New law gives grace period to use rewards points if your card gets canceled

If you're a resident of New York State, Governor Kathy Hochul has given you an early Christmas present. Actually, it is more like a present for Christmas 2023, since the law doesn't take effect for one year. But, it is definitely one that will help some consumers.

The new law, Senate Bill S133B, will provide consumers a 90-day grace period to use their credit card reward points if their credit card is closed or canceled.

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Specifically, the law requires that "notice be provided to credit card holders within forty-five days of the cancellation, closure, termination or modification of a credit card account and establish a 90-day grace period (beginning on the day such notice is sent) for the use of accumulated credit card points."

Moreover, the law forbids credit card agreements that provide for "expiration, forfeiture or cancellation of those points."

Related: What you need to know about credit card debt — and how to get out of it

Considering that most credit card agreements specify that cardholders have no ownership rights at all in those hard-earned points, this is a pretty big win.

New York State Senator Shelley B. Mayer, who sponsored the bill, noted, "The sudden and unexpected cancellation of credit card rewards points is devastating, especially for those who save them over long periods of time."

There is an exemption for cases of fraud or misuse by the cardholder. Some sites have pointed out that since there is no clarity as to what the card company must do to prove fraud, this legislation may amount to a lump of coal in the stocking.

Related: What is the Fair Credit Billing Act and how does it affect consumers?

We see it differently.

For one thing, it's impressive that the legislators cited data from the Consumer Financial Protection Bureau to the effect that points, loyalty programs, and other rewards are some of the key factors consumers look for in choosing a credit card.

That is hardly news to TPG readers. But, it's nice to know that our collective consumer muscles are being flexed. This time next year, New York residents at least can all rest easier about keeping those hard-earned points.

As Hochul said in a Dec. 10 release, "This legislation will guarantee a season of good cheer in New York State by making sure that no New Yorker unfairly loses their accumulated credit card rewards."

That's a holiday gift we can all appreciate and hope that other states follow suit.