12 major mistakes people make with travel rewards credit cards
Update: Some offers mentioned below are no longer available. View the current offers here.
Travel rewards cards let you earn points and miles toward awards on airlines and at hotels. They can also open access to swanky airport lounges and confer benefits like reimbursement for Global Entry or TSA PreCheck application fees.
When you look at the annual fees you pay to keep certain cards in your wallet, it's clear how important it is to maximize their benefits.
Yet it can be tough to keep track of which cards include which perks at which times, let alone adjusting your spending habits to earn the biggest bonuses, as well as taking advantage of a card's various other benefits and protections.
With a little time and research, though, you can avoid these common and costly travel credit card mistakes.
Not Earning the Welcome Bonus
It seems basic, but one of the biggest mistakes you can make with a travel rewards card is not earning the welcome bonus. Many of us are wowed by bonuses worth tens or even hundreds of thousands of points, but you have to earn them. There are a couple of reasons you might not hit the mark.
The first is that welcome bonuses typically require you to spend a certain amount of money on your card within a specific time frame, like $1,000 within three months or $5,000 within six months. If you apply for a card (or several cards at once) and the minimum-spending threshold is too high for you to hit (responsibly), you risk not earning the bonus. On the other hand, it's not worth being reckless with your credit card and finances to bag a welcome bonus, so be sure you can achieve the spending requirement before applying.
The second reason you might miss out on a welcome bonus is miscalculating the time window in which you must hit that spending requirement. With a welcome bonus, the spending clock starts when you are approved, not when you receive your card. So you could find yourself with fewer days, or even weeks, to get all those purchases in. If in doubt, call your card issuer and ask what the deadline is.
Not Applying at the Right Time
Hand in hand with Mistake #1 is not applying for a card when it is offering a good bonus. Like just about everything in life, welcome bonuses come and go and rise and fall periodically.
For example, via the CardMatch Tool, some customers have seen elevated, targeted offers as high as 125,000 points on The Platinum Card® from American Express when they spend $5,000 in the first six months of card membership. (Targeted offer; subject to change at any time.) Compare that to the current public offer for the card, which is just 75,000 Membership Rewards® Points after you spend $5,000 on purchases in your first six months of card membership.
Similarly, the Hilton Honors American Express Surpass® Card, and The Hilton Honors American Express Business Card are all offering their highest-ever introductory bonuses, with the Hilton Honors American Express Aspire Card,up to 150,000 bonus points after spending $2,000 within the first three months for the Business and Surpass versions, and after spending $4,000 in the first three months with the Aspire. Plus, the Hilton Honors Surpass and Hilton Honors Business cards come with a $150 statement credit after your first purchase within the first three months of account opening. That's a lot more points and money than usual.
So do your homework and look at the bonuses offered historically on cards before applying to make sure you’re getting the best deal.
The information for the Hilton Aspire Amex card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Applying for Too Many Cards
As mentioned above, applying for too many cards in a short period of time can mean that you miss hitting the minimum spending requirements for welcome bonuses. However, in the case of Chase, it can also exclude you from being eligible for some of the issuer’s best credit cards.
Related: Best travel rewards cards of 2020
That’s because of Chase’s so-called 5/24 rule. Put, Chase will automatically deny most applications for certain credit cards if you have opened more than five new credit card accounts, with any issuer, in the preceding 24-month period. Not every Chase card is subject to this rule, but premium products like the Chase Sapphire Reserve, Ink Business Preferred Credit Card, Southwest Rapid Rewards Premier Credit Card and United Explorer Card are.
Redeeming for Low-Value Rewards
We post points valuations on TPG every month to give you a rough idea of how much value you should be getting from specific types of points and miles at any given time based on a mix of factors, including award availability, transfer options and more.
Unfortunately, far too many consumers redeem their hard-earned points at below-average values for things like merchandise and even poor cash-back propositions. If you do that, don’t blame yourself too much. Credit cards, airlines and hotels tend to make it easy to cash in your points for low-value items or redemptions for a reason: It’s cheaper for them.
Remember, even if you’re interested in earning cash-back points at a fixed rate, not all points are created equal, nor are all redemptions. For instance, the Chase Sapphire Reserve lets you redeem your Ultimate Rewards at a rate of 1.5 cents apiece for travel purchases but only 1 cent each for merchandise redemptions. Now through April 30, 2021, cardholders also get 1.5 cents per point for redemptions through the "Pay Yourself Back" feature for purchases made at grocery stores, home improvement stores and dining establishments, including take-out and delivery services.
Research your options and make sure you find a program that allows you to maximize the value you get from points you redeem, either by allowing you to redeem them for things you actually need at a decent rate or to earn bonus points on the categories in which you spend the most money (more on that below).
Not Paying Off Balances
Speaking of points valuations, even the most valuable points — ones that you can transfer to hotels or airlines for otherwise high-priced rewards — are not likely to be worth anywhere near the interest rate you’ll be paying on balances that you carry. And that’s to say, nothing of the impact that carrying a big balance will have on your credit score. So before you use a points-earning card with a high interest rate to make big purchases that you might not be able to pay off quickly, consider using a card with a low (or no) APR instead.
Missing Out on Transfer Bonuses
Though they are hard to predict and offered only for limited times, don't miss out on the chance to maximize your points with transfer bonuses. For example, American Express Membership Rewards is currently offering a 40% bonus on transfers to Hilton Honors, and Citi ThankYou Rewards is boosting transfers to Avianca Lifemiles by 25%.
Letting Points Expire
At this point, there’s simply no reason your points or miles should expire. Most airline and hotel loyalty programs still enforce expiration policies, but many are lax enough that you need to earn just a single point or mile every 18-36 months, including miles you earn with credit-card spending.
The less obvious way that you might lose a whole haul of points or miles, or their ability to transfer to travel partners, is if you downgrade or close a particular account and do not transfer the points first.
First, let’s say you downgrade from a Chase Sapphire Preferred Card to a Chase Freedom Unlimited. With the Sapphire Preferred, your points would transfer to the Ultimate Rewards program’s travel partners, including British Airways, Southwest, United, Hyatt, Marriott and IHG Rewards. With just the Freedom Unlimited, those points are only good for fixed-value redemptions of 1 cent apiece.
In another case brought up by a reader, if you have a card that earns transferable Citi ThankYou Rewards points, like the Citi Prestige® Card or Citi Premier® Card and close that account, your points will expire after 60 days if you do not transfer them. Know what will happen to your points before making any major decisions on your points-earning card accounts. The information for the Citi Prestige has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Not Maximizing Category Bonuses
One of the best benefits any travel rewards credit card can offer earning multiple points or miles per dollar in various spending categories. Those can include airfares or hotel purchases with a cobranded card like the Delta SkyMiles® Gold American Express Card or the World of Hyatt Credit Card. But many credit cards also offer earning bonuses on broader categories such as travel, dining, entertainment, groceries and gas.
If you have multiple cards, it can be hard to keep track of which card will earn you the most points at which merchants.
With the variety of credit cards out there and the bonus earning opportunities they afford, you should be earning multiple points per dollar on nearly every purchase. Not doing so is basically leaving points, and thus huge potential value, on the table.
Paying a High Annual Fee for Perks You’re Not Actually Using
The annual fees on travel rewards credit cards range from no annual fees whatsoever, like with the Wells Fargo Propel American Express® card and the Chase Freedom Unlimited, to charging several hundred dollars — even several thousand dollars, like the Amex Centurion (Black) Card. The information for the Wells Fargo Propel (card no longer available) and Amex Centurion card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Many top cards have annual fees of around $95, such as the Chase Sapphire Preferred Card, Capital One Venture Rewards Credit Card and United Explorer Card (waived the first year on the United Explorer). Leveraging perks like free checked bags, automatic hotel elite credit or a free anniversary night makes it easy to compensate for a $95 annual fee…if you actually use them, that is.
Likewise, some fantastic premium travel rewards cards are charging higher annual fees that can be well worth it — but only if you maximize their benefits. For instance, cards that charge $550 a year, like the Chase Sapphire Reserve and The Platinum Card® from American Express (see rates & fees), offer a range of value-added benefits that can help offset their annual fees. These two, in particular, include Global Entry or TSA PreCheck application-fee reimbursements worth up to $100. They also offer annual travel credits for various purchases worth between $200-$300 per year and get cardholders into various Priority Pass lounges. But if you’re not using these benefits, it’s not worth paying that high annual fee. Enrollment required for select benefits.
The same is true of airline credit cards that offer lounge access with their specific airline, like the Delta SkyMiles® Reserve American Express Card, the Citi® / AAdvantage® Executive World Elite Mastercard® and the United Club Infinite Card. The Delta Reserve has an annual fee of $550 (see rates & fees), while the Citi AAdvantage Executive card has a $450 annual fee and the United card has a $525 annual fee. They will get you into Delta Sky Clubs, American Admirals Clubs or United Clubs, respectively. That’s a discount compared to the cost of outright club membership, but still not worth much if you’re not actually using those clubs.
Related: Guide to credit card annual fees
Not Asking for a Reduced Annual Fee
Speaking of annual fees, many consumers forget that you can often negotiate an annual fee when it comes due. According to a poll in this CreditCards.com story, only one in four cardholders ever contact their card issuer to request a lower annual fee or a higher credit limit. Of those who did, however, 82% reported that their annual fee had been waived or reduced. As we always say at TPG, it never hurts to ask.
However, be reasonable — if your credit card fee is $550 and you’re not spending a ton on it each year, it’s unlikely the issuer will waive the fee altogether. Instead, they might offer you a slight reduction or possibly some bonus points. See what they come back with and make your decision from there.
Not Hitting Spending Threshold Bonuses
Many travel rewards credit cards offer cardmember anniversary perks, like free nights at hotels or companion travel tickets, and the opportunity to earn additional benefits by hitting certain spending thresholds each year.
For instance, the World of Hyatt Credit Card confers a free night each anniversary at a Category 1-4 property and an additional Category 1-4 free night for hitting $15,000 in spend in the cardmember year. The Hilton Honors American Express Aspire Card comes with a free weekend night upon opening and you can earn a second one after you spend $60,000 on the card in a calendar year.
Some airline cards, including the Delta Reserve and Delta SkyMiles® Platinum American Express Card, offer the chance to earn elite-qualifying miles by hitting (rather high) spending thresholds that could boost you to the next level of elite status.
Famously, the British Airways Visa Signature Card offers a “Travel Together” companion ticket when you spend $30,000 in a calendar year. You can also earn the companion ticket as part of the card's current offer: Earn up to 100,000 Avios. Earn 75,000 Avios after you spend $5,000 on purchases within the first three months from account opening and earn an additional 25,000 Avios after you spend $20,000 in the the first 12 months of account opening.
It doesn’t make sense to spend money on things you wouldn’t otherwise purchase to hit these thresholds, but you should maximize the bonuses your credit card offers if they are within your normal expenditures.
Related: Take full advantage of annual credit card benefits in 2021
Paying Foreign Transaction Fees
Many issuers have realized that people who want travel rewards credit cards actually, you know, travel. That includes internationally. Issuers once levied 2-3% extra on purchases made abroad, but many credit cards now charge no foreign transaction fees for international shoppers. Not all cards waive these charges, however. Notable exceptions include the Chase Freedom Unlimited (3%) and the Citi Rewards+® Card (3%). Before you go abroad or even make a purchase from a foreign company without leaving the U.S., read your card’s pricing terms to see whether you might be dinged with extra fees.
Rewards credit cards can be powerful tools to help you maximize your travel strategy, but only if you can leverage benefits like category, transfer and spending bonuses, along with fee waivers, lounge access and more. Be sure you are getting enough value from your travel credit cards to justify their annual fees and that you know the terms and conditions of each so you are not hit with fees and other penalties, which might erase the value of any points you earn. That way, you'll reach your travel goals faster and get that much more value from your credit cards.
For rates and fees of the Amex Platinum Card, please click here.
For rates and fees of the Delta Reserve Card, please click here.
Additional reporting by Liz Hund.