CardBreakageCardbreakage

Loyalty & rewards

Points, miles, and rewards currencies

Programs where the reported liability is driven more by accrual assumptions and expiry policy than by what members actually do.

What drives breakage here

The behavior specific to this program type

Expiry policy effects

Rolling activity-based expiry produces very different breakage than fixed-term expiry, and both differ again from non-expiring balances.

Tier concentration

A small share of high-tier members drives most redemption, so member-level segmentation matters more than portfolio aggregates.

Redemption cost variance

Breakage on points must be converted at the actual cost of redemption per option, not at a single blended unit value.

Dormant member balances

Accounts inactive across multiple cycles rarely re-engage, forming a stable and identifiable breakage layer.

How we analyze it

Our approach for this structure

Every step is built from your own history and reconciled to your reported position.

  1. 01Rebuild accrual and redemption activity per member and per earning cohort.
  2. 02Segment members by tier, engagement frequency, and balance band.
  3. 03Model expiry-driven and behavior-driven forfeiture separately.
  4. 04Derive redemption cost per option and weight by observed redemption mix.
  5. 05Convert forfeiture rates into a currency-denominated liability position.
  6. 06Produce sensitivity bands across engagement and expiry-policy scenarios.

Signals

When an audit is worth running

Flat accrual assumption

The liability is booked on a single redemption-rate assumption applied to all members.

Program redesign

You are changing earn, burn, or expiry rules and need the liability impact quantified first.

Large dormant base

A material share of point balances sits with members who have not transacted in years.

Engagement

Run your breakage audit

A confidential, analyst-led review of your stored-value liability — expected breakage, redemption behavior, and escheatment exposure quantified against your own data.

No engagement commitment required. Scope is confirmed before work begins.

Run My Breakage AuditReview Methodology