Whether you’re a novice or a full-on expert, there are key tenets to follow if you want to successfully navigate the world of credit card rewards.
As the saying goes, “Everyone makes mistakes,” and the points and miles game is no exception. Even seasoned pros can slip up, resulting in missed rewards, lower credit scores or extra money out of pocket.
Here are my 10 “commandments” for travel credit cards to help you avoid some of the most common mistakes cardholders make.
| Commandment | Why it’s important |
|---|---|
It avoids interest charges that negate the value of your rewards. | |
You may incur a late fee, and it may impact your credit score. | |
Don’t rush to cancel a card | It could lower your credit score. |
Canceling a card may nullify your rewards. | |
Don’t let your rewards expire | You may let hundreds of dollars in value go to waste. |
Don’t miss out on a welcome bonus | You could sacrifice thousands of dollars in value by misunderstanding the timeline or what does (and doesn’t) count as eligible spending. |
Maximize category bonuses | Aligning your card(s) to your spending habits allows you to make the most of every dollar you spend. |
Don’t ignore cards with annual fees | You could be missing out on valuable benefits and rewards. |
A card issuer could offer you a compelling reason to not cancel a card. | |
Avoid foreign transaction fees | You can avoid extra charges of up to 3% on every purchase outside the U.S. |
Let’s dig into each of these in greater depth — though please share your own favorite rules in the comments below.
Related: 5 things to check before applying for your next credit card
Thou shalt pay thy balance in full
Keeping a balance is a cardinal sin when it comes to credit cards.
Unfortunately, I know several people who treat credit limits like free money, spending at will without any clear plan to pay down the balance. Aside from being a surefire way to wreck your credit score (and hurt your ability to open cards or obtain a mortgage or other loan in the future), this behavior will also cost you money.
Rewards credit cards can carry high interest rates — although a few offer a 0% annual percentage rate (APR) for an introductory period — so running up a balance and not paying it off every month will negate the value of any points or miles you earn.
Put simply, always pay your balance in full and on time every single month.
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How to comply
Whether you have one credit card or 20, always spend within your means and stay organized. I use an Excel spreadsheet to project my bank account balance for at least three months, so I know my outflows (payments, checks, etc.) never exceed my inflows (income).
Related: 4 ways to manage your spending on multiple credit card accounts
Thou shalt not miss a payment
Though not nearly as bad as running a balance, missing payments can be very costly. For starters, most credit card issuers charge a late fee that can be upward of $30 if you submit a payment even a single day late. Although some credit cards may be willing to waive the fee for your first missed payment, you will still want to avoid it.
Payments made beyond your due date can also significantly affect your credit score. Your payment history makes up over one-third of your overall credit score, and while one missed payment isn’t fatal, several are a cause for concern.
How to comply
Take advantage of the automatic payment features available on just about every credit card, or create a recurring calendar reminder to set up a payment each month.
When I open a new card, I immediately activate autopay. However, some accounts will require a manual payment for the first month — so be sure to read the details to know when (exactly) your autopay starts.
Related: How to set up autopay for your credit cards
Thou shalt not rush to cancel a card
Many people are surprised by how many credit cards I have (28!), and I’m often asked, “Don’t you need to cancel one card before opening another?” Absolutely not. In fact, canceling a card may actually hurt your credit score.
There are two main reasons for this. For one, a large part of your credit score (30%) consists of your credit utilization ratio, or how much of your available credit you actually use.
If you currently have balances of $5,000 and $50,000 of total available credit, your credit utilization rate is just 10%. If you then cancel a card with a $30,000 limit, your rate suddenly jumps to 25% (because your available credit is now just $20,000). That’s not quite in the danger zone, but it is high enough to give a card issuer some doubts.
Second, another component of your credit score (10%) consists of your length of credit history, and part of this equation is the average age of your accounts. For example, if you’ve had a card with no annual fee for five or more years, do not cancel it. Make a few purchases on it each year (so the bank doesn’t close it) and let it continue to add to your history.
How to comply
Simply put, we recommend not canceling a card unless doing so won’t hurt your credit utilization rate. If the card has an annual fee you want to avoid, try downgrading it to a no-annual-fee version instead of canceling. If you have another card with the same issuer, you may also be able to shift around your credit limits to the card you want to keep and then cancel it.
Related: Considering canceling your credit card? Here’s why you might want to “downgrade” it instead
Thou shalt not cancel a card and lose thy points and miles
Another hazard of canceling a credit card is forfeiting the points and miles you’ve earned.
This isn’t an issue for many credit cards connected to a specific airline or hotel chain, as what you earn automatically is credited to your loyalty account with that program. However, other points and miles simply sit with the card issuer until you redeem them, including American Express Membership Rewards points and Chase Ultimate Rewards points.
Before closing a card that earns issuer-specific rewards, check the program’s rules and make a plan for your points. Depending on the issuer, you may need to redeem or transfer them, or move them to another eligible account.
How to comply
Use the points before canceling the card, either by transferring them to a partner or redeeming them directly for travel, statement credits, etc. You could also look at moving them to another eligible account with the same issuer.
Related: Do you keep your points and miles when you cancel a credit card?
Thou shalt not allow thy rewards to expire
While some loyalty programs (such as JetBlue, Delta and United) don’t put an expiration date on rewards, others will wipe out your account after a certain period of inactivity.
That period is generally at least 24 months, though it can be shorter.
How to comply
Check out TPG’s tips on how to keep your points and miles from expiring. To be safe, I always recommend making at least one purchase annually on each card in your wallet and earning points or miles through a shopping portal for any other currency.
Related: A list of loyalty programs and their rewards expiration policies
Thou shalt not miss out on a welcome bonus
Using a rewards or travel credit card for day-to-day spending is a great way to boost your earnings throughout the year, but one of the biggest drivers of credit card applications is the welcome bonus.
You can miss out on a huge influx of points by not spending enough in the specified time frame (usually three to six months). Some things to keep in mind when it comes to these requirements:
- The clock usually starts as soon as your application is approved: It sometimes takes a week or two to get your card in the mail, but your spending window typically starts as soon as you’re approved. Thankfully, many issuers allow you to add a card to your digital wallet immediately, and most include bonus trackers for you to monitor your progress.
- Annual fees, transferred balances and cash advances do not count: For instance, if you got in on an offer for the American Express Platinum Card®, the $895 annual fee (see rates and fees) will not help you hit the minimum spending threshold.
- Returns and statement credits affect your spending: Eligible spending for a welcome bonus is usually calculated based on your net purchases. If you buy some clothes and then return some of the items, only the money you spent on what you kept will count. And if a purchase triggers a statement credit, only the actual out-of-pocket expense will count.
How to comply
Knowing the specific time frame and what counts is half the battle, but you also need to track spending. If it looks like you’re going to come up short, try to identify any prepaid expenses you could make to close the gap.
And don’t wait until the last minute. I always try to hit the minimum spending threshold at least a month early to be safe.
Related: The best credit card welcome bonuses this month
Thou shalt maximize category bonuses
Many credit cards give you bonuses for purchases at certain merchants, including restaurants, supermarkets and gas stations. For instance, I shudder when my friend pays for dinner with a 1% cash-back card instead of a card like the Chase Sapphire Preferred® Card (see rates and fees) or Chase Sapphire Reserve® (see rates and fees), both of which earn 3 Chase Ultimate Rewards points per dollar spent on dining purchases.
If you have a card with bonus categories, be sure to use it when making purchases in those categories.
How to comply
Read your cardmember agreement (or visit the card’s website) to know the earnings and benefits. You should also audit your monthly spending to ensure the category bonuses on your current cards align with your purchase habits. If they don’t, consider adding a new card to your wallet.
Related: How to choose the best credit card for you
Thou shalt not ignore cards with annual fees
If you’re new to this hobby, you may believe (as I once did) that cards with an annual fee are not worth it.
However, many of these cards offer lucrative welcome bonuses, ongoing benefits and anniversary bonuses that more than cover the annual fee. In addition, some of them waive the annual fee for the first year, giving you a free one-year trial before deciding whether to keep the card for the long term.
How to comply
By visiting TPG, you’ve already taken the first step. Our expert analysis will help you maximize your earnings and rewards on these cards, including TPG’s monthly ranking of the top limited-time credit card offers. You can also check out our best credit cards page for a list of these (and other) great offers.
Related: The complete guide to credit card annual fees
Thou shalt pursue retention bonuses
Once you take the plunge and open a card with an annual fee, there’s no reason you need to keep it in subsequent years.
If you don’t think the value you’ve received from the card justifies the annual fee, you can always call your card issuer when the annual fee comes due and ask about any incentive they may have to keep the card open. These are known as retention offers.
Remember that the issuing bank wants you as a customer, so it doesn’t want you to close your account, especially if you’re a big spender. Many TPG readers and staffers have received offers to keep cards open, including:
- A waived or reduced annual fee (no strings attached)
- Make X purchases in Y months and enjoy a waived annual fee
- Make X purchases in Y months and receive Z bonus points or miles
- Z bonus points or miles (no strings attached)
If you don’t receive a retention offer, reassess whether the card’s ongoing benefits justify its annual fee before deciding whether to keep, downgrade or cancel it.
How to comply
Call the number on the back of your card when the annual fee comes due, and tell them you’re considering canceling the card because of it. Then, see what happens.
Related: The ultimate guide to credit card retention offers
Thou shalt not pay foreign transaction fees
Many credit cards charge you a fee (generally 1%-3%) for every purchase you make in a foreign currency or country. This includes purchases made abroad that the merchant converts to dollars for you (which you should never accept, by the way).
But some credit cards waive these fees. Several premium travel rewards credit cards don’t have foreign transaction fees, but this even extends to some no-annual-fee cards — like the Capital One VentureOne Rewards Credit Card.
How to comply
This one is simple: Get a card that waives these fees. Here are the best credit cards with no foreign transaction fees.
Related: How to choose a no-foreign-transaction-fee credit card
Bottom line
There are many things that you absolutely should (and should not) do concerning your travel rewards credit cards. Hopefully, this list of commandments has given you some food for thought, whether you’re looking for one of the best cash-back credit cards or a premium card with a high annual fee.
Using the points, miles or cash back to manifest a nice vacation will deliver a gratifying feeling. However, that’s only possible if you’re managing your rewards responsibly.
For rates and fees of the Amex Platinum Card, click here.