We may love our rewards credit cards but that doesn't mean we are actually redeeming our rewards points. Some studies have found U.S. consumers are stockpiling rewards rather than jumping through the hoops needed to redeem them.
However, some credit cards companies have been working in recent years to find new, easier ways for their cardholders to redeem points. For example, Discover lets members with eligible cards use their points to make purchases at some online retailers.
American Express is now taking the idea of easy redemption one step further by allowing cardholders to use their rewards points to pay for offline purchases as well.
American Express touts Use Points for Charges program
Unveiled in November, the ability to redeem points for any purchase has been dubbed by AmEx as "Use Points for Charges." The program is available to basic consumer and OPEN card members who have accounts in good standing and rewards balances of at least 1,000 points.
To redeem their points for retail purchases, cardholders open their account on the American Express mobile app and select the charges they would like to convert to points. The statement will reflect the appropriate credit within 48 hours.
"While many of our card members enjoy using points for big rewards like travel, Use Points for Charges now makes rewards more accessible for those who want to use Membership Rewards points for their everyday purchases," David Yoo, part of American Express's SVP Mobile Products and Services, said in a written statement announcing the program.
Citi's failed attempt at easy rewards redemption
While American Express may be getting some buzz for the program, they aren't the first company to try to give their customers the ability to redeem points for any purchase. Citi tried a similar program three years ago with its Preferred 2G Card with Request Rewards.
Rather than connect their program to a mobile app, Citi sent customers a snazzy new credit card that included a blinking light and a "Request Rewards" button. Press the button and you would automatically receive a statement credit although that credit would be for, say, a flat $10 instead of the exact amount of your purchase.
While an interesting concept, Citi shuttered the card after a two-year pilot program apparently failed to gain any traction among consumers.
Will more credit card companies follow suit?
For credit card watchers, the real question is whether the American Express program signals a shift in how companies allow rewards redemption or if it will be a flash in the pan like the Citi Preferred 2G Card.
Citi may have run into trouble since it provided a physical card that included a battery, most definitely an added expense for the company. However, by using standard cards and a mobile app, American Express may have hit on a winning combination.
Still, the question remains if consumers will be sold on the novelty of redeeming points for specific purchases when it may be just as easy to go online and redeem points for a single, larger statement credit.