This Newbie Credit Card Mistake Cost Me Money -- but Taught Me a Valuable Lesson

by Natasha Gabrielle | Updated Aug. 27, 2022 - First published on Sept. 5, 2021

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A woman sitting next to her dog on her couch in the sun while holding a credit card and looking something up on her laptop.

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When I got my first travel rewards credit card, I didn't consider all redemption options. That mistake made me miss out on hundreds of dollars in rewards value.

Using credit cards responsibly can allow you to build and improve your credit. You can also earn valuable rewards if you're using a rewards credit card. But there are different ways to redeem your earned rewards, and some redemptions are more valuable than others.

Several years ago, I made a credit card redemption mistake that cost me money. It did, however, teach me a valuable lesson. Keep reading to learn from my error.

I should have paid more attention to my redemption options

When I first heard about credit card rewards, I was hooked. I was already using credit cards regularly, and I had developed a good habit of paying off my card balances every month to avoid interest fees. When I realized I could earn rewards on my spending, I knew I needed to get started. Since I was beginning to travel more, I decided to get my first travel rewards credit card, which came with a sign-up bonus.

After applying and being approved for my card, I managed to meet the minimum spending threshold and earned a big chunk of bonus points.

But here's where I went wrong: I didn't carefully consider all of my redemption options. Instead, I redeemed my points for cash back in the form of a statement credit. That wasn't a smart move and was a poor redemption choice that carried far less value than other options.

My mistake cost me hundreds of dollars

The card I had was not just a cash back credit card; it was a travel rewards card that offered more rewards potential. I had three redemption options available to me:

  • Redeem points for statement credit (worth $0.01 per point)
  • Use the points to book travel through the credit card's rewards portal (worth $0.0125 per point)
  • Transfer points to an eligible travel partner at a 1:1 transfer rate and then book travel (the total value varies from program to program, but redemptions can easily be worth $0.02 to $0.03 per point)

The options I didn't choose likely would have offered more value. I don't remember exactly how many bonus points I received because I no longer have a record. But I'll give an example to illustrate how silly my mistake was:

Let's say I had 60,000 points to redeem -- 50,000 from a sign-up bonus and 10,000 from my regular spending. At the rates I discussed above, here's what value I could have earned:

  • Cash back statement credit: $600
  • Booking travel through the card's reward portal: $750
  • Transferring to a transfer partner and then booking travel: $1,200 (estimating $0.02 per point value as an example)

My rookie mistake cost me hundreds of dollars. But it taught me a good lesson and helped me better navigate my future credit card rewards journey. It gave me a good laugh, too.

Always research redemption options

Here's the valuable lesson I learned: Carefully researching redemption options is a must.

Had I researched more, I could have maximized the value of my points. The $600 statement credit at the time sounded great, but it wasn't the best option. If I could go back and do it over, I would transfer all of my points to a transfer partner and book an unforgettable vacation.

Are you wondering what kind of vacation you can take with credit card points? Here's an article that discusses four ways to redeem 60,000 Chase Ultimate Rewards points for travel. These trips would be amazing. When comparing the cash price to book these trips, using points would likely offer more value than $600 in statement credit.

If you're new to travel rewards, be sure to research and have a plan in place before you redeem. You may be able to stretch your points further. If you'd like to get a travel rewards credit card and start earning points for travel, check out our list of top travel credit cards.

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