Maximize Your Credit Card Points and Miles: Common Mistakes to Avoid

Many people unknowingly leave significant value on the table when earning and redeeming credit card points and miles. By understanding how to navigate rewards programs, you can significantly enhance the benefits you receive from your credit cards. In this guide, we’ll explore common mistakes people make and provide actionable tips to help you make the most of your rewards.

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1. Not Understanding Point Valuations

Mistake: Failing to understand the value of each point or mile can result in poor redemption choices.

Fix: Research the value of points and miles for different programs like American Express Membership Rewards, Chase Ultimate Rewards, or Citi ThankYou Points. Understanding how much each point is worth when redeemed for travel, cashback, or other rewards will help you avoid using points for low-value redemptions such as merchandise or gift cards. For example, redeeming points for travel generally provides better value compared to cashback options.

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2. Failing to Maximize Category Bonuses

Mistake: Not taking full advantage of bonus categories like 3x points on dining or 2x on travel can lead to lost rewards.

Fix: Use the right credit card for every purchase. For instance, use a card that offers 3x points on dining when eating out, and a travel rewards card for flights or hotel bookings. If you’re not meeting a minimum spend requirement, be strategic about your purchases. One easy way to earn a lot of points quickly is by taking advantage of sign-up bonuses from new cards.

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3. Missing Minimum Spend Requirements

Mistake: Missing a credit card’s sign-up bonus because you didn’t meet the minimum spend within the required timeframe.

Fix: Track your spending to ensure you meet the minimum requirement to earn the bonus. For large purchases, plan ahead or use a dedicated card for everyday spending to hit your target. I personally use the Travel Freely app, which is free, doesn’t require any financial information, and sends me reminders when my minimum spend deadline is approaching.

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4. Carrying a Balance

Mistake: Carrying a balance and accruing interest can quickly negate the value of any rewards you earn.

Fix: Always aim to pay off your balance in full each month to avoid interest charges. If you’re unable to pay off your balance, consider switching to a 0% APR card for a period of time to avoid interest charges. Additionally, if you’re struggling with credit card debt, it may be a good idea to take a break from applying for new cards until you’re financially ready to start again.

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5. Not Taking Advantage of Transfer Partners

Mistake: Many credit card rewards programs, like Chase Ultimate Rewards and American Express Membership Rewards, allow you to transfer points to airline or hotel partners at a 1:1 ratio. Failing to use these transfer partners can result in missed opportunities for better redemption rates.

Fix: Transfer your points to airline or hotel partners to maximize your rewards. Often, transferring points to an airline partner for flights can provide much better value than booking through the card issuer’s travel portal. Want to learn more? Check out my free guide on transfer partners to unlock the best redemptions.

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6. Overlooking Expiration Dates

Mistake: Forgetting to track expiration dates for points and miles can result in losing your hard-earned rewards.

Fix: Regularly check the expiration policies of your points programs and keep your accounts active. Most programs extend expiration dates if you have qualifying transactions, like earning or redeeming points.

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7. Ignoring Extra Card Benefits

Mistake: Many credit cards come with valuable perks like airport lounge access, free checked bags, travel insurance, and extended warranties. Ignoring these benefits means you’re not getting the full value of your card.

Fix: Familiarize yourself with all your credit cards’ benefits. For example, if your card offers free checked bags, use it when booking your flights to save money on checked luggage. Take advantage of every benefit that applies to you.

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8. Misunderstanding Redemption Options

Mistake: Many people believe that redeeming points for cashback or statement credits is the best option, but redemptions for travel (especially flights and hotel stays) usually provide better value.

Fix: Always evaluate your redemption options. Using points for travel, especially flights or hotel bookings through travel portals, typically offers a higher value than using points for cashback. Prioritize travel redemptions when possible.

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9. Using the Wrong Card for Purchases

Mistake: Not using the optimal card for certain purchases can lead to missed rewards.

Fix: Keep track of which cards offer bonus points for specific purchases. For example, some cards offer rotating categories like 5% cashback on groceries or gas every quarter. Activate and use the right card to maximize your rewards for each purchase.

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10. Forgetting to Activate Quarterly Categories

Mistake: Some cards, like the Chase Freedom or Discover it card, offer rotating bonus categories that require activation each quarter. Forgetting to activate these categories means you miss out on bonus rewards.

Fix: Set a reminder to activate bonus categories as soon as they’re available. I make it a habit to activate the categories as soon as I get the email notification from my card issuer. This small step ensures I never miss out on extra points.

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11. 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: Choose a credit card with no foreign transaction fees, especially if you travel abroad frequently. Many premium travel cards, like the Chase Sapphire Preferred or Platinum Card from American Express, offer this benefit.

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12. Closing Old Credit Cards

Mistake: Closing old credit cards can hurt your credit score and make it harder to qualify for new cards with attractive sign-up bonuses.

Fix: Keep old cards open, especially those with no annual fee, to maintain your credit score and improve your credit utilization ratio.

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13. Ignoring the Annual Fee

Mistake: Not accounting for a card’s annual fee can lead to overspending, especially if you don’t use enough perks to justify the cost.

Fix: Evaluate the overall value of your credit cards. Consider the rewards you earn and the benefits you use in relation to the annual fee. If you don’t use the card’s perks enough to justify the fee, consider downgrading to a no-fee version or canceling the card.

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14. Not Having a Strategy for Points and Miles

Mistake: Earning and redeeming points randomly, without a clear strategy, can lead to suboptimal outcomes.

Fix: Develop a strategy that aligns with your travel goals. For example, if you want to book a business class flight to Europe, focus on accumulating points in programs that offer the best redemption options for that route.

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By avoiding these common mistakes, you can unlock the full potential of your credit card points and miles and travel for a fraction of the cost. With the right strategies, you’ll be well on your way to enjoying dream vacations without breaking the bank.

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