7 Costly Mistakes You’re Making With Your Travel Rewards Card
Travel rewards credit cards have been pretty magical for me.
Over the past 10 years, they’ve helped me visit destinations I otherwise wouldn’t have been able to afford. I don’t think it’s an exaggeration to say my life would be a lot different without them.
Do you have a travel rewards card? Awesome, but chances are you’re not making the most of it.
Here are seven mistakes I’ve made — and some you might be making right now.
1. Carrying a Balance
If you have a travel rewards credit card, please don’t carry a balance.
These cards have higher APRs than other cards, so any interest you accrue will completely negate the benefits of your rewards.
Use your card like a debit card, only spending what you can pay off in full each month.
If you can’t, then the answer is simple: Don’t get one. (Here are six other ways to earn frequent flyer miles!)
2. Making Purchases With Cash
If you know you can be responsible with a travel rewards card, then use the bejesus out of it.
After all, why buy something in cash when you could put it on your card and earn rewards like miles or cash back?
Sometimes when I’m out with friends, I offer to pick up the tab and have them pay me back in cash. It makes the server’s life much easier — and I earn a boatload of rewards.
3. Not Using All Your Card’s Benefits
Rewards cards come with a slew of benefits many people aren’t aware of, so make sure you know your card and its perks!
Some common benefits include coverage for:
Did the airline lose your bags? If you paid with a travel rewards card, you might be able to get reimbursed for the purchase of emergency supplies.
Here’s a list of cards and their lost luggage benefits.
Unfortunately, airline delays are a way of life. If you’re stuck for a while, more than a dozen cards will reimburse you for expenses including taxis, hotels, food and toiletries.
Don’t believe what the rental car agents tell you — the vast majority of credit cards include insurance.
To be certain about what coverage is offered, check with your card issuer before you get to the rental agency.
4. Using Your Points to “Buy” Flights or Merchandise
Yes, you can use your points however you like.
But if you want to get the most out of your miles, don’t use them to “buy” flights or merchandise.
Some travel rewards programs have booking engines, similar to Kayak or Orbitz, where you can buy flights using points instead of cash. But if the option’s available to you, a much better option is transferring your points and booking directly through an airline.
I’d also advise against redeeming points for gift cards or other merchandise, since it won’t give you much bang for your buck, either.
5. Booking Late or Poorly
Rewards seats fill up fast — so if you want the best selection, book as soon as seats open up, which is often a year ahead of time.
The closer in you get, (usually) the more expensive the flights will be.
To ensure you’re maximizing your rewards, it’s also wise to do research before booking.
For example, several airlines offer free “stopovers” on award tickets. So, instead of just flying from LA to Auckland, New Zealand, you could include a weeklong stopover in Singapore on the way — for the same number of miles. (I’ve traveled this route, and it was awesome!)
Or, look into “open jaws,” which allow you to avoid backtracking by flying in and out of different airports. You could fly from New York to London, then return from Paris to New York, taking local transport to get between the two cities.
If you don’t have the time or know-how to figure this out, try a mileage booking service like PointsPros, who will do all the heavy lifting for you.
6. Paying Foreign Transaction or Annual Fees
Fees suck, so I do my best not to pay them.
It’s becoming easier and easier to find a card without foreign transaction fees, allowing you to travel internationally without worrying about unexpected charges.
And you might think annual fees are unavoidable, but they’re not.
A month before your annual fee is due, call your credit card company and tell them you love the card but don’t want to pay the fee — and therefore, might have to cancel.
Often, the representatives can offer you a “retention bonus,” either in the form of extra rewards points, a statement credit or fee waiver.
If they won’t waive it, you can ask to downgrade to a card with no annual fees. This strategy preserves your line of credit, while still freeing you of expensive fees.
7. Letting Your Points Expire
This is one of the most egregious travel rewards mistakes, yet it happens all the time.
For rewards cards that earn card-specific points, like Chase’s Ultimate Rewards or AmEx’s Membership Rewards, your points won’t expire as long as the card is active.
For cards that earn points with an airline or hotel, your miles will remain even if you cancel the card — but then you need to keep track of their expiration dates.
I use AwardWallet to warn me when my miles are about to expire. Then, to reactivate them, all I have to do is make a small purchase through the airline’s shopping portal.
Avoid these common travel rewards mistakes, and you’ll be flyin’ high in no time!
Your Turn: Have you made any of these mistakes? Which ones did I miss?
Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.