New York Legislature Has Passed Credit Card Rewards Consumer Protection

At the start of 2020 a New York state Senator introduced a consumer protection bill to protect bank points. It prohibits bank points expiration and requires banks to give consumers 90 days to use their credit card rewards points if their account is closed either by the consumer or the bank.

I noted last summer that the legislation had passed the state’s Senate. Now the bill has passed both the Senate and state Assembly, and awaits the Governor’s signature. There doesn’t appear to be a reason why it won’t be signed.

The Problem: When A Bank Card Is Cancelled, There’s Nowhere For Your Points To Go

If you have an American AAdvantage account or a United MileagePlus account and cancel your co-brand credit card, you still miles in your American or United account. However if you cancel a bank rewards card, that’s akin to cancelling the account that holds the points. You’re going to lose your points.

Generally if you have more than one card with a bank, you can pool all of your points into a single account (American Express does this automatically). So losing your points is only an issue when your last account with the bank is closed.

Depending on the issuer you may be given a grace period in which to use your points. Citibank, for instance, gives you 60 days.

However if the bank closes your account you may initially not be able to do anything with your points. In most cases, as long as there’s no allegation of fraud, you’ll be able to either access the account briefly for redemption or receive some compensation for your accumulated balance. The bank is in the drivers seat here, though. And you have to push for anything you get.

What This Bill Does

This legislation would prohibit bank credit card points from expiring (most bank points do not expire now) and require banks to give consumers 90 days to use their credit card rewards points if their account is closed either by the consumer or the bank.

For some banks that’s not an issue at all. For instance if an American Express Membership Rewards card gets closed, and you still have another Membership Rewards card, you still have all of your points. But if you don’t, this bill would be helpful.

Currently if you have a non-Membership Rewards Amex, the issuer will give you 30 days to use unspent points, and won’t let you have a grace period to use them at all if you don’t. Similarly, Citibank’s grace period is currently just 60 days. In both instances, this law would require the bank to give customers 90 days.

However this only applies to consumers in New York. And it doesn’t apply to instances where an issuer confiscates points arguing that they’re the victim of fraud, or other violations of program rules. A bank could still take away points in this case without giving consumers a chance to spend those points.

This is most useful, then, for consumers who want to cancel a credit card, or who have a card closed on them for lack of use.

If Lucky from One Mile at a Time were a New York resident, and he’d had his Citibank points taken away due to a card’s closure after the bill’s effective date, it would have helped him. But he’s not a New Yorker, and the bill isn’t law yet, so he’s still stuck.

Here’s the relevant language,

(2) require that notice be given to credit card holders within fifteen days of the cancellation, closure, termination or modification of a credit card account and establish a 90-day grace period (beginning on the day such notice is sent) for the use of accumulated credit card points, except in the case of fraud or misuse of the credit card or related awards program by the credit card holder;

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

It Would Be Nice If Banks Did This For Everyone

If you aren’t a New York resident, you won’t be able to avail yourself of the provisions of this legislation (assuming Governor Cuomo signs it into law). But it would be nice if banks honored this for everyone.

It doesn’t give anyone a leg to stand on that’s accused of abusing the program, it just creates a broader window for people to use their accumulated points if they no longer maintain the card (whether by their choice or the bank’s choice).

However it does seem like a pretty low priority piece of legislation, protecting the pretty well off credit card rewards members against a known risk (for those who’ve done their homework).

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. New York state should force the credit card companies to pay for the rewards, not the small merchant.

  2. It would have given Lucky more time but it would not have helped him. He didn’t realize he had a problem until he saw the 0 account balance. He just would have seen that 30 days later. That is when most of us realize that we have a problem.

    That said, the extra 30 days can only help.

  3. For once we have a fair policy out of New York. It is not a policy that restricts freedom. It gives consumers more freedom. If people spent money with a credit card under the promise of rewards points, they should earn those points. It’s a financial transaction. Consumers should get what they are promised. Since banks can shut down accounts unilaterally for any reason (risk of doing business with a consumer/business), this protection is fair.

    It’s a good thing this applies only to New York. It would be a nice policy nationwide, however, the more federal regulation on credit cards and rewards, the more we have the risk of rewards being taxed and fees capped that would eliminate rewards like what happened with debit cards over 10 years ago. Banks may take this New York regulation as a cue to apply this nationwide. It’s better for the brand if there is a consistent policy. Many already allow points to be redeemed after closure. Amex and a few others may be prompted to do the same nationwide.


    That would be the end of credit card rewards. Merchants should pay for using the credit card network. It’s a cost of doing business that allows them much more sales as people spend more with credit cards than if they used cash (many don’t carry cash). Offering merchants the opportunity to accept payments is not free. Banks have to staff, capitalize (money has to come from somewhere before consumers pay off their credit card bills), insure, and account for their credit card divisions. Merchants should pay their part. Many consumers don’t pay any interest to banks. All 2% rewards are unprofitable for banks. Those that are 1% at least allow the bank to cover their costs with the 1.4-1.7% they get from interchange fees.

  4. @Jackson Waterson
    Merchants are paying more than their part. The entire rewards are paid for by the merchant by the merchant having to pay more to the credit card processors than when a consumer uses a card that doesn’t have a reward. Credit card companies force small merchants to accept all reward cards as a condition of accepting MasterCard or Visa or American Express. The small merchants are glad that at least there are no 15% cash back because then their fees would go up an additional 15% of the sales price, which might be a 4-5X increase in fees. The credit card companies probably will never have 50% cash back because then the small merchants will drop credit cards.

    Why are consumers so greedy? We know the banks and credit card companies are greedy.

  5. Smaller banks can choose not to issue credit cards to NY residents.
    Big banks can limit other benefits applying to NY residents which had already happened. There is no free lunch.

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