Do all purchases count when racking up rewards?

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I pay my Liberty Mutual auto insurance quarterly ($425). I would like to pay it with my Venture card for air miles. Will that count as a “purchase?” – Billy

Dear Billy,

If you are new to using credit cards for rewards, it might be unclear exactly how the cards accumulate points.

In general, whenever you make a purchase with a rewards credit card, you receive points. The number of points you receive depends on the card and perhaps the category (gas stations or grocery stores, for example) of the purchase. Usually, the definition of a purchase is uncomplicated. If you go to the mall and buy a shirt and use your card, that is obviously a purchase and will earn you reward points.

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Not all transactions earn rewards

But sometimes, the definition of a purchase is not as straightforward. Let’s look at the definition from the program terms of a Capital One Venture Rewards Credit Card: “You will earn 2 miles per dollar on net purchases (purchases minus any credits or returns) only. Cash advances, balance transfers and checks used to access your account are not considered purchases and will not earn reward points.”

Most credit card reward programs contain similar language detailing the categories that are ineligible for rewards. Let’s examine these segments in a little more depth:

• Net purchases. This means that if you spend $800 one month but then return $100 worth of merchandise, you will earn rewards on only $700 worth of spending. That happens even if the returns take place in a future month: The card issuer will subtract those points.
• Cash advances. If your credit card has a PIN, you can probably use it at a cash machine. You also might be able to walk into a bank and get cash with your card. But that is usually a horrible idea because the interest rates on cash advances are high and begin accruing immediately, even if you pay the money back at the end of the month. And you don’t earn reward points on advances, either. There might be other places, too, where using the card for cash or cash equivalents counts as a cash advance, such as buying chips at casinos or buying cryptocurrencies online.
• Balance transfers. Be careful on balance transfers, too. While it can make sense to move a balance from a high-interest card to one with lower interest rates, there are often fees. You do not earn reward points on balance transfers. And balance transfers do not generate rewards.
• Convenience checks. Known as “convenience checks” or “credit-card checks,” these sometimes come in the mail along with your monthly statement. Be careful: They are treated the same as cash advances, with corresponding high interest rates, and do not count toward rewards.

See related: Paying rent with a credit card

Purchases that earn points

What’s left? Everything else counts as a purchase, including your car insurance payment. Some vendors will charge you a convenience fee for the privilege of paying with credit. And, there are some bills you cannot pay with credit cards, such as credit card bills or home-equity loans.

Shifting your spending onto credit cards can be a wise strategy for accumulating credit card rewards – assuming you have no credit card debt and pay off your balance in full each month.

So breathe easier – that car insurance bill will go toward Capital One points and move you closer to redeeming for those airline miles.