When you get a travel rewards credit card, you often pay a yearly fee, but you gain access to airport lounges and earn miles and points that you can use to redeem for flights and hotel rooms. Many credit card users make mistakes and waste valuable opportunities, however. What follows are tips on the mistakes to avoid with rewards credit cards.
Wasting the opportunity to earn a welcome bonus
When you sign up for a new card, there is usually an initial welcome bonus worth thousands of points on offer. You only get those points when you spend a certain amount of money on your card in the first few months, however. You may make the mistake of forgetting about the time stipulation, or apply for multiple rewards cards at the same time and find that you have the impossible goal of having to spend thousands of dollars in the first three months or so if you are to earn those points. It’s important to carefully think about whether you’ll be able to spend enough before the deadline arrives.
Failing to look out for special promotions
Many websites keep track of special promotions that offer extra-large welcome bonuses for limited periods of time. You may miss out on these offers if you don’t look out for them before you apply for a card. It’s important to do your homework before you pick a card to apply for.
Getting too many cards in a short period of time
Applying for multiple cards together isn’t just problematic for the way it affects your ability to hit the spending levels that you need to reach to earn the welcome bonuses. Some card issuers disqualify you from applying for some of their best cards if you’ve received multiple credit cards from other issuers in a short space of time. For instance, Chase applies what they call the 5/24 rule. If you’ve opened 5 or more credit cards over the past two years, you’re automatically out of the running for some of their best rewards cards. It’s important to plan out your credit card applications to make sure that you don’t disqualify yourself from getting the best ones.
Redeeming your points at low value
Rewards cards allow you to redeem your points for either merchandise or travel. Credit card companies often subtly encourage you to redeem your points for merchandise, however, because it costs them less to give you merchandise in exchange for your points. In addition, some cards value your points at higher rates when you redeem them for travel and lower rates when you redeem them for merchandise. It’s easy to neglect to pay attention to the redemption rates that you get for your points. It’s important to be careful.
Carrying balances
No matter how valuable the points on your credit cards, the interest that you are charged for carrying a balance is likely to cost you more. Carrying a balance can also affect your credit score and cost you in other ways. It’s only worth spending for rewards points when you know that you can pay the balance off in full each month.
Neglecting to take advantage of transfer bonuses
Transfer bonuses are promotions that airline loyalty programs announce for short periods of time every now and then. With a transfer bonus, you get to transfer the points or miles that you have on a credit card to the loyalty program and receive extra miles as a bonus. You can get 30 percent more miles when you take advantage of these promotions. It can be a mistake to not pay attention to when the airlines announce these bonuses.
Letting your rewards expire
Reward points come with expiration dates. Loyalty programs, however, make it easy for you to keep your points going. All you need to do is to earn at least one point with your spending every year or so.
You can also lose your points when you close a credit card or change to a card with fewer features. If you neglect to transfer your points to a travel loyalty program first, your points go to waste.
Neglecting to avail yourself of multiple points on each dollar spent
Many travel rewards credit cards offer you the ability to earn multiple points for each dollar that you spend on specific types of expenses. When you spend on entertainment, gas, groceries, or other expense categories with specific credit cards, you get to earn extra points. It can be hard to keep track of what credit card goes with what expense, however. For this reason, many people neglect to take advantage of these generous offers. If you have the patience to keep track, however, you do get to quickly add to your collection of points.
Paying annual fees for perks that you don’t actually use
Some travel rewards cards come with no annual fee. Others, however, charge anything from about £100 a year to thousands a year. If you actually need the free checked bags, the free night at a hotel on your anniversary, access to an airport lounge, or free TSA PreCheck, the fee could be worth it. If you’re not making enough use of your benefits to justify the high fee, however, or if you have duplicated benefits on multiple cards, it’s money wasted. You need to think about what you get for the money you pay.
Thinking that the annual fee is non-negotiable
It doesn’t occur to many people that they could call up their credit card companies and ask them to waive the annual fee. One in four people asks for a waiver, however. Most who try it are successful. It doesn’t pay to be shy about it. Every time the due date for your annual fee comes around, you should simply call customer service up and ask for a discount or a waiver.
Not reaching your spending thresholds
When you spend £15,000 a year or more on a credit card, you get bonus perks. You may get a free night at a hotel, a free ticket for your traveling companion, and other attractive perks. While it doesn’t make sense to spend money that you otherwise wouldn’t, just to get the bonuses, it’s a good idea to try to reach the spending limits with expenses that you would have spent on anyway. It can take some planning to spend with specific credit cards to be able to make the thresholds. It can be a mistake to forget what cards you need to spend on to make those bonus benefits.
Travel rewards cards can be a great way to help you profit from these financial products. It’s important to plan ahead of time how you will use these cards, however. It’s only with careful, deliberate use that you get to make all the rewards promised.