Earning a significant amount of rewards takes a lot of time and spending—the last thing you want is to lose your rewards. Even a small rewards balance can require hundreds of dollars in spending and several months to accumulate. To lose your credit card rewards can almost feel like losing actual cash from your wallet.
It may surprise you to learn you can lose your credit card rewards at all. It's true. The fine print of your rewards program details specific things that could cost your credit card rewards. While rewards programs can differ from one credit card to the next, here are some things you should avoid if you want to keep your credit card rewards.
You Make a Late Payment
You probably already know that a late credit card payment has several consequences: a late payment fee, interest rate increase, and damage to your credit. Late payments can also cost your credit card rewards. Most credit card issuers will forfeit your rewards if you're late on your credit card payment.
The exact number of payments you can miss without losing your rewards will be different depending on your credit card. Unfortunately, you probably won't get your rewards back once you get caught up on payments. Once your rewards are gone, they're likely gone for good. Be especially sure that you make your credit card payments on time if you have rewards you haven't used.
It's best to err on the side of caution when it comes to making your credit card payments. Even if one missed payment won't cost your credit card rewards, the late fee will offset any rewards you've earned.
Your Account Becomes Inactive
Not only does not using your card mean you're not earning any new rewards, it also puts you at risk of losing the rewards you've already earned. (Not to mention your credit card issuer could close your credit card if you're not using it regularly.)
Use your credit card about once every three months and your rewards should be safe. Refer to the terms of your credit card rewards program to learn whether inactivity will cost your credit card rewards.
The Rewards Expire
Many credit cards let you earn an unlimited number of rewards that never expire. However, there are other credit cards that will expire your rewards if you don't use them within a certain amount of time or by a specific date.
Pay attention to the expiration date for your rewards—especially retail store rewards—and use them before they expire. Your credit card issuer might not warn you when your rewards are about to expire; it may be up to you to keep up with the timing of your credit card rewards.
Don't let rewards expire because you can't find a use for them right away. You may be able to apply them as a statement credit to your account or redeem them for a gift card that you can use in the future.
You Close Your Credit Card
When you close your credit card, you'll lose any rewards you've accumulated, even rewards that didn't post to your account before you closed it.
If you decide you want to close your account for whatever reason, use or transfer your rewards first so you don't lose them. Some credit cards allow you to transfer your rewards to another credit card with the same rewards program or to the hotel or airline partner loyalty program before closing your card.
Rewards you received as a signup bonus may be rescinded if you cancel your account within a few months of opening the account. Leaving your account open for at least a year (and using your rewards before closing your card, of course) should protect you from losing the signup bonus.
You Return Items That Have Earned Rewards
Credit card issuers have to have a provision like this in place; otherwise, people would max out their cards to earn rewards then return the items and keep the reward. Don't let the risk of losing rewards make you keep an item you don't want or can't afford. You can always earn those rewards again on a future purchase.
You're Caught Trying to Game the System
If you're a credit card churner, you're probably always on the lookout for creative ways to meet the spending requirements for the credit card's signup bonus. You have to get especially creative if you're trying to earn the signup bonuses on more than one credit card. Be careful that you don't violate the terms of the rewards program. Otherwise, you could lose the rewards you've earned. You could also lose points if you're caught selling or buying rewards.
Your Purchases Are Outside the Reward Categories
You don't technically lose rewards when you make purchases outside the reward categories, but you also don't earn any. Pay attention to the types of purchases you have to make to earn rewards and even the kinds of stores you need to shop in. For example, your gas rewards credit card may pay rewards on purchases from standalone gas stations only, not from gas purchases made at warehouse stores.
Balance transfers and cash advances also do not earn rewards. Cash equivalent transactions like the purchase of money orders, cashier's checks, foreign currency, and wire transfers also do not earn rewards.
You File Bankruptcy
You could lose your credit card rewards even if you don't include that specific credit card in your bankruptcy. Of course, if you're filing bankruptcy, you're probably more concerned about getting your financial life in order than you are about keeping your credit card rewards. Note also that filing bankruptcy can impact your credit and make it difficult to qualify for a rewards credit card until you rebuild your credit.
You Miss Changes to the Rewards Program
You can also lose your rewards if the credit card issuer changes the reward program. Of course, this is something that's out of your control. If the credit card issuer gives you a chance to use your credit card rewards before the program changes, be sure to act immediately so you don't lose all the rewards you've worked so hard to earn. Otherwise, you could lose your credit card rewards for good.