You were saving those airline credit card miles for your dream vacation. Finally, you accumulated enough and go online to reserve your flight only to get bad news. Your miles have expired. They are no longer good.
It's a mistake that even John Ulzheimer, president of consumer education for SmartCredit.com, has made, to his utter dismay.
The bank won't mind these mistakes
Letting your rewards points or miles expire is one of many common mistakes that your credit card issuer won't mind if you make. The prospect of earning miles for each purchase encouraged you to charge up a storm, and now the bank doesn't have to pay out a single mile.
As he learned the hard way, Ulzheimer says, when you select a rewards credit card, you have to read the fine print and know the rules of redemption or you could lose out big time. "It can be a lot to manage," he says, but if you're going to play this game you have to take the time.
Here are six other mistakes your credit card company won't mind if you make:
- Pay only the minimum each month. You know you should pay more than the minimum and cut down on the interest you're paying for "borrowing" the balance. Thanks to the Credit CARD Act of 2009, your bill tells you how much it's going to cost you to pay off the balance over time. But that hasn't seemed to scare too many consumers into paying more of their bill each month, says Gail Cunningham, vice president of the National Foundation for Credit Counseling.
- Pay late now and then. Don't be mistaken, Ulzheimer says. "The credit card companies want you to pay. But they don't mind your paying late once in a while." Yes, under the CARD Act, they cannot raise the interest rate on your balance if you're only 30 days late once. But they can raise the interest rate on your new purchases as long as they give you 45 days' notice. And they can charge you a late fee - think how much late fees of $29 to $39 generate for the credit card companies.
- Ignore the mail. You are so busy, you don't pay attention when you get your monthly credit card statement. Whether it arrives via email or snail mail, it's critical to open it so you stay informed of any changes to your account. You could be getting a 45-day notice that your interest rate is rising for a late payment or some other reason. Or there could be charges on your statement that are fraudulent, which you won't have to pay - as long as you inform the credit card company right away.
- Use a balance transfer to rack up new debt. You transfer your outstanding balance to a card that has a low or zero introductory interest rate thinking you'll save money. Then you hear this voice in your head telling you to use this card when you're at the checkout. You may save money by taking advantage of a balance transfer credit card, but not if you start racking up the bills on this card, too. "You need to understand that moving debt around is not the same as becoming debt free," Cunningham says. If you go for a balance transfer offer, use it to pay off your debt, not add to it. You want to be sure that you pay off your balance by the end of the promotional period on the card or all your work transferring your balance was for naught. Also, watch out for balance transfer fees.
- Opt in to go over your credit limit. Under the new law, if you don't opt in and you try to buy something that will put you over your credit limit, the transaction could be declined at checkout. You may have opted in so you can avoid embarrassment. However, if you opt in, it can cost you, Ulzheimer says. You still can be hit with an over-limit fee and you can face higher interest rates on your credit card balances.
- Pay more fees than you earn in rewards. If you don't travel, Cunningham says, why sign up for an airline credit card? "Say your annual fee is $129 and you've only earned enough rewards points to get $80 cash back," Ulzheimer says. "You've just self-funded your own rewards program." In that case, it's better to choose a card with no annual fee even if it has no rewards points program. And needless to say, if you carry a balance even for one month beyond any promotional interest period, the interest you'll pay can quickly eat up any rewards points you might have earned.
You can win the rewards credit card game, but only if you know the rules and you play by them.