The question of whether to save or to spend miles takes on new urgency this year as lawmakers consider the Credit Card Competition Act. The legislation targets transaction fees — usually 2 to 3 percent of a sale — that retailers pay to credit card companies such as Visa and Mastercard. The fees are partially used by the companies to run loyalty programs that award points to cardholders that can be redeemed for things like flights and hotels.
The act proposes allowing retailers to choose a cheaper system that would reduce the fees. Critics, including banks and airlines, which make billions selling co-branded credit cards, maintain that a cheaper system, backed by retail giants like Walmart and Target, would upend rewards programs.
Whether the legislation will succeed is unknown.
“This has been one of the biggest lobbying battles of all time, pitting two huge industries, retail versus banking,” said Brian Kelly, the founder of the Points Guy, a travel site that helps users maximize reward points and opposes the act.
Does the legislation threaten your points? Not immediately, said Leigh Rowan of Savanti Travel, a personal travel management service. “Assuming it passes, we still have a long runway ahead between then and when the bill will be enacted,” he said. “There’s not a rush to do anything in 2024.”
Still, experts perennially advise spending over saving points.
“Never hoard,” said Mr. Kelly, explaining that airlines and hotels have the leeway to change their redemption values overnight, and to keep up with the growth of points, they tend to increase the total needed to get a flight or hotel room. “Over time, the points you have today generally lose value.”
Mr. Rowan suggests diversifying your credit cards by switching from one airline card, for example, where you can only redeem points with that airline, to a more robust card like the Chase Sapphire Preferred card that has redemption partnerships with multiple airlines, hotels and rental car companies.
“Diversification will help regardless, but especially if this act goes through,” Mr. Rowan said.