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7 ways you can lose your credit card rewards — and how to avoid that

·5 min read
7 ways you can lose your credit card rewards — and how to avoid that
7 ways you can lose your credit card rewards — and how to avoid that

While many Americans have taken the pandemic to focus on their financial priorities, pay down debt and build up their savings, a good portion are also strategically spending to earn extra rewards.

Nearly half of surveyed travel credit cardholders told ValuePenguin that they’re using their cards to rack up more rewards to skip town once the pandemic is over. And nearly 1 in 5 plan to open a new travel credit card to score a deal.

But if you’ve spent your time in quarantine building up a reserve of rewards, you’ll want to be careful to avoid anything that could put them at risk.

Here are eight instances where you could lose your rewards points and what you can do to prevent that from happening.

1. Missing payments

cut up credit card on a statement
gemphoto / Shutterstock

Missing a payment can result in all kinds of penalties or fees and damage your credit score, but many don’t realize it can also cost you your rewards.

If you’re late with your payments, most credit card issuers will withhold your rewards, according to Brex, a financial service and technology company. And there’s no guarantee that you’ll get your rewards back once you’re caught up on payments.

If you haven’t lost your credit card points after missing several payments, you could lose them when you file for bankruptcy. If your finances look like they’re heading that way, you may want to consider some alternatives before filing for bankruptcy.

When you’re managing a ton of high-interest debt, you may want to consider taking out a single lower-interest debt consolidation loan to get some relief and pay down what you owe sooner.

2. Your account lapses

Letting your rewards credit card become inactive can also put your points in jeopardy.

To keep your rewards safe, make sure you use your card at least once every few months, says Equifax.

You can always make that easier by setting up a regular automatic payment on that specific card — just make sure you remember to pay it off every month.

3. You close down the account

Woman signing piece of paper in front of bank teller, close up of hands
New Africa / Shutterstock

Closing down a credit card will mean you forfeit any points you’ve accumulated, including any rewards that may have been earned between your last billing cycle and the date you close the account.

To avoid losing those points, before you close the credit card, look into whether you can transfer your rewards to another card with the same rewards program or a partner loyalty program.

It is also worth noting that credit card rewards are usually not transferable to other people.

Your credit card issuer should outline what happens to your points if something should happen to you in your terms and conditions. But a 2011 study found that most of the time, rewards are not considered property of the cardholder and therefore aren’t transferable upon death.

4. Making a return

shopping customer returning product to retail employee.
Odua Images / Shutterstock

Returning items you’ve purchased also means returning the rewards you earned.

Credit card issuers impose this rule to prevent people from running up their cards to earn rewards only to get refunds on all their purchases.

And points aren’t a good reason to hold onto purchases you don’t need or can’t afford. Keep in mind that each point is generally worth about 1 cent. And any interest you pay on your card will generally be more expensive than the benefits of your rewards.

5. Breaking the rules

If you sign up for a card just to get a signup bonus (also known as credit card churning, you may think you’ve found a loophole into earning all kinds of free points.

But you’ll want to be careful you don’t violate the terms of your card. And there’s a chance if you close your card too soon after opening that you can lose any rewards you earned as a signup bonus.

To avoid that and any hits to your credit score, keep any new cards for at least a year.

6. Your points expire

Upset woman looking at a piece of paper, holding head in her hand.
fizkes / Shutterstock

Yes, some credit card points have an expiration date, especially co-branded credit cards that accrue hotel or airline miles or the rewards you collect is through a specific credit card issuer’s points program, according to Experian.

Make sure you read all the fine print when you sign up for a credit card and take a look at your statement to confirm if any of your rewards are about to expire.

7. The rules change

This is one situation you don’t have any control over. Sometimes, credit card companies change the terms of their rewards programs.

Any significant changes require giving you a heads up at least 45 days out, according to the Consumer Financial Protection Bureau.

If you get a notice that your rewards program is changing or closing down, you should act immediately to prevent losing your points.

More ways to reward yourself

Happy woman doing online shopping at home
gpointstudio / Shutterstock

If you’ve recently lost your credit card rewards, or you haven't saved up enough yet, you have a few options to find some alternative perks or rewards in your everyday spending.

  • Slash your insurance premiums. Did you know that you could be overpaying for your car insurance by up to $1,100 a year? If you think your car insurer is taking you for a ride, it may be time to shop around for a better deal. And while you’re looking, why not use the same technique to save hundreds on homeowners insurance every month too?

  • Find savings on everyday purchases. Make sure you’re getting the best price whenever you shop online by downloading a free browser extension, which will automatically scours the web for the best deals and coupons every time you make a purchase.

  • Swap your clutter for cash. Kill two birds with one stone by cleaning up while doing your spring cleaning. Sign up for a service that offers you 33% more back for your old belongings than other second-hand selling sites.

  • Dip your toe into investing. Don’t have much experience or an expansive budget to get into investing? There’s an app for that. Download a popular app that allows you to invest with your "spare change” and turn pennies into a diversified portfolio.