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Late credit card payments may cost you rewards points

Question for the expert

Dear Cathleen,
I’ve read that some credit card companies and airlines are taking people’s miles away if they’re late with credit card payments. I’ve got a lot of miles and would be really mad if that happened to me just because I was a couple days late one month. Can they do that? And what can a person do if it happens to them? — Forgetful flier

Answer for the expert

Dear Forgetful Flier,
Yes, you can lose miles if you’re late on credit card payments. The practice of holding rewards hostage in order to force payment is becoming more common as card issuers try to find new ways to make up for the restrictions on rate hikes imposed by the Credit CARD Act.

You’re not likely to lose all your miles permanently for being a couple days late now and then, but since you have a lot of miles at stake, you may want to read the fine print on your card agreement.

Generally, card issuers will restore all or most of your rewards once you settle up, but it may prove costly. Different card issuers have different rules for reinstating rewards and most are more lenient for cards that are co-branded with airlines. However, these rules can change fast, so if you’re considering a new rewards card, read up on the penalties for late payments — especially if you’re not planning to set up automatic payments.

Some card issuers will freeze rewards after a missed payment, then restore them after you settle up and (in some cases) cough up a reinstatement fee — on top of the late fee you’ll have to pay. Citi normally charges a $15 fee to reinstate rewards on its own cards, for example, but its co-branded American Airlines cards do not.

American Express charges $29 to reinstate miles after one missed payment on any of their rewards cards — and that now includes Delta SkyMiles and JetBlue AmEx cards. A $29 fee may be worth shelling out if you’re thisclose to scoring an overseas flight, but if you miss a few billing deadlines, you can rack up the price of a domestic flight in reinstatement fees pretty fast. Add their $19 to $38 late payment fees and you may find you’re covering the cost of some serious air travel.

Other card issuers will dock the rewards you would have earned during the billing period of a missed payment but defer to the airlines regarding miles. If you miss two payments on most Chase cards, for example, you will lose the rewards for that month and no reinstatement fee will bring them back.  However, Chase cards associated with Continental OnePass or United Mileage Plus are managed by the airlines. A customer who has an open account and charging privileges at the time of the statement date will earn those points. Points will be forfeited only if an account is closed during a billing cycle.

Obviously, the surest way to avoid the disaster of losing your rewards — and racking up fees — is to set up automatic payments. If that’s not an option, take those fees into consideration when you choose your credit card. A few airlines offer frequent fliers cards from more than one issuer. American Airlines offers AAdvantage members American Express and Citi Visa, for example.

See related:A guide to the Credit CARD Act, Forget to pay your card bill? You could lose rewards points

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Published: August 6, 2011

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Credit Card Rate Report Updated: June 12th, 2019
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