As rewards credit cards face regulation, what are the alternatives?

Ronald Duben is ready to give up his credit card. He thinks there's something better out there – and there almost certainly is.

Duben has been dutifully shelling out $120 a year for his co-branded airline rewards card, which promises he'll get "free" flights if he spends enough money. It was a good deal at first. Once he collected about 60,000 points by late February, he could cash in his rewards for a flight to Asia.

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But when Duben tried to redeem his loyalty points for an economy class ticket to Japan recently, he was stunned that his airline more than tripled the miles he had to pay. Then it asked him for another $375 in taxes and fees on top of the 200,000 points.

So much for "free."

"I feel like I'm deeply involved in a rip-off," said Duben, a retired chef from San Rafael, California, "and I want to get out."

It turns out there is a way out.

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Making a U-turn on rewards credit cards

Rewards credit cards – and especially those high-fee, high-interest mileage-earning credit cards – are not for everyone. You're probably just as likely to pay an absurdly high interest rate and add to that $1 trillion in credit card debt as you are to get a "free" airline ticket.

The government is concerned about these cards, too. Earlier this month, the Consumer Financial Protection Bureau (CFPB) issued a report on rewards cards that identified multiple problems with these payment systems. Consumers complained that rewards are often devalued or denied even after they meet program terms. And consumers who carry revolving balances often pay more in interest and fees than they get back on rewards.

The CFPB and the Department of Transportation also held a hearing on rewards credit cards, a likely precursor to regulating these programs.

So if this is the beginning of the end for rewards credit cards, then what's next?

Here are the alternatives to rewards cards

Read a travel blog or newspaper travel section, or look at a travel Instagram account, and you might think the only way to travel is with one of those high-fee travel cards. But there are other ways to pay:

• A debit card: A debit card or bank card deducts money directly from your bank account. No need to worry about spending more than you have because it usually won't let you overdraw. "Debit cards are a straightforward option," said Shawn Plummer, a financial expert and frequent traveler. "They're widely accepted and eliminate the risk of accumulating debt because they only allow you to spend what you have."

Many debit cards even have travel benefits such as no currency conversion fees, but there are limits: Car rental companies and hotels may not accept a debit card.

• A no-annual-fee, low-interest-rate credit card: You shouldn't pay an annual fee for your credit card. And if you do a little research, you can find a card with less than a 10% annual interest rate. Hint: Check with a credit union. Many of these cards also have all the travel benefits you need, including coverage for car rentals and medical evacuations – and no currency exchange fees.

By the way, if you do want to pay a membership fee, try joining one of the warehouse clubs like Sam's or Costco. Peter Hoagland, a consultant from Warrenton, Virginia, swears by his Costco Visa. He said it's a no-nonsense payment system with relatively reasonable fees.

"I use the card everywhere," said Hoagland.

• Money transfer services: A service like Revolut or Wise will allow you to transfer money to a company or individual, completely bypassing the credit card network. These companies are on the bleeding edge of digital banking. I visited Wise's headquarters while I was in London recently and really loved its plan to remove "all the friction" between you and your money. That means eliminating a lot of the high fees you've been paying for years.

Andy Abramson, a communications consultant from Las Vegas, uses both and likes the speed of transfer and the favorable exchange rates when moving dollars to another currency.

"They're both incredible," he said.

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What is the future of payment systems for travelers?

Are rewards credit cards obsolete? Have they become bloated and inefficient, with their high swipe fees and exorbitant interest rates and empty promises of free tickets? Some industry watchers believe the answer is yes.

As an intermediate step, many travelers are switching to a debit card or a digital payment system. That allows them to lower their interest rates and make smarter decisions about their purchases instead of mindlessly spending money to accumulate points or giving all of their loyalty to one airline.

Financial experts see a better future just ahead. It's a place where digital peer-to-peer payment systems are used to transfer money at virtually no cost to you. In that future, cards are as antiquated as traveler's checks. All transactions happen on a phone with a tap and a biometric "OK." And loyalty programs have evolved into something more sophisticated than today's bait-and-switch cards that just make you spend more.

Will the government regulate rewards credit cards?

After this month's joint hearings with the CFPB and DOT, rewards credit cards are likely to be regulated soon.

Even if regulators don't act, Congress could. A new bill called the Credit Card Competition Act could bring much-needed competition to credit cards. That would make rewards cards a little less generous and could bring some sobriety back to rewards programs.

It's about time. Rewards credit cards make promises they can't keep, bait you into spending more than you should, and ultimately reward only the airlines and credit card companies that issue trillions of often worthless points. The sooner we can find an alternative to reward credit cards, the better. The current system is completely unsustainable.

That's what Duben, the retired chef who wanted to go to Japan, did. He clicked on the United Airlines website and booked a regular ticket. He'll use his miles for another ticket and then close his rewards credit card for good.

Christopher Elliott is an author, consumer advocate, and journalist. He founded Elliott Advocacy, a nonprofit organization that helps solve consumer problems. He publishes Elliott Confidential, a travel newsletter, and the Elliott Report, a news site about customer service. If you need help with a consumer problem, you can reach him here or email him at chris@elliott.org.

This article originally appeared on USA TODAY: 'I want to get out': Are rewards credit cards becoming obsolete?