A new credit card rewards consumer protection law has been signed by the governor after passage this summer. Starting one year from now it will help customers who cancel a card – or have a card closed on them by the issuer for lack of use – to still use their points.

What This Bill Does

It prohibits bank credit card points from expiring (most bank points do not expire now) 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.

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 still 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 will require the bank to give New York customers 90 days.

This 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.

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;

Why There’s A 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.

This takes effect for all “credit card agreements entered into, renewed, modified or amended after” December 10, 2022.

Huge Victory For One Reader

This bill in New York originated with a quest by reader of this site Wolfgang Armbruster.

This issue was brought to the attention of Senator Mayer by constituents, Gloria and Wolfgang Armbruster of Bedford who lost over $50,000 worth of rewards, which they had been saving when, without notice, their credit card company closed their account.

Wolfgang Armbruster said: “It’s about time consumers were protected against unjustly stolen rebate awards from unscrupulous banks and credit card companies. In our case, my wife and I had accumulated over 1 million Citibank thank you reward points and a lifetime of transacting with Citibank credit cards. Literally in the middle of the night without warning, Citibank confiscated all of our points with explanation citing they had the contractual right to seize points at any time and for no reason at all.”

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. 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).

I’m not sure I would have pushed for the law – 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) – and I am not sure it should be illegal for points to expire. New York wouldn’t be able to write a similar law for airlines, of course, under Supreme Court precedent interpreting the Airline Deregulation Act. But about those hotel programs…