Amex, Chase and Capital One have quietly made changes to credit cards

Millions of Americans are religious about collecting credit card points to spend on flights and hotel stays - or simply to convert to cash.

But the spending value of credit card points has fallen in the years since the Covid-19 pandemic as inflation has taken hold.

A point redeemed through online banking has long been worth around one cent. But one cent has lost around 20 percent of its purchasing power since 2018, according to the Bureau of Labor Statistics.

This means a point has also fallen in value by around the same amount, according to The Wall Street Journal. 

If you built up 50,000 points with a major credit card issuer in 2020 and still have not spent them, they are now worth about 41,300, according to the outlet.

Cardholders racked up a stockpile of points worth more than $34 billion in 2023, according to annual reports from major card companies American Express, Capital One and JPMorgan Chase. 

Inflation starts to bite into the value of points if users redeem them directly through a bank's portal or online app.

But the conversion rate for points changes when you transfer them out of the bank's portal and into a frequent flier or other points program. 

Different airlines and hotels have their own systems for valuing points. And many of them are upping the number of points needed to book, in order to reflect how prices have increased with inflation.

While the annual rate of inflation slowed to 2.5 percent in August, higher inflation has pushed up prices over the last several years. 

This has meant that the average price for an economy flight purchased with points has increased around 19 percent since 2019, according to aviation consultant IdeaWorks. 

Michael Faulkner, who works in the insurance industry, told The Wall Street Journal that transferred points do not go as far as they used to. 

He said the same flight from his home in Chicago to France increased from 60,000 United Airlines points last year to between 80,000 and 90,000 this year.

Many airlines are now pricing the fares for point users more similarly to how they set the cash value for flights. 

In 2015, Delta switched its points fares from a flat-price model to dynamic pricing based on timing and customer demand, the outlet reported.

Other airlines, like American and United, have since done the same. 

Credit card issuers have typically offered points more liberally over the last few years since the pandemic, Tiffany Funk, president and co-founder of Point.Me, which tracks credit-card reward values, told The Wall Street Journal.

That is instead of increasing the value of rewards to keep up with rising inflation.

She recommends that Americans may be able to find the best deals by sticking to cards with easily transferable points.

If you create several accounts with different partner companies, Funk said, you can shop around to see which one is offering the best deal. 

Spending points soon after they land in your account can also be a good way to avoid 'pointsflation', Nick Ewen, an analyst at The Points Guy, said.