NY Law Requires 90 Days Grace Period to Use Points After Credit Card is Closed
The New York State Senate has passed a new bill that requires credit card issuers to give customers a grace period to use their credit card even after a card is closed.
Senate Bill S7104A relates to “establishing a set grace period for the use of credit card reward points when an account is modified, cancelled, closed or terminated; ninety days shall be provided for the use of such points from the date notice of modification, cancellation, or termination of the card is provided.”
The purpose of this legislation is to protect credit card holders from the unmerited cancellation of their reward points by creating a grace period for the use of reward points after the closing of a credit card account. According to the Consumer Financial Protection Bureau, points, loyalty programs, and other rewards are among the most important factors for consumers when selecting a credit card, and more than 60% of all new credit card accounts were for rewards cards.
“Credit card rewards programs are often governed by agreements that are not transparent to consumers”, the bill reads. “One particular provision in many credit card agreements allows the credit card issuer to cancel all accumulated rewards points or other rewards benefits upon the closure of the credit card account, without affording the credit card holder any opportunity to use accumulated points.”
“Although issuers provide for a grace period in some situations, consumers should always have the ability to use their accumulated points after the closure of their account so long as they have not engaged in fraudulent or other improper activities relating to that card or the related rewards program” the bill says.
So if you need to close a credit card for example because you do not want to pay the annual fee for another year, thanks to this bill you don’t have to rush to use your rewards before calling in to cancel your card. You will not lose your points right away. And a three month grace period seems abundant to use your points properly. I doubt we will see credit card issuers extending this willingly to all cardholders though.
You can see the bill here.