Published in: Credit Cards | Nov. 1, 2018
Don’t Make These 7 Crucial Travel Credit Card Mistakes
By: Lyle Daly
Whether you’re just getting started with travel cards or you’ve been earning points for years, learn what the biggest travel rewards mistakes are and how to avoid them.
Image source: Getty Images.
It’s no mystery why travel rewards continue growing in popularity. Who doesn’t want to have amazing vacations that they pay for in points that are racked up just by making their usual, everyday purchases?
But rewards can be a complex subject, and making the wrong move often has costly consequences. That may mean you get a low value for your points, or you could be stuck unable to get the best travel rewards cards for years. To keep you safe from any of those doomsday scenarios, here are the biggest travel rewards mistakes.
1. Applying for travel credit cards on a whim
People don’t always put much thought into the travel cards they choose. Some just pick the first one they see, and others apply for a bunch of different cards to earn a ton of points.
The problems here are that you could end up with cards that aren’t a good fit for your lifestyle and that applying for too many cards can impact your chances at getting other cards in the future. For example, Chase’s 5/24 rule would block you from getting any of the bank’s highly rated travel cards if you had opened five or more cards within the previous 24 months.
You don’t have to spend months comparing cards, but it is worth checking out the benefits and rewards that different travel cards offer.
2. Missing out on sign-up bonuses
Sign-up bonuses are perfect for earning a lot of points quickly. You could make 50,000 points or more in months by reaching one spending minimum.
Just don’t lose the bonus opportunity by not spending enough. Make sure you know what transactions will and won’t count towards the minimum. Any regular spending should count, but annual fees usually don’t, and gift cards may not either.
Another way you can miss out on a bonus is by waiting too long to get the card. The best sign-up bonuses are often temporary, and card issuers can reduce them without warning.
3. Hoarding points
This is one I’ve been guilty of. I collected hundreds of thousands of points, telling myself I’d save them for high-value redemption opportunities, such as international travel.
It’s not a bad idea to save some points for costlier trips you have on the horizon, but only to a certain extent. Travel rewards aren’t a stable currency. Rewards programs can lose transfer partners, and airlines and hotels can devalue their points by making redemptions cost more.
Since you can’t be entirely sure what points will be worth in the future, prioritize saving money with those points in the here and now.
4. Waiting too long before booking with your points
I’ve always been the kind of person who books travel last minute, but that’s ill-advised when you’re using points to pay for your trip.
Award space is often limited, especially if you’re looking for a more luxurious redemption, such as business-class or first-class international airfare. Book as far in advance as you can so you don’t get stuck paying cash.
5. Overspending to earn more rewards
One downside of travel rewards is that it’s easy to fall into the trap of spending unnecessarily and using the points you’ll earn as your justification.
Maybe you find yourself thinking “I shouldn’t be going out to eat this much, but my credit card earns double points on dining anyway,” or “I don’t need to buy this, but I’m trying to meet a spending minimum for a bonus, so it’s no big deal.”
Never change your spending habits for rewards. Your budget should stay the same no matter which credit card you’re using.
6. Paying unnecessary annual fees
Many travel cards have annual fees. In most cases, if you can take full advantage of the card’s benefits, you’ll still come out ahead even after taking the fee into account.
But here’s the thing -- it gets tougher to maximize those benefits when you have multiple travel cards, especially since those cards may have similar features.
Having one card with an annual fee is fine, but if you have more, it’s worth calculating how much value you’re getting from each of them and potentially downgrading or even closing cards you don’t need in favor of a travel card with no annual fee instead.
7. Wasting rewards on low-value redemptions
Many rewards programs give you an assortment of ways you can redeem your points, with certain redemptions being a far better deal than others. For example, some let you redeem points for products, but you’ll almost always get less for your points this way than you would with a travel redemption.
Since redemptions can vary so much in value, it’s worth figuring out the best ways to use your points. With a little research, you can learn the average value with each of a program’s redemption options and choose accordingly.
Making the most of your travel rewards
Mistakes happen with travel rewards. Like I mentioned, I’ve made several of the very mistakes I advise against in this article. Just try to avoid them as much as possible so you can get the greatest value from your credit card and its rewards program.
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