Your credit card rewards points are safer under new New York State law

A new state law protects New Yorkers from losing rewards points if their credit card account is closed or canceled.

The law, which took effect Sunday, requires credit card issuers to provide notice to New York customers within 45 days when a credit card account or rewards program is canceled, closed or modified. Beginning with the date the notice is sent, cardholders have 90 days to use or exchange their accrued points, miles or other forms of value.

State Sen. Shelley Mayer (D-Yonkers), who sponsored the Senate bill that became law, said the impetus was a complaint she received from a constituent whose card was canceled after he had just accrued one million points that were worth about $50,000.

“He lost all the points sort of abruptly like that,” the senator said. “He had basically $50,000 worth of things he could have used the card for because he really bought everything using that card.”

Mayer said she didn’t believe the constituent was at fault for the cancellation. In any case, she said, cardholders shouldn’t have to forfeit their points regardless of the reasons for the account’s closure.

“Even if there's some fault of the cardholder, to me, you still participated and you spent your money using that card intentionally,” she said. “[Card issuers] can't just take it away.”

New York state is among the first states to enact such protections, according to the senator’s office.

Previously, depending on the type of credit cards people have, consumers could lose unused points if their accounts closed. Card issuers could cancel accounts due to late or missed payments, inactivity and other reasons.

“Whatever the reason for the cancellation, the person should have the opportunity to take advantage of the points that they've earned,” said Chuck Bell, a financial policy advocate at Consumer Reports.

“That's just a basic fairness idea,” he said. “We're glad that it's been upheld and honored by this law.”

Many consumers strategically accumulate points, miles or cash-back rewards to help pay for large purchases or trips, Secretary of State Robert J. Rodriguez said. Some save up rewards for their holiday shopping and an unexpected loss of those benefits could cost cardholders the equivalent of hundreds and, in some cases, thousands of dollars in lost value.

“It’s the value you’ve earned frankly through your spending,” Rodriguez said. With the new law, “we now as a consumer [are] given the opportunity … to utilize those points that can't just be arbitrarily removed without notice or without a corresponding recourse.”

The new rules do not apply to consumers in cases of fraud or misuse of the credit card account or any related rewards program.

By Dandan Zou

dandan.zou@newsday.com@DandanZou

Dandan Zou covers education for Newsday. Previously, she worked for a community newspaper in Maryland and a personal finance magazine in Washington, D.C.