Credit Cards

3 Mistakes You May Be Making With Your Credit Card Rewards

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A little planning can help you avoid these missteps and maybe make a little extra money.

Key points

  • Credit card rewards are a nice perk that can lead to savings.
  • Choose the right rewards program, use your rewards before they expire, and watch out for fees so you can get the most out of your investment.

Credit cards can make shopping more convenient. Instead of worrying about having enough cash, simply swipe your cards to cover your purchases and pay your bills when they’re due.

But another great benefit of having credit cards is being able to accumulate rewards. Those rewards can come in the form of cash back, points that can be redeemed for store credit, or free hotel stays.

Because credit card rewards can be so valuable, it’s important to make the most of them. And that means not falling into these annoying traps.

1. Choosing the wrong program

Different credit cards offer different types of rewards. Some offer additional cash back on specific purchases, like gas or groceries. Others offer you the opportunity to earn airline miles or hotel points. But if you choose the wrong rewards program, you could end up with a lot of useless perks.

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Imagine you opt for a credit card that makes it easy to earn airline miles. Those miles won’t do you much good if you don’t plan on traveling much. Make sure the rewards you are entitled to are rewards you are likely to use and benefit from.

2. Let them expire

Some credit card rewards never expire, but that’s not always the case. And if you don’t use your rewards on time, you’re actually throwing money away.

A better bet? Pay attention to the rewards program rules of your various cards and note the expiration dates on your calendar. That way, you’ll be less likely to miss out on using your rewards.

For example, let’s say one of your credit cards gives you a $5 store credit for every $50 you spend, but that credit must be used within two months. In that case, you’ll want to set a calendar reminder about a week before your rewards are due so you have time to use that money.

3. Not accumulating enough to be worth paying an annual fee

Different credit cards allow you to earn rewards at different rates. Sometimes, in exchange for paying an annual fee for a credit card, you’ll gain access to a more generous rewards program. But you’ll need to make sure you’re actually racking up enough rewards to make that fee worth paying.

Let’s say you’re deciding between a credit card with no annual fee that gives you 2% cash back on gas and restaurant purchases and a card with a $95 annual fee that offers 4% cash back on those items. If you spend enough in those categories to rack up at least an extra $95 in cash, then paying that fee might make sense. But if you only get an extra $45 a year in rewards, you’re actually losing money on that card when there’s a no-fee alternative.

Credit card rewards are a huge plus. And in some cases, they can even help you better cope with rising expenses (like using your cash back to pay essential bills). Just be sure to avoid these bounty-related bugs along the way.

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