From time to time, credit card issuers can take away benefits promised at the time of your application, or change the terms of credit card, often in a discreet manner. If you receive some notices from your bank, don't throw it away. It is often interesting to read how credit card issuers can tweak things to their favor.
For example, join me in a journey to make sense of the one-page notice I just received from MBNA on a number of program changes:
Payment Due Date: MBNA is saying the Payment Due Date now can be as least 20 days and as many as 32 days after statement Closing Date, and Due Date can change from time to time "based on such factors as your payment history."
Analysis: How does it benefit MBNA? If you are using a bill payment service, you might set a fixed date every month to send money to MBNA. Now think twice before you continue your practice -- as your Due Date can change over time, if you rely on a fixed schedule, you might well fall behind on payment at one point of time.
Common Carrier Travel Accident Insurance: Effective February 1, 2005, the Common Carrier Travel Accident Insurance coverage is reduced to $100,000 from the original coverage of $500,000 or $1,000,000.
Analysis: It is actually a nominal cut. What's the chance you are involved in an airplane disaster? It is much more probable you get a car accident in your life than an air crash. Nevertheless, this reduction improves MBNA's bottomline.
WorldPoints Rewards Program Change: Effective December 31, 2004, the cash redemption schedule is changed to: $12.50/2,500 points, $25/5,000 points, $37.50/7,500 points, $80/10,000 points, $120/15,000 points, $160/20,000 points, $250/25,000 points, $350/35,000 points, $500/50,000 points. Originally, points can be redeemed for cash starting at $40/5,000 points.
Analysis: MBNA is lowering the cash value of points at the low end and customers will not benefit. One can either accumulate more points before redemption, or redeem points for non-cash merchandise (with fancy but unrealistic reference price). Either way, MBNA wins.