4 fine-print traps to watch out for in credit card rewards programs


Assuming, and not reading the contract, can lead to disappointment

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If you’re new to rewards cards, it’s easy to assume that accumulating enough points for a free travel or cash back is as simple as just using your card.

Truth is, racking up enough rewards for free travel or substantial cash back can be complex, and making assumptions could lead you to some disappointing discoveries – such as not having certain purchases count the way you thought they should, or not getting perks because you didn’t claim them. (See “Rewards cards draw a surge of complaints to the CFPB.”)

Checking out the fine print can help you avoid hidden traps that could trip up your rewards-earning progress.

CreditCards.com spoke to three savvy rewards cardholders to put together a fine print primer to help you avoid these potential point pitfalls.

  • Confusing bonus spending categories.
    Are bonus categories capped? When different cards have similar bonus categories, figure out which card rewards you the most. Plus, know if your spending at a certain type of establishment qualifies for that category.
  • Know how to claim your rewards.
    Some issuers require you to opt in or sign up for certain rewards categories.
  • Educate yourself on special perks of your card’s rewards program.
    Not all rewards perks are automatically granted and require sign up, such as Priority Pass membership or airline fee credits.
  • Don’t make assumptions.
    Card terms and fees can change. Pay attention to issuer communications.

1. Confusing bonus spending categories.

The advantage of a rewards card’s rotating category bonuses is that they are usually the highest bonuses you can get, says Ariana Arghandewal, founder of Pointchaser.com. But there may be limits and loopholes. Here are a few to consider:

Are bonus category earnings capped?

With many cards, there is a limit to how much you can earn, says Arghandewal.In the case of the Chase Freedom card, for instance, bonus earnings apply to just the first $1,500 spent each quarter. Cardholders who max out on this cap can end up with $300 cash back every year, which isn’t too shabby.However, if you know you’ll spend more than $6,000 per year in a specific category, you might consider choosing a card that offers uncapped bonus rewards.

For example, says Arghandewal, the American Express Platinum card offers 5x points on airfare, with no limits.“That’s awesome for people who charge a great deal of personal or business travel to their credit cards. A while back, some family members offered to let me charge their $5,000 airfare bill to my credit card, and I earned 25,000 points,” says Arghandewal.. “If I had used my Chase Freedom at the time, the bonus would only have applied to the first $1,500.”

When categories clash, dig deeper.

Since power point collectors often juggle more than one reward card, it is possible that more than one of your cards will have the same categories offering bonuses during the same period, says Grant Thomas, miles and points expert and founder of Travelwithgrant.com.“Right now, we are in the third quarter (July 1 – Sept. 30) and the Chase Freedom and Discover it Cash Back credit card both earn 5 percent cash back at restaurants,” he says. “I have both cards, but I will focus on the Chase Freedom, because it is accepted at more restaurants than Discover.” The Discover it® Cash Back earns 5% cash back on rotating categories on up to $1,500 a quarter, then 1%, activation required.

Don’t assume all your spending is created equal.

“Let’s say a credit card has a 5x per dollar bonus on groceries. It is important to know what is defined as groceries,” says Walter Travers, also known as the Credit Card Maestro with more than 11,000 followers on Twitter.

“Third-party food apps, online gift cards, and non-wallet payment methods (such as Apple Pay or Android Pay) may not always count toward bonus spending,” he says.Along those lines, if you’re someone who buys gas at Costco, know that since it’s not classified as a gas station, it might not count on cards that offer extra points on gas purchases. “Clarification can normally be found within the terms and conditions in the bonus section, or by calling customer service,” says Travers. “Some credit cards offer incredible perks that require user sign-up.”

Taking the time to verify how payments are tracked can work in your favor, too, as Arghandewal discovered. “I used to shop at Target for pretty much everything: skin care, food and household essentials. Back then, I had an American Express Premier Rewards Gold card, which earned 2 points per $1 spent at grocery stores,” she says. “I wasn’t using this card regularly for my Target purchases, until one day I discovered that American Express was coding Target as a grocery store.” After that, she was able to earn double points on essentially everything she bought there.

Use tricks to reach maximums. 

If you aren’t close to earning the most you can in each quarter, use Thomas’ trick: Buy gift cards to max out rotating bonus categories.“For a restaurant bonus, you can buy gift cards to your favorite restaurants during the quarter, and then use them year-round,” he says.However, American Express recently amended its terms and conditions saying the purchase of gift cards, among other things, do not count toward the spending requirement for bonuses.

2. Perks left on the table because you didn’t claim them.

Some card benefits are no-brainers that are automatically available when you sign up and use the card, such as earning cash back or getting consumer purchase protections, such as extended warranties. In other cases, you must be proactive.

“Some credit cards offer incredible perks that require user sign-up,” says Arghandewal. For example, The Platinum Card from American Express offers an annual $200 airline fee credit, but cardholders must designate an airline each year to which the credit will be applied.

Similarly, Travers points out that he had to enroll in American Express’ Priority Pass Select membership, which provides complimentary access to 1,000 lounges worldwide, to gain free airport lounge access.

Whether it’s elite status with a hotel or rental car chain, baggage fee credits for when you fly or concierge services, read your card welcome kits carefully to find out what you need to do to enroll. Usually it’s as easy as a one-time or yearly online registration.

3. Not taking advantage of special programs that boost rewards.

Once comfortable with your credit card’s rewards program, you may be able to find some advanced maneuvers hidden in the fine print for even more earnings. One way to do that is to analyze your redemption options, says Arghandewal.

For example, points from the Chase Sapphire Reserve card are worth 1 cent each when redeemed for statement credits. But Chase offers cardholders 50 percent more value when they redeem points through the Ultimate Rewards Travel Portal, boosting the point value to 1.5 cents.

“Then if you take advantage of the card’s 3x point bonus on travel and dining, you’re essentially earning 4.5 percent,” she says.

Another route to more points hidden in the fine print is referral programs.

“Currently, the Chase Sapphire Preferred® Card offers a refer-a-friend program. Customers can earn up to 50,000 bonus points a year (10,000 a referral, with a maximum of five referrals) when someone is approved with the personal code from the current customer,” says Travers.

Finally, consider how your brand loyalty and affiliations could ramp up your points. Some banks reward card users for also having a checking account or retirement account with them.

For example, BankAmericard currently offers a 10 percent customer bonus for people who redeem cash back into a Bank of America checking or savings account. So, if you earn $100 and put it directly into your account, you’ll get $110.

4. Making assumptions.

There is a learning curve when it comes to getting the most out of your credit card rewards programs, especially when you make assumptions. Here are two misconceptions to avoid:

  • Foreign transaction fees only matter if you’re a globetrotter.
    If you’re more of a domestic traveler, you might not be too concerned if your chosen rewards cards tack on fees of 3 percent or more for overseas purchases. However, what most people don’t realize is that shopping from your home base can still rack up foreign transaction costs.“You don’t have to physically be in a different country. Online shopping can incur foreign transaction fees if purchased from an overseas merchant,” says Travers.
  • Rewards programs stay the same.
    On the contrary – card terms can change at any time – it says so right in the fine print. Thomas suggests making it a habit to skim your entire credit card statement (either online in PDF form, or the physical copy that arrives via mail) and any communication directly from the issuer to spot any upcoming program changes. You might come to realize that you’re not getting as much value from a card as you once did if it decides to drop or reduce a certain offer, for example.

Getting the most value from rewards cards requires a careful navigation of each one’s term and conditions. By putting in some quality time with the fine print, though, you can successfully win the game of points.

See related: Getting the most out of multiple rewards cards, Not all travel qualifies for bonus rewards points

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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