Here's What Happens When You Don't Use Your Credit Card Points

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  • Credit card points may lose value if you don't use them, as redemption options can change.
  • If your credit card is closed for any reason, you could lose all your unused points.
  • To avoid hanging on to credit card rewards for too long, plan how you want to use them and give yourself a time limit to do so.

Rewards are definitely one of the best, and most exciting, perks that many credit cards offer. Just use your card for eligible purchases, and you can earn points on every dollar you spend. Let's be honest, people love earning just about any type of point, and credit card points are especially useful because they can save you money.

Now, any time points are involved, it's normal to want to accumulate as many as possible. But this often leads to hoarding points instead of using them, and that's a big problem. To explain why, let's look at how this can go wrong.

Your credit card points may become less valuable

One of the most important things to understand about credit card points is that their value can change at any time. For example, airlines and hotels have been known to increase the cost of award travel. A hotel could raise room rates from 30,000 points per night to 40,000 points. This is known as a devaluation, because it lowers the value of your points.

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There are many types of credit card rewards programs and points out there, but any of them can lose value. Let's say you have points that can be transferred to multiple airline and hotel loyalty programs. That list of partners can change, leaving you unable to send your points where you planned.

The longer you hang on to your points, the more likely it is that something happens making them less valuable. Even if you have points you can redeem as cash back, you're still better off using them sooner rather than later. Because of inflation, redeeming $100 today is better than redeeming $100 a year from now.

You could lose them

Points usually don't expire as long as your rewards card remains open. Double check the terms just to be sure, but that's how it works with the vast majority of rewards credit cards. Based on that, you may assume that your rewards are safe as long as you don't close your credit card.

However, the card issuer can also close your credit card. In fact, credit card issuers can do this at any time, and they aren't required to give you advance notice.

To avoid giving you the wrong idea, it's extremely unlikely that a card issuer will decide to close your credit card for no reason. Account closures always have some logic behind them, but it could be an issue you weren't aware of. Here are a few of the most common reasons why a card issuer would close your account:

  • Your account is inactive. If you haven't used your credit card for a long time, the card issuer may cancel it. You'll likely receive a notification before this happens, giving you the opportunity to use your card again and avoid a cancellation or redeem your rewards.
  • Your credit score has dropped. Card issuers monitor the credit history of their cardholders. If something has damaged your credit score, such as missing a payment or defaulting on an account, a card issuer could close your card because you pose a higher risk than before.
  • You violated the terms and conditions of the rewards program. Card issuers sometimes close accounts if they suspect cardholders of abusing the rewards program. For example, if a card issuer suspects you of trying to manufacture credit card spending to earn more rewards, it could shut down your account.

The bottom line is that if you run afoul of your card issuer, it could close your card. When that happens, you may lose all your rewards. Some consumers have lost thousands of dollars worth of credit card points this way.

Don't hold on to your credit card points for too long

It's tempting to save your points for the perfect redemption opportunity, especially if you use travel credit cards. You may want to wait until you go on an expensive trip, such as an international vacation, instead of redeeming your points for anything less expensive.

There's nothing wrong with being strategic about how you redeem points. If you can maximize their value this way, it's well worth it.

However, keep in mind that the whole reason to earn points is so you can use them to save money. A balance of 500,000 points may look impressive in your account, but it hasn't benefited you in any way until you use it. If you often find yourself hanging on to points for a long time, start planning how you want to use them and give yourself a time limit to redeem them.

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