Pitfalls That Cost Your Rewards

Rewards credit cards are a wonderful way to get free trips, hotel stays, and other merchandise. You have to be smart about how you use your rewards card, otherwise, you could end up missing out on hundreds, even thousands of reward points. Learn how to keep an innocent slip up from costing your rewards.

Late payments
A lot of rewards credit cards will not reward your purchases if you miss that month’s payment. No matter how much you’ve purchased, that single late payment can seriously set back your rewards accumulated. Not only do you miss out on points, you get charged a late fee. Any extra fees charged to your account decreases the value of the benefits you received.

To keep late payments from affecting your rewards progress, make your payments on time each month. Pay attention to any fine print stating your payment must be received by a certain time. This type of trap can easily cause you to miss a credit card payment.

Not using your rewards credit card. Keeping your rewards card in your wallet and instead of using it to make payments will definitely affect the rewards you receive. If you’re not making purchases, you can’t earn any rewards. So, the easiest way to avoid this pitfall is to use your rewards card.

Stuck on how you can Use your Card?
Think about the purchases you make on a daily basis. These are good candidates for your rewards credit card. Then, when your bill is due, use the cash you would have used for those purchases to pay off your credit card balance.

Restrictions and caps
The fine print in the terms and conditions of your rewards credit card probably has a few restrictions on how you can earn rewards. For example, you may only earn rewards when you make certain types of purchases.

Many rewards cards have caps on the number of rewards you can earn during a certain month or year. A cap is the maximum number of rewards you can earn. Once your rewards balance reaches the cap, you will either earn fewer rewards per dollar charged or you won’t earn any rewards at all. Either way, a cap on your rewards can limit what you can earn, especially if you typically charge more than the cap will reward you.

Changes to the Reward Program
Pay attention to disclosures that come with your credit card bill. Your rewards credit card might change the terms of your reward program. If you don’t know about these changes (and change your spending habits accordingly) you could end up missing out on rewards. Read those extra leaflets included with your credit card statement.

Fees and surcharges
Merchants have to pay credit card companies a fee each time they run a credit card transaction. This fee, typically a certain percentage of the transaction, cuts into merchants’ profits. So, to offset the cost, they sometimes pass it along to consumers as a credit card convenience fee or surcharge. More fees on your rewards card mean more cost for the card. Remember keeping costs your credit card costs at a minimum is the best way to get full benefit from your rewards points.

Card not Accepted at Certain Vendors
Some American Express rewards cardholders complain they often miss out on rewards because the card isn’t accepted at certain stores. If you have a set number of places you shop, carrying a card that isn’t widely accepted will set back your rewards earnings. Visa and Mastercard are the most widely-accepted credit cards. If you notice American Express isn’t accepted in the places you shop, choose one of the more popular credit card brands.

Conversion Fees
Rewards credit cards often partner with vendors and merchants to offer you places to redeem your rewards. Sometimes you have to convert your rewards to that of the merchants to redeem them. This is common with airlines and hotels. The drawback is you might have to use extra points to convert your rewards, leaving you with fewer rewards to spend on other things.

You can avoid conversion fees by signing up for the vendor’s reward program directly. So, instead of converting your rewards points for a Qantas flight, sign up for a Qantas rewards credit card.

Mike runs Credit Card Finder, an Australia credit card comparison site.
Find out how to get the most from your reward credit cards here.