Are You Using Your Credit Card Rewards Points Wrong?

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When used correctly, a good rewards credit card can help you pad your bank account, upgrade a vacation, fund a free trip, or shave down the cost of your expenses. Many rewards cards these days pack so much value into their rewards programs you could potentially walk away with hundreds of dollars worth of freebies — especially if you use your card for most of your expenses and then pay off the balance in full each month.

If you don’t pay attention to how you’re collecting and spending your hard-earned rewards points, though, you could wind up leaving free money on the table. Here are six ways you might be using your card rewards points wrong without realizing it.

You aren’t tracking how you earn them. To make the most of your rewards credit card and earn as many miles or points as possible, you need to take advantage of every bonus opportunity you get. For some cards, that means tracking your spending and using your card for every purchase that earns a rewards bonus. With other cards, it means taking advantage of separate bonus opportunities, such as redemption bonuses or bonus points for spending a certain amount.

You’re spending your points on merchandise. Most rewards cards let you trade in your rewards points for free merchandise, such as home electronics or housewares. But the redemption values for these types of rewards purchases are usually terrible — especially compared to higher value options, such as travel.

For example, depending on your credit card, 50,000 rewards points might buy you a $250 digital camera, a $500 gift card or a $750 airplane ticket. To get a higher rate of return on your rewards purchases, check your card’s redemption guide and choose rewards that buy you more with fewer points.

You’re wasting points on inexpensive travel. Similarly, you’ll squeeze more value from your rewards points if you use them for longer flights or pricier hotels.

For example, a hotel credit card might charge you the same number of points, no matter whether you’re staying in a room that regularly costs $100 a night or $400 a night. To get the most from your rewards card, save your points for pricier travel that would otherwise cost you a bundle in cash.

You’re spending money to redeem your “free” rewards. Some rewards cards require you to go through the card issuer to book your rewards-funded travel, but then charge redemption fees if you do it over the phone. To avoid getting charged for redeeming your rewards, book your travel through your card issuer’s online rewards portal or choose a travel card that lets you book your travel independently and get reimbursed for it.

You’re compartmentalizing your rewards programs. Many credit cards let you transfer your points to other loyalty programs, such as airline frequent flier programs. But if you don’t take advantage of that service, you could miss out on the chance to purchase free travel faster or get more value from your rewards earnings. For example, if you just need a couple hundred points to buy a free trip on your favorite airline, you can use extra points you have leftover from your rewards card.

Trading points between different loyalty programs also gives you more flexibility so you don’t have to limit when or where you travel. You may also find that your credit card rewards points are worth more when you transfer them to another program.

You’re leaving rewards unused in an account. It’s one thing to save up your rewards until you have enough miles or points to purchase a big trip. But if you’re neglecting your rewards for no good reason, you could wind up losing them altogether. Many rewards expire after just a few years in your account, while other cards renew rewards every year only if you keep using your card. You may also come to regret saving up your points if your issuer cuts the value of your rewards points before you’ve even redeemed them.