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4 Credit Card Rewards Nightmares

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Rewards travel enthusiasts love to use credit cards to earn points and miles that they redeem for award travel. Others appreciate cash-back credit cards that amount to a discount on their purchases.

But not everyone is happy with their rewards credit cards. Cardholders can lose their hard-earned rewards in a variety of ways, or they might simply feel like they have been unable to redeem their points and miles for what was promised.

Here are four credit card rewards nightmares, and how you can keep them from happening to you.

1. The Missing Sign-Up Bonus 

Many people apply for a rewards credit card with the hopes of earning tens of thousands of points or miles, yet their promised rewards often fail to materialize. In most cases, cardholders fail to comply with the terms of these offers, which typically require making a minimum amount of purchases within a specified period of time. In other cases, applicants can mistakenly have the wrong “offer code” applied to their account, so the bank fails to grant the bonus, even when the terms are met.

How to keep this from happening to you: Not only should you closely read the terms of each offer, but you should save a copy of it until you receive your bonus. And don’t forget, the clock starts ticking on these offers when the application is approved, not when the card is mailed, received, activated or first used.

2. Not Getting the Reward Flights You Want 

Airlines very generously offer frequent-flier miles to their credit card holders, but it has become increasingly to get award seats at the lowest mileage levels. As a result, credit card users feel ripped off when their miles aren’t sufficient to get to their destination.

How to keep this from happening to you: Cardholders really need to research these programs thoroughly before committing to them. Read online reviews and try to make sample bookings to a few destinations, and you will quickly realize that they aren’t regularly offering four award seats in first class to Hawaii at the lowest levels published on their award chart. Also, try earning rewards in a flexible program such as Chase Ultimate Rewards or American Express Membership rewards. These programs allow you to transfer points to miles with several different airlines, depending on which is offering you the award seats you need. Cardholders can also try to use one of the several award booking services, or just earn cash back and use it for their travel instead.

3. You Lost Rewards After Closing a Card

Rewards credit cardholders generally forfeit their points when they cancel their accounts.

How to keep this from happening to you: First, understand the terms and conditions of your credit card rewards program, to see how you can hang onto your rewards if you need to cancel an account. For example, if you are canceling your account to avoid paying the annual fee, many programs allow you to keep your rewards by switching to a similar card with no annual fee. And if the reward program is with an airline or hotel chain, you almost always get to keep your reward points and miles, even if you cancel your credit card account with their banking partner.

4. Overspending to Earn Rewards

This might be the biggest nightmare of them all, as even 5% cash back is a waste of 95% when you make an unnecessary purchase.

How to keep this from happening to you: You should not be thinking about rewards when you use your credit card to make a purchase, only about getting the best deal possible for your money. To help get your mind off rewards, log into your account frequently to see how much you are spending, and what you are purchasing. And if you are unable to pay off your statement balance in full each month, then its time to retire your rewards card and get a low-interest card instead.

Credit card debt can not only be very costly and negate your rewards, it can wreck your credit scores. You can see how your credit card usage is affecting your credit scores for free on Credit.com.

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