When people choose credit cards, factors such as credit line, fees and interest rates are usually first in mind. However, a good rewards program can be a card issuer’s way of giving customers a well-deserved pat on the back for their loyalty and spending. Unfortunately, along with lavish corporate getaways and gaudy bonuses, it appears that these programs are another victim of financial services firms’ cost-cutting, according to recent articles from CNBC and Yahoo! Finance. While these cuts may help your card issuer remain solvent, that weekend spa getaway or iTunes gift card may no longer be as close as you thought.

The articles start off by rehashing the usual bad economic news. Just as millions of Americans have fallen behind on paying their mortgage, millions are now behind on their credit card payments. Card issuers are realizing they may never see a significant portion of that money and have begun to take defensive measures in response to this crisis. Aside from raising interest rates and fees, firms are taking action in the rewards space by reducing earn rates, eliminating new client bonuses, imposing higher redemption minimums and scaling back redemption options. Needless to say, the reporters did not have trouble tracking down dissatisfied customers for quotes.

A key player identified by these articles is Citibank, although American Express, Capital One, Chase and Discover are also discussed in the context of the industry cutbacks. It’s unfortunate that Citi manages to find itself at the center of the bad news again, as its ThankYou Network has, in many ways, been a model program from the consumer’s standpoint. In terms of value, it was clearly competitive, receiving a B+ in our recent Credit Card Monitor Report (subscription required) on universal rewards cards. In other research, we found ThankYou offered an advanced, user-friendly online rewards center with a robust bonus mall and earnings opportunities. Citi’s rewards program-related changes - for example, stingier travel rewards redemption and stricter points policies - are going to upset many card holders, but this may just be the tip of the iceberg. Apparently, the program as a whole is under pressure; Citi reportedly circulated a letter ominously informing clients that they reserve the right to revoke their rewards if necessary.

The irony in all of this is the fact that scaled-back rewards may not even help firms recover from their card-related losses. Rewards cards are a lucrative business, and drawing fewer new customers or losing old clients because of program cutbacks is not a good thing. It will be interesting to see whether lower earn rates and other reductions might be enough to drive large numbers of current card holders to find better rewards from other issuers. If that happens, the worst offenders will regret nickel-and-diming away some of their most loyal customers.