Baffled by Your Credit Card Rewards? You’re Not Alone

Photo (cc) by Philip Taylor PT

While the whole point of having a rewards credit card is to reap big rewards, a large slice of consumers admit they don’t know how their own cards’ programs work.

A recent J.D. Power study of credit card satisfaction found that 41 percent of the more than 14,000 people surveyed don’t fully understand the rewards their cards carry.

By not understanding how these programs work, you could easily wind up leaving money on the table, rather than putting it in your pocket. Here’s how you can figure them out:

Read the fine print

Whether you want to apply for a new credit card, or have an existing rewards card, be sure to read all the fine print, even if seems dull as dirt. To use your card most effectively, you need to understand how that particular rewards program works.

But the details of rewards programs can be a moving target. Credit card issuers can change the terms, so you need to keep an eye out for any modifications that show up in your mailbox.

Make sure the rewards fit your needs

Some credit cards offer cash back on purchases. Others give you airline miles or points. Often points can be redeemed for a wide range of items, such as travel and merchandise.

When you’re trying to sort out which card to choose, be sure it fits your lifestyle and needs. An airline card that gives you miles when you make purchases won’t help if you’re afraid to fly.

Our credit card marketplace will give you the lowdown on various rewards credit cards and let you make comparisons among many popular cards.

Understand cash-back terms

While you can’t go wrong getting cash back for your purchases, many cards provide varying amounts of cash back depending on what you buy and how much you charge. For instance, some cards are more generous with cash back for groceries, while some provide extra rewards for spending on gasoline and utilities. Some limit the amount of credit card charges that qualify for cash back in a year, and others allow unlimited rewards.

In some cases, the categories in which you can earn the most cash back will rotate from month to month or will change every three months.

Check the annual fee

Many rewards credit cards carry annual fees, so don’t apply for one of those cards and then never take it out of your wallet. You need to be sure you’ll spend enough to justify the annual fee.

But with all that spending, make sure you pay your balance off each month. You don’t want to pay interest charges that cost as much or more than the rewards you earn.

Look for bonuses

Some travel rewards credit cards will give you extra points if you open up a new card and spend a certain amount of money in a certain period of time. The amounts vary by card. With the Barclaycard Arrival World MasterCard, for example, you’ll earn 40,000 bonus miles if you spend $1,000 within the first 90 days of opening your account. That essentially means you’ll save $400 on your next trip.

The key is to understand exactly how much you need to spend, and how quickly you need to spend it.

Consider how many cards you need

If possible, carry only one rewards credit card. By putting all your charges on that card, you’ll accumulate points or miles faster, so you can earn that free flight or purchase that new tablet sooner.

Know the limitations

It’s not uncommon for miles or points to expire. Often they’re good for only 12 or 18 months.

In some cases, your credit card issuer will only allow you to earn a certain number of points per year.

If your card has limitations, make sure to use your points before they expire, and try to avoid running up new charges on the card if you’ve passed your limit or won’t earn anything for it. In that case, another rewards card will come in handy.

Always keep in mind that applying for new credit cards can push down your credit score temporarily. And don’t forget: Carrying a balance can easily cost you more than the reward cards are worth.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
5 Reasons You Should Retire Sooner, Not Later
5 Reasons You Should Retire Sooner, Not Later

Waiting until age 70 to retire isn’t for everyone. Could you be waiting too long?

The 2 Biggest Retirement Fears of Baby Boomers
The 2 Biggest Retirement Fears of Baby Boomers

Boomers have a lot of worries as they age, but two stand out.

Small Splurges That Make It Feel Like You’re Living Large
Small Splurges That Make It Feel Like You’re Living Large

Cutting costs is the shortest path to financial freedom. However, there are times when a little spending can produce big returns.

10 Products That Upgrade Your Home for Less Than $45
10 Products That Upgrade Your Home for Less Than $45

Make a fresh start with these affordable Amazon buys.

This Cellphone Carrier Has the Worst Network Quality, Customers Say
This Cellphone Carrier Has the Worst Network Quality, Customers Say

One major wireless provider stands out for the least reliable call, messaging and data services.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.