What to do if your card's loyalty program changes

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Canadians are fiercely invested in racking up credit card rewards, but what happens when your favourite loyalty program changes?

"People capitalize on their points," says Rubina Ahmed-Haq, a Toronto-based personal finance expert. For those who understand how the rewards system works and use it to their advantage, it can be a lifestyle change, he says. "When you change this on them, it's a major loss."

It's happened a handful of times already: RBC and Shoppers Drug Mart severed ties, BMO and grocery store giant Sobeys stopped their partnership, and Aeroplan and Air Canada "broke up" earlier in 2017.

Here's why partnerships change and end - and what your options are if it happens to you.

Companies strive to keep customers happy
"Credit card companies are always looking for some kind of feature or capability that will help distinguish their card from other credit cards," says Ken Wong, a Queen's University professor specializing in consumer affairs and marketing. "The ability to offer consumers a double dip by getting points at a specific store is a big sell."

For a lot of companies, the cost of setting up and running their own loyalty program is pricey, too. If a credit card company offers to cover some of the cost of processing in exchange for exclusive access to its customers, it "boils down to a business case."

This is why "renegotiations" often happen, Wong says. But sometimes, they end in going separate ways, and consumers are left on the hook to grapple with the changes.

Businesses are cognizant of that and are trying to do their best to appease their clients, Wong says.

"You will never be on the short end of the stick," Wong says. "As businesses are discovering, consumers are very religious in the defence of their points. There have been times where they tried to push for change or set deadlines but they'd back down because of backlash.

"When you tamper with people's points you tamper with their loyalty," he says.

So what are your options when your favourite credit card stops its partnership with a loyalty program? Here's what the experts suggest.

1. Go with the migration.
If you're a responsible cardholder, it's very likely your card will be migrated to a new credit vehicle, Wong says.

The partnership may not be there anymore, but another card may be pre-approved for you.

Case-in-point: RBC and BMO ended up moving hundreds of thousands of existing customers to other banking products within their institutions when their partnerships ended.

It's unclear what will happen to Aeroplan cardholders, but for now, banks are telling consumers that everything is staying status quo until further notice.

Go over your options for a replacement to see if there's a better fit within the same institution. Try to broker a deal so you keep the same annual fees, interest rates and due dates so the change is a bit more seamless.

Familiarize yourself with your new card too, Ahmed-Haq says.

"Ask if the terms changed, what's in your new agreement, what to be aware of, and how new points are earned and redeemed," she says.

2. Figure out what will happen to your points.
When will the partnership end and what will happen to your points?

Typically, both sides of the partnership will provide time for you, the consumer, to figure out your next steps.

"There's always going to be some provision that leaves the consumer, as much as possible, unaffected," Wong says. "That's just good business thinking."

"There will be some mechanisms for the customer to take accumulated points and apply them to a new program," Wong says.

This could be through a transfer or a conversion of some sort. Keep your eye on your mail or email for correspondence from your issuer.

3. Use your points.
If a deadline is looming, decide how you want to use up your points, and do it while the partnership is still intact. At this point, it's better to stop hoarding them, the experts say.

Rewards could be devalued at any time, especially when a partnership comes to a complete stop and the guidelines are rewritten.

"If you have a lot of loyalty points with the company that says there's a time limit, use them as quickly as you can," Ahmed-Haq says. "They could be in the process of getting rid of loyalty cards and one day may not honor them."

"Do all this leg work before you find out they're only worth one-fourth of what they were worth before," she says.

Pay close attention to your card's annual fee deadlines, too. Once your year wraps up, if you decide you don't need the card, close the account before another year of fees is tacked on.

4. Find a replacement.
A broken partnership forces consumers to make a decision, the experts say. Do you stick to the institution and find another card within the fold, or do you look to fill your services elsewhere?

Say you were using your card to get free groceries. Now that you can't, do you want to find another card with the same rewards, or move your efforts toward collecting cash back or travel points?

"Each individual has to look at their personal arrangements and decide if it's worth the hassle or not," Wong says. "You have to decide what your priorities are and what you're using your card for."

See related: Points redemption 101, How to become a points chaser
Published August 29, 2017

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