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Forgot to pay your credit card bill? You could lose your rewards points

More issuers withholding or taking away rewards for late payments

By Jen A. Miller

Here's another reason to pay your credit card bill on time: If you pay late, you could lose your rewards points.

Forgot to pay your credit card bill? Lose your rewardsSixty percent of consumers have credit cards that offer rewards, according to the Federal Reserve Bank of Boston. And why not? Getting free stuff for using a credit card can be a great perk when using plastic.

However, "credit companies are saying, 'Rewards points if you're not paying your credit card bill on time? If you're late, maybe you shouldn't have access to that perk,'" says Scott Gamm, founder of helpsavemydollars.com.

Threatening with fees or the loss of rewards can also be an incentive to get customers to pay promptly, says Liz Pulliam Weston, a personal finance columnist for MSNMoney.com and author of "Your Credit Score, Your Money and What's at Stake." "If you're going to lose your rewards, that might be what gets you to pay attention when a late fee might not," she says.

This practice isn't anything new, says Richard Bialek, who led credit card units of GE Money and is the former senior vice president of consumer credit products at Visa International. He's now owner of Bialek Group, which consults companies on new ways of accepting credit card payments.

He saw credit card companies wiping away rewards points for late payments 15 years ago, but not with as many cards as we're seeing now, nor with the option to pay a fee to reinstate points.

"There's a cost related to rewards programs, and when the issuers don't see the payments coming in from the cardholder, they'll stop access to that," he says. "They're looking for every fee. Some of this reminds me of the airlines and new baggage fees. It's another revenue generator."

Major card issuers' late payment/reinstatement policies on rewards points
Card issuer What's late?
Reinstatement fee? Points/rewards policy
American Express 1 missed payment
$29 Rewards can only be restored after reinstatement fee is paid.
Bank of America 60 days n/a Rewards will be restored once account is current again.
Capital One 1 missed payment
n/a You lose only the rewards you earned in the billing cycle of the missed payment.
Chase 60 days n/a You lose all rewards after 60 days of nonpayment.
Citi 1 missed payment $15 Rewards will only be restored after reinstatement fee is paid.
Discover 2 billing cycles n/a You lose all rewards after missing two payment cycles.

Want to keep your rewards? Here are some things to consider:

  • Pay the reinstatement fee if you risk losing sizeable rewards. "If you have enough for business class trip to Europe, by God, yes, you're going to pay that $29," says Pulliam Weston. But if your points don't add up to the fee? Don't bother.
  • Set up automatic payments so your rewards are never at risk, especially if you just forgot about your credit card bill. Plus, you'll save yourself a late fee and possibly mucking up your credit score.
  • Pulliam Weston also recommends re-evaluating rewards programs every year, especially since card companies have watered down programs. You can use the CreditCards.com rewards cards comparison page to figure out what program works best for you to maximize your point power.

Just make sure to set up those automatic payments.

See related: How to keep track of all those rewards points, Who owns the rewards on a company card?, How to decide when to dump your rewards card for another, Do you lose your miles if you cancel your rewards card?

Published: October 19, 2010


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Updated: 04-24-2014

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