Why did Keesler Federal Credit Union slash the value of credit card rewards points?

Keesler Federal Credit Union lowered the value of points in their popular credit card rewards system in August, prompting outcry from customers who said they lost hundreds of dollars in perks.

Keesler Federal said the decrease restores the rewards program to its normal rate of cash-back on purchases. The higher rate, the credit union said in a statement, was a limited-time offer.

The change affects anyone who uses a Keesler Federal Visa Signature credit card. People who use that card earn points on purchases and can use them to pay for account deposits, statement credits, merchandise and more.

Under the current rate, members earn $50 for every 7,500 points.

Customers said online that they earned $50 for every 2,500 points under the former rate.

In a statement, Keesler Federal said the rewards program “offered a higher cash-back redemption rate beyond our disclosed rate of two percent for a limited time.”

“We understand that some members may be disappointed that the higher point redemption rate changed,” the statement said, but the change “restored the program to the disclosed rate.”

Keesler Federal has been known for its generous perks for years.

The credit union did not respond to questions about whether it warned customers of the change or why it changed the rates as of Wednesday morning.

Eric Bank, who writes for the credit card guide website Cardrates.com, said credit card issuers can change their rewards programs at will without warning customers. He also said those changes are common across the country.

“They can make points more valuable or less valuable anytime they want,” he said.

Why is the rewards rate changing?

The Keesler Federal statement did not say why the credit union made points less valuable this summer, other than to specify that the higher rates were part of a limited time program.

Bank said one reason other credit unions nationwide have lowered the value of their rewards points is simple: money. If a credit union “is not doing as well as it used to,” he said, sometimes its rewards points can become less generous.

In Washington, a bill called the Credit Card Competition Act has not been passed but aims to lower the small fees — often called “swipe fees” — that credit card companies charge on each purchase. Many banks fund credit card rewards programs, in part, through those fees.

So far, disagreement exists over how much the bill would impact rewards programs if it is passed later this year. The American Bankers Association opposes the bill.

If passed, the bill would only impact U.S. credit card issuers who have assets higher than $100 billion, Callum Godwin, chief economist at the consultant firm CMSPI, told The Hill.

Keesler Federal had $4.3 billion in assets as of 2022, according to their website.

This story was originally published August 16, 2023 at 9:14 AM.