Many people leave value on the table without even realizing it when earning and redeeming credit card points and miles.

Understanding how to navigate rewards programs can significantly enhance the benefits you receive from your credit cards. Here are some common mistakes to avoid and tips to help you make the most of your rewards.

Not Understanding Point Valuations

• Mistake: Not understanding how much each point or mile is worth can lead to poor redemption choices.
• Fix: Research the value of points and miles for different programs (e.g., American Express Membership Rewards, Chase Ultimate Rewards, etc.). Understand how much each point is worth when redeemed for travel, cashback, or other rewards, and avoid using points for low-value redemptions (like gift cards or merchandise).

Failing to Maximize Category Bonuses

• Mistake: Not taking full advantage of category bonuses (e.g., 3x points on dining, 2x on travel) can result in lost rewards.
• Fix: When you aren’t meeting a minimum spend, know which cards offer bonus categories and use the right card for purchases. For instance, use a card with 3x points on dining when you dine out or a travel card for flights and hotel stays. However, do know that the fastest and easiest way to keep racking up points is through sign-up offers.

Not Meeting Minimum Spend Requirements

• Mistake: Many credit cards offer sign-up bonuses that require meeting a minimum spending threshold within a certain time frame. Missing the threshold means missing out on valuable rewards.
• Fix: Track your spending to ensure you meet the minimum required spending to earn the bonus. Plan for large purchases or use a dedicated card for everyday spending to hit the target. I use the Travel Freely App. It’s free, requires no financial information, and sends me notices when my minimum spend deadline is approaching.

Carrying a Balance

• Mistake: Carrying a balance on your credit cards and accruing interest can quickly negate the value of any rewards you earn.
• Fix: Pay your balance off monthly to avoid interest charges. If you can’t pay off the balance, consider switching to a 0% APR card for a period to avoid high interest rates. Also, take time to reflect if credit cards are the best avenue for you. Credit card debt can be a slippery slope for some. There is not shame in taking a break, getting your finances back under control, and starting again when you’re ready.

Not Taking Advantage of Transfer Partners

• Mistake: Many rewards programs (like Chase Ultimate Rewards, American Express, and Citi ThankYou points) allow you to transfer points to airline or hotel partners at a 1:1 ratio. Not using these transfer options can result in missing out on better redemption rates.
• Fix: Transfer points to airline or hotel partners to maximize your rewards. Often, transferring points to an airline partner for flights can provide better value than booking through the card issuer’s travel portal. Here’s my FREE GUIDE to TRANSFER PARTNERS!

Not Tracking Expiration Dates

• Mistake: Some points or miles expire after a certain period of inactivity or time. If you don’t keep track of expiration dates, you may lose your hard-earned rewards.
• Fix: Regularly check the expiration policies for your rewards and keep your account active by occasionally earning or redeeming points. Some programs extend the expiration date if you have a qualifying transaction.

Overlooking Additional Card Benefits

• Mistake: Many credit cards come with additional perks, such as airport lounge access, free checked bags, travel insurance, purchase protection, and extended warranties. Ignoring these benefits means you’re not fully utilizing your card.
• Fix: Familiarize yourself with all your cards’ benefits and use them when relevant. For instance, if your card offers free checked bags on flights, use it when booking air travel to save money.

Misunderstanding Redemption Options

• Mistake: People often assume that redeeming points for cash back or statement credits is always the best choice. However, redemption for travel (especially flights or hotel stays) usually provides better value.
• Fix: Evaluate how you can redeem points and choose the ones that maximize their value. For instance, using points for flights or hotel bookings through travel portals often provides a higher redemption value than converting points into statement credits which is typically the least valuable way to use your points and miles.

Using the Wrong Card for Purchases

• Mistake: Not using the optimal credit card for certain purchases is a common mistake. This can result in losing out on bonus points or miles.
• Fix: Keep track of which cards offer bonus points in which categories and use the best card for each purchase. Some cards offer rotating categories (e.g., 5% cashback on groceries or gas) that require activation each quarter.

Forgetting to Activate Quarterly Categories

• Mistake: Some credit cards, like the Chase Freedom or Discover it card, offer rotating bonus categories requiring quarterly activation.
• Fix: Activate these categories on time to earn bonus rewards. Set a reminder to activate the bonus categories at the start of each quarter. What I do is as soon as Chase sends me the 1 Click email to activate the quarterly promotion, I always take 30 seconds to do it. I don’t ever wait because then I’ll forget.

Not Considering Foreign Transaction Fees

• Mistake: Using a credit card that charges foreign transaction fees when traveling internationally can add unnecessary costs to your trip.
• Fix: If you travel abroad frequently, choose a credit card that doesn’t charge foreign transaction fees. Many premium travel cards, like the Chase Sapphire Preferred or Platinum Card from American Express, offer no foreign transaction fees.

Closing Old Credit Cards

• Mistake: Closing old credit cards can negatively impact your credit score and make qualifying for new cards with lucrative sign-up bonuses harder.
• Fix: Keep old credit cards open, especially those with no annual fee, to maintain your credit score and improve your credit utilization ratio.

Ignoring the Annual Fee

• Mistake: Some cards have high annual fees but also offer great rewards and benefits. Not accounting for the annual fee when considering keeping a card can lead to overspending.
• Fix: Evaluate the overall value of a credit card by considering the rewards you earn and the benefits you use, versus the annual fee. If you don’t use the perks enough to justify the fee, consider downgrading to a no-fee card or canceling the card.

Not Having a Strategy for Points and Miles

• Mistake: Randomly earning and redeeming points without a clear strategy can lead to suboptimal outcomes, such as not earning the right points for your travel goals or using points at a low value.
• Fix: Set a goal for your rewards. For example, if you want to redeem points for a business class flight, focus on accumulating points in airline programs that offer good redemption rates for that specific route.

By avoiding these common mistakes, you can maximize the value of your credit card points and miles and unlock the full potential of your rewards program, and travel for next to nothing!