7 Ways to Lose Credit Card Reward Points

You sweat over your expenses for months or years to collect enough rewards to take you on the journey of a lifetime. But your dreams can quickly be dashed if you commit a breach that causes your card issuer to forfeit your rewards.

“They may disappear,” says Ira Reingold, executive director of the National Association of Consumer Advocates.

One of the most common ways to lose a reward is to return an item, in which case you will most likely lose the points, miles, or cashback earned on that purchase.

However, there are at least seven other ways in which you can lose your points or miles, which are in the fine print in many rewards program agreements. You can lose your rewards in the following cases:

Rewards expire

In most major credit card rewards programs, with the exception of airline rewards, points do not expire while the card is active.

Consumers should be aware of points expiration in advance on their card program, and they should record expiration dates so they don’t lose points, says Rosemary Clancy, former vice president of content and marketing for RewardExpert.

“Some awards have an expiration date,” she says. For example, in the Citi ThankYou rewards program, some card rewards do not expire, while others expire after three or five years.

If you have a co-branded airline card that credits miles directly to your frequent flyer account, you may need some account activity every 18 months or so to keep your miles from expiring, depending on the program.

“Shelf life is a big issue, so you need to constantly check your stock,” Clancy says.

You are missing a monthly payment

Most card issuers require the cardholder to maintain an account in good standing in order to use and retain rewards. Policies vary, but most issuers will only take your points if your account becomes seriously delinquent.

If this happens, returning your rewards may cost you money. American Express states in its Terms and Conditions of Membership Rewards that a cardholder who fails to pay the amount due on the account by the closing date of the next billing period will forfeit all rewards earned during the time shown on the unpaid report. However, the cardholder can recover the reward through the Amex online portal by paying the invoice plus a $35 fee. Amex warns that points must be redeemed within a year or they will be permanently cancelled.

Other issuers may not charge you, but still require you to jump through hoops. For example, the Citi ThankYou rewards program will not allow a late payer to redeem any points until the account has been updated and the cardholder has requested points to be reinstated online or by phone. Chase Ultimate Rewards Agreements for various cards state that cardholders who are 60 days late will be temporarily prohibited from redeeming points. Rewards will automatically become available again for use in the next billing cycle after the account has been upgraded.

If you don’t choose any card completely, you will most likely lose your points altogether. For example, the Chase Agreements state that if you go 60 days from the payment date without paying the minimum amount, your account may be closed and your points deducted permanently.

Points are a reward for using the card and paying as agreed, says Nessa Feddis, senior vice president of the American Bankers Association. “Basically, it doesn’t make sense to give money in the form of points to someone who doesn’t pay what he or she owes,” she says.

Card inactivity

If your credit card issuer cancels your account for inactivity, your points will disappear. Some issuers may collect your rewards immediately. For example, the BankAmericard® Travel Rewards credit card terms and conditions state that your points will be forfeited if your account is terminated for any reason.

However, many issuers offer a grace period during which you can use the rewards. The agreement with American Express allows the cardholder to use the points for 90 days after the account is closed for inactivity. Citi will wait 60 days after closing an inactive credit card account to terminate the ThankYou promotion account. Once your ThankYou account is closed, points will expire. And if the account is closed simply for inactivity, Chase gives the customer 30 days to use the remaining points.

Financial difficulties

Some issuers consider financial hardship a reason to take your points. For example, the Chase Ultimate Rewards card agreements state that the company can forfeit points if you file for bankruptcy.

The reality is that by the time most people file for bankruptcy, they’ve already lost their points or miles because they’re badly overdue, says Edward Bolz, a North Carolina-based bankruptcy attorney and partner at John’s Law Office. T. Orcutta. However, some consumers do file for bankruptcy as long as they have credit card accounts, and it makes sense that a lender would like to leave open the option to collect any remaining points in this situation, he says, if cards are closed or balances have been wiped out. as a result of bankruptcy.

First, if you owe, say, $6,000 or $8,000 and the issuer knows they could lose that money, they don’t want you to also get the perks earned from those expenses, Boltz says. Second, the issuer may want to defend against a receiver who treats the fee as an asset. For example, they don’t want a trustee to say, “Oh, you have 60,000 frequent flyer miles, I’ll cash in on the flight and sell it to the highest bidder,” he says.

you break the rules

Most issuers warn that they will deduct points if you break the rules of the program, such as trying to sell your points or commit fraud.

American Express states that if you attempt to earn or use points fraudulently, they may take your points and close your cards. And Wells Fargo says it can determine in its “sole discretion” whether you have abused the program, as Capital One does.

Some card issuers have also cracked down on bonus card “churning”, where you sign up for a new card just to get bonuses and then close those cards and sign up for new ones.

For example, Chase’s agreements state that the issuer can forfeit points if you “misuse” the program by “repeatedly opening” cards just to earn rewards. The Chase 5/24 rule, which can result in a credit card being denied if you’ve opened more than five card accounts with any bank in two years, is an attempt to discourage consumers from opening cards just to get a benefit. promotional offers.

Card issuer changes rewards program

Most agreements mention in fine print that the issuer can cancel the rewards program. If this happens, cardholders will in many cases have several months to use the rewards.

For example, if the program is ever cancelled, Chase will give Ultimate Rewards members 30 days to redeem their points. And the Citi ThankYou rewards program will allow consumers to redeem points for 90 days. However, Capital One Venture’s remuneration agreement simply states that the issuer may terminate the program at any time without prior notice.

You can minimize the chances of losing your rewards for any reason by keeping your account in good condition, keeping a close eye on it, and following the rules.

If you have a co-branded airline card and your points are credited directly to your frequent flyer account, the points are subject to the terms of that account, not the terms of your credit card issuer. The same applies if your card issuer allows you to transfer points to a frequent flyer or hotel loyalty account and you do so.

Reingold says one way to avoid waiting too long for points is to consider switching to a cashback program.

Cancellation of a credit card account

You may lose your Rewards if you close your credit card account before redeeming or transferring points.

In this case, you can double check with your credit card issuer to see if you are allowed to transfer rewards. Multiple credit cards allow you to transfer your rewards if they are in the same rewards program.

However, some credit card issuers allow you to use rewards for a certain amount of time after your account is closed. For example, the terms of the Citi ThankYou Rewards state that you can use your Rewards within 60 days of closing or converting your account.

bottom line

Consumers spend time and money to earn rewards, so losing it is like wasting an investment. You can use your rewards strategically as long as you follow your card issuer’s policies and plan ahead to close your account.