For example, Southwest Airlines recently announced that it would change the flight redemption rate for Rapid Rewards members from 60 points per dollar to 70 points per dollar after March 31, 2014. Yet there were no announced changes to the rate at which consumers earned points with Southwest-branded credit cards – consumers now get 1.4 cents per point, as opposed to the previous 1.67 cents. Effectively, reward flights will cost more, and the rewards-earning potential of Southwest's credit cards will be reduced.
This is one case in which a rewards program has gotten worse, but every credit card rewards program is different. Take these steps below before signing up for a credit card that promises loads of perks.
1. Choose the type of reward. Before applying for any rewards credit card, look into the types of rewards available for redemption.
2. Look at the limits. Reward limits are a factor that differentiates rewards programs. Some cards will cap the amount of rewards that can be earned. For instance, the Citi Dividend Platinum Select card has an annual cash-back cap of $300. Other cards have limits on how much you can earn in a certain category. Usually, it's difficult to reach these reward limits, but it's not impossible for dedicated consumers who make the effort to maximize their rewards.
3. Weigh your options.You should never be in a hurry to sign up for a credit card simply because you saw an advertisement or commercial that boasts the ability to earn large amount of points. Those points might not be worth as much as you thought. Take time consider what rewards you would actually redeem. Then, you can look at that issuer's credit cards to see which one will generate the most rewards you want.
Simon Zhen is a columnist and staff writer for MyBankTracker.com, where he covers banking, financial technology and savings rates.