Smarting, Credit Card Companies Cut Rewards

That airline ticket won't be so easily obtained in recession
By Harry Kimball,  Newser Staff
Posted Jan 13, 2009 4:00 PM CST
American Express thinks the cuts will save it a bundle.   (AP Photo)
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(Newser) – Smarting from the sour economy, many credit-card companies are cutting back on rewards programs born out of 1980s excesses, USA Today reports. The cutbacks are akin to moves made by the airline industry last year as fuel prices skyrocketed. “You’re going to see more and more of the trimming down of the benefits that aren’t so popular,” one watcher said.

The cutbacks appear to be industry-wide, from American Express—canning an airline promotion—to Discover, where there is now a time limit on redeeming cash rewards. But some watchers think the thrift could backfire. “You’re basically kicking customers to the front porch of competitors,” one analyst said. That may be so, but AmEx expects to save $1 billion this year with streamlined programs.