Credit Card Reward Program Loss and Devaluation

After going unused for some time, I logged into one of my credit card accounts online to find that I had over $220 dollars in unused rewards program points to be redeemed for gift cards, products, check or statement credit! After doing some research, I learned that I am not alone. About one-third of consumers fail to redeem their points, losing $16 billion per year nationally! The average consumer squanders $205 according to a national study.

There are a few important tips to remember about these rewards programs:

• Redeem frequently to avoid loss and devaluation. Devaluation occurs when the program increases the number of points needed to redeem for miles, money, or products.
• Understand the card agreement and program details. A late payment can cause you to forfeit your rewards and being unaware of the program and how it works can result in lost benefits.
• Gravitate towards cash rewards over points. Cash towards your account can help you pay down debt or pay for household needs versus wants. This also minimizes point devaluation.
• Avoid paying more for credit card branding. The card with your favorite celebrity or sports team may not be the account with the best interest rate or rewards program.
• Use the “island approach” strategy for maximum points. Choose one or two cards that provide the highest cash-back rewards on the types of purchases you make most frequently.

Most importantly, remember that if you are not able to completely pay off your credit card balances each month you will likely lose any benefits of a rewards program due to accrued interest charges on the account. Don’t let credit card rewards convince you that a non-essential purchase is worthwhile or drive you into debt! For more information on understanding how credit cards work, contact Clearpoint at 1-877-877-1995.