7 Things You Should Never Do With Your Travel Rewards Credit Cards

Travel rewards credit cards offer incredible opportunities to fund dream vacations through points and miles earned on everyday spending. However, common mistakes can erode their value, leading to lost rewards or unnecessary fees. This guide outlines seven critical errors to avoid, drawing from expert financial advice and real-world experiences to help you maximize benefits.

1. Carry a Balance on Your Rewards Card

The most damaging habit with any credit card, especially rewards cards, is carrying a balance. Interest charges, often exceeding 20% APR, quickly surpass the value of points earned. For instance, if you earn 2% back in points but pay 25% interest, you’re losing money overall. Always pay in full each month to leverage rewards without penalty.

• Why it hurts: High interest nullifies rewards value, which typically redeems at 1-2 cents per point.
• Solution: Set up autopay for the full statement balance and use low-interest cards for large purchases if needed.

Financial experts emphasize treating rewards cards like debit cards—spend only what you can repay immediately. This preserves the ‘free travel’ illusion while building credit.

2. Ignore Annual Fees Without Evaluating Value

Many premium travel cards charge $95-$550 annual fees, but waiving them without assessing perks is a mistake. Cards like Chase Sapphire Preferred offer travel credits, lounge access, and bonus points that often exceed fees for frequent travelers.

Calculate your personal value: if perks save more than the fee, keep it. Otherwise, downgrade to a no-fee version before the annual fee posts.

3. Miss Earning Bonus Categories and Sign-Up Bonuses

Travel cards shine in categories like dining, travel, and groceries, offering 3x-5x points. Ignoring these means leaving money on the table. Sign-up bonuses, often 50,000-100,000 points after spending $3,000-$5,000 in 3 months, provide outsized value—worth $500-$1,500 in travel.

• Track rotating categories (e.g., Chase quarterly bonuses).
• Time applications around planned spending like home improvements.
• Avoid manufactured spending schemes, which risk account shutdowns.

Pro tip: Use tools like AwardWallet to monitor bonuses and categories across cards.

4. Redeem Points for Low-Value Options Like Cash Back

Points redeemed for travel often yield 1.5-2 cents per point via transfer partners (e.g., Chase to United), but cash back or gift cards fetch only 1 cent or less. Never squander portal redemptions on low-value items.

For example, 50,000 Chase points might book a $750 flight through the portal or transfer for a $1,000+ business class award. Always compare redemption values using sites like The Points Guy valuations.

5. Fail to Transfer Points to Partners Strategically

Not all redemptions are equal. Issuers like Chase, Amex, and Capital One allow 1:1 transfers to airlines/hotels, unlocking premium cabins unavailable via portals. However, transferring without researching award availability wastes points.

• Check partner award charts (e.g., United, Hyatt).
• Transfer only confirmed bookings—points don’t transfer back.
• Focus on high-value sweet spots, like 15,000-point Hyatt stays worth $300+.

Experienced users redeem for once-in-a-lifetime trips, like European business class for 70,000 points.

6. Overlook Card Benefits Like Travel Insurance and Protections

Premium cards provide trip delay insurance, baggage protection, and primary car rental coverage—saving hundreds per trip. Ignoring these means overpaying for separate policies or facing out-of-pocket losses.

Key benefits include:

• Trip cancellation: Up to $10,000 per trip on many cards.
• Cell phone protection: Reimburses up to $800 with $50 deductible.
• Purchase protection: Covers new items for 120 days.

Review your card’s guide to benefits annually; requirements like paying with the card trigger coverage.

7. Close Cards or Cancel Without Considering Impact

Closing a rewards card can trigger point expiration (if no grace period) and hurt your credit score by shortening average account age and utilization. Instead, downgrade to a no-fee version or tuck away unused cards.

Maintain accounts for churn strategies: earn welcome bonuses ethically, then product change. Check issuer rules—American Express allows changes without credit pulls.

Frequently Asked Questions (FAQs)

Q: Can I earn rewards while paying off debt?

A: Use a 0% APR intro card for debt, but switch rewards earning to everyday spending only after paying balances to avoid interest.

Q: What’s the best way to redeem for family travel?

A: Cards with family pooling or companion tickets shine; compare flexible points vs. airline-specific miles.

Q: How do I avoid manufactured spending risks?

A: Stick to organic spending; issuers like Chase shut down accounts for excessive gift card buys.

Q: Are travel rewards worth it for infrequent travelers?

A: Yes, with no-fee cards like Capital One VentureOne; focus on sign-up bonuses for occasional trips.

Maximizing Your Rewards: Final Tips

Beyond avoiding pitfalls, pair cards strategically: one for travel bonuses, another for everyday spend. Track via apps and redeem promptly for peak value. With discipline, rewards fund adventures like stingray encounters or luxury Paris stays without cash outlay.

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medha deb

 

Medha Deb is an editor with a master's degree in Applied Linguistics from the University of Hyderabad. She believes that her qualification has helped her develop a deep understanding of language and its application in various contexts.

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