Regardless of whether you’re a rewards newbie or a seasoned travel hacker, there are mistakes you want to avoid in the points and miles game. Keep reading for our eight travel rewards card sins you should steer clear of committing.
See our list of the best credit card bonuses here.
CHASE SAPPHIRE PREFERRED® CARD
The Chase Sapphire Preferred® Card currently has an offer for 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
Redeeming the 60,000 bonus points through the Chase Ultimate Rewards program, which is praised by users, will get you $750 in value towards travel. The 60K bonus points are worth $750 because you get 25% more value whenever you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards.
Even better, strategize with Chase Ultimate Rewards points transfer partners to potentially get even more value. Each point can be worth up to 2 cents apiece (60k points = ~$1,200). Read more on this here.
1. Keeping A Balance
This is perhaps the biggest credit card sin of all. Keeping a balance wreaks havoc on your credit score, making it more difficult for you to open other card or loan accounts.
Not to mention, most travel rewards cards have high interest rates. So if you run up a balance every month without paying it off, you’ll negate the value of any rewards you earned with your spending.
TIPS: Always pay your balance in full. Spend within your financial means. Keep a budget so you know your spending never exceeds your income.
2. Missing A Payment
Although not as sinful as keeping a balance, missing payments can get expensive. You’ll probably get hit with a $25 to $35 fee, even if you’re just one day late.
Payments made past their due dates also get reported to credit bureaus, negatively impacting your credit score.
TIPS: Set up automatic payments. But remember, it might take one or two months to activate, so be sure to make those payments manually before auto-pay takes over.
3. Closing Your Credit Card
A common card myth most people believe is that you need to cancel a card before opening another one. WRONG! Closing a credit card may, in fact, hurt your credit score. Here’s why:
- Your credit utilization ratio determines 30% of your credit score. This ratio is defined by your account balances compared to your credit limits. You want a low credit utilization ratio, which means low account balances and high credit limits.
- The length of your credit history accounts for 10% of your credit score. This takes into consideration the average age of your accounts. The longer you’ve had a card open, the better.
TIPS: Do not cancel a card unless you’re sure it won’t hurt your credit utilization ratio. If you want to avoid having to pay an annual fee on a card you don’t use, try downgrading to its no-annual-fee version instead.
4. Losing Your Points Or Miles
Some loyalty programs, like Delta SkyMiles and JetBlue TrueBlue, have rewards that never expire. Other programs will toss out points if there’s no account activity for a certain time period. This period is usually 18 months, although we’ve seen it as short as three months with Spirit Airlines Free Spirit.
TIPS: Look for our upcoming guide on keeping your points and miles from expiring. We recommend making at least one purchase a year on every card you have.
5. Missing Out On A Welcome Bonus
One of the biggest reasons to sign up for a credit card is to get the welcome bonus. If you don’t spend enough during your allotted time frame, then you’ll be missing out on huge rewards. Keep in mind:
- That time frame starts counting down once your application is approved, NOT when you receive your credit card.
- Certain spending, like annual fees, balance transfers and cash advances, do not count towards your spending goal.
TIPS: Know when your welcome bonus period ends and what counts towards your spending requirement. Click here for more credit card bonus tips.
6. Using The Wrong Card
Some rewards cards offer bonuses for purchases made with certain types of merchants. For example, travel, restaurants, gas stations and supermarkets. You don’t want to use your 1% cashback card to pay for your dinner when you can earn 2x points with your Chase Sapphire Preferred® Card.
TIPS: Read your card agreement and familiarize yourself with the card’s earning structure and benefits.
7. Ignoring Cards With Annual Fees
You might think credit cards with annual fees aren’t worth the cost. Think again. Many of them offer better sign-up bonuses, ongoing rewards and benefits, and anniversary bonuses than their low-cost counterparts. Usually, the combination of all these valuable perks outweigh the card’s annual fee.
TIPS: Check out our list of the best credit card bonuses, updated monthly.
8. Paying Foreign Transaction Fees
Some credit cards will charge up to 3% for purchases made in a foreign currency. This even includes when the foreign merchant converts the transaction into USD.
With so many travel credit cards these days offering to waive foreign transaction fees – even no-annual-fee cards – there’s no reason why you should still be paying foreign transaction fees.
TIPS: Simply get a credit card that doesn’t charge foreign transaction fees.
Bottom Line
As you can see, there are plenty of things you shouldn’t do when it comes to rewards credit cards. Travelling for “free” is a possibility, even easy, if you make the most out of every credit card you open. Just make sure to avoid our eight travel rewards card sins above.
READ MORE: SEE THE BEST BANK BONUSES HERE AND THE BEST INVESTING BONUSES HERE.
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