal. However, the conversion rates for points change when transferring them to a frequent flyer or other loyalty program.

While airlines and hotels have their own systems for scoring points, the amount required to redeem flights or rooms reflects cash prices, which have risen with inflation.

A recent report from IdeaWorks found that the average price of an economy flight purchased with points has increased by about 19% since 2019.

Michael Faulkner, an insurance expert, told the Wall Street Journal that transferred points don't go as far as they once did.

He said the same flight home from his home in Chicago to France has increased from 60,000 United Airlines points last year to 80,000 to 90,000 this year.

“I try not to sit on points,” Faulkner told the outlet.

“But it’s reassuring to have a balance because I’ve been traveling this way for 10 years.”

Faulkner has earned more than 4.5 million points since the pandemic began and estimates he earns about 1.5 million points each year through spending.

Shop around

Tiffany Funk, president and co-founder of Point.Me, told the outlet that many companies are now offering points more generously rather than increasing the value of rewards to keep up with inflation.

Funk, who runs a company that tracks the value of credit card rewards, said many companies are now awarding points for more purchases and increasing welcome bonuses.

According to the US Credit Card Guide, consumers can earn about twice as many points by opening an Amex Platinum or Gold card as they did in 2017.

Other popular cards like Capital One Venture and Chase Sapphire Preferred increased sign-up bonuses by about 50% during this period.

Experts say consumers should shop around for the best deals and choose cards with easily transferable points.

Funk also said people can create accounts with several different companies to get the best deal.

An analyst at The Points Guy also said that spending points quickly after they hit your account could be a good way to avoid “points inflation.”