The biggest mistakes people make with travel rewards credit cards

We all make mistakes, but when it comes to your travel credit cards, errors can be costly.

Travel rewards cards let you earn points and miles toward awards on airlines and at hotels. They can also open access to swanky airport lounges and confer benefits like reimbursement for Global Entry or TSA PreCheck application fees.

Tracking which cards offer certain perks during which times can be tricky. Especially if you also plan to simultaneously adjust your spending habits to earn the biggest bonuses and take advantage of a card’s various other benefits and protections.

This is where TPG’s team of experts comes in — we can help you avoid some of the most common and costly travel credit card mistakes. First, let’s talk about welcome bonuses.

Not earning the welcome bonus

It seems basic, but one of the biggest mistakes you can make with a travel rewards card is not taking advantage of the welcome bonus. Many of us are wowed by bonuses worth tens or even hundreds of thousands of points, but you typically have to meet certain criteria to earn them. Here are a couple of reasons why you might not hit the mark.

The first is that welcome bonuses typically require you to spend a certain amount of money on your card within a specific time frame, like $1,000 within three months or $5,000 within six months — it varies from card to card. If you apply for a card (or several cards at once) and the minimum-spending threshold is too high for you to hit (responsibly), you risk not earning the bonus.

We’d also like to point out that spending unnecessarily to bag a welcome bonus isn’t financially savvy if that means ending up with a lot of credit card debt, so be sure you can comfortably achieve the spending requirement before applying.

Miscalculating the time window in which you must hit that spending requirement could also cause you to miss out on a welcome bonus. The spending clock starts when you are approved, not when you receive your card. So you could find yourself with fewer days, or even weeks, to get all those purchases in. If in doubt, call your card issuer and ask for the deadline.

Related: 10 easiest credit card sign-up bonuses to earn

Not applying at the right time

Missing a decent welcome bonus offer because you didn’t apply at the right time is another mistake that could cost you valuable perks, points and miles.

For example, via the CardMatch Tool, some customers have seen elevated, targeted offers as high as 125,000 points on The Platinum Card® from American Express. (Targeted offer; subject to change at any time.) Compare that to the current public offer for the card, which is just 80,000 Membership Rewards® Points after you spend $8,000 on purchases in your first six months of card membership.

Related: The 12 best-elevated credit card offers to sign up for in October

Applying for too many cards

As mentioned above, applying for too many cards in a short period of time can mean that you miss hitting the minimum spending requirements for welcome bonuses. This may present an issue with Chase as it can also exclude you from being eligible for some of the issuer’s best credit cards.

Related: Best travel rewards cards of 2020

That’s because of Chase’s so-called 5/24 rule. Chase will automatically deny most applications for certain credit cards if you have opened more than five new credit card accounts with any issuer, in the preceding 24-month period. Not every Chase card is subject to this rule, but premium products like the Chase Sapphire Reserve, Ink Business Preferred Credit Card, Southwest Rapid Rewards Premier Credit Card and United Explorer Card are.

To check how many accounts you’ve opened recently, you can create a free account with Experian or Credit Karma and track your accounts’ age.

Redeeming for low-value rewards

We post points valuations on TPG every month to give you a rough idea of how much value you should get from specific types of points and miles at any given time based on various factors, including award availability, transfer options and more.

Unfortunately, far too many consumers redeem their hard-earned points at below-average values for things like merchandise or cash-back propositions. Credit cards, airlines and hotels tend to make it easy to cash in your points for low-value items or redemptions for a reason: It’s cheaper for them.

Remember, even if you’re interested in earning cash-back points at a fixed rate, not all points are created equal, and the same goes for redemptions. For instance, the Chase Sapphire Reserve lets you redeem your Ultimate Rewards at a rate of 1.5 cents apiece for travel purchases but only 1 cent each for merchandise redemptions.

Carrying a balance

Speaking of points valuations, even the most valuable points — ones that you can transfer to hotels or airlines for otherwise high-priced rewards — are not likely to be worth anywhere near the interest rate you’ll be paying on balances that you carry. So before you use a points-earning card with a high interest rate to make big purchases that you might not be able to pay off quickly, consider using a card with a low (or no) APR instead.

Related: Here are 3 reliable ways to pay off credit card debt

Missing out on transfer bonuses

Though they are hard to predict and offered only for limited times, don’t miss out on the chance to maximize your points with transfer bonuses. Current transfer bonuses include 25% bonus points when transferring Chase Ultimate Rewards to Air France-KLM Flying Blue and 25% bonus points when transferring Citi ThankYou points to Avianca LifeMiles.

Letting points expire

At this point, there’s simply no reason your points or miles should expire. Most airline and hotel loyalty programs still enforce expiration policies, but many are lax enough that you need to earn just a single point or mile every 18-36 months, including miles you earn with credit card spending.

The less obvious way that you might lose a whole haul of points or miles, or their ability to transfer to travel partners, is if you downgrade or close a particular account and do not transfer the points first.

First, let’s say you downgrade from a Chase Sapphire Preferred Card to a Chase Freedom Unlimited. With the Sapphire Preferred, your points would transfer to the Ultimate Rewards program’s travel partners, including British Airways, United, Hyatt, and Marriott. With just the Freedom Unlimited, those points are only good for fixed-value redemptions of 1 cent apiece.

Related: How to keep your points and miles from expiring

Not maximizing category bonuses

One of the best benefits any travel rewards credit card can offer is earning multiple points or miles per dollar in various spending categories. Those can include airfares or hotel purchases with a cobranded card like the Delta SkyMiles® Gold American Express Card or the World of Hyatt Credit Card. But many credit cards also offer earning bonuses on broader categories such as travel, dining, entertainment, groceries and gas.

With the variety of credit cards out there and the bonus-earning opportunities they afford, you should be earning multiple points per dollar on nearly every purchase. Not doing so is basically leaving points, and thus huge potential value, on the table.

Related: A complete guide to the best travel credit cards broken down by bonus category

Paying a high annual fee for perks you’re not actually using

The annual fees on travel rewards credit cards range from no annual fees whatsoever, like the Chase Freedom Unlimited, to charging several hundred dollars — even several thousand dollars, like the Amex Centurion (Black) Card. The information for the Amex Centurion card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Many top cards have annual fees of around $95, such as the Chase Sapphire Preferred Card, Capital One Venture Rewards Credit Card (see rates and fees), and United Explorer Card. Leveraging perks like free checked bags, automatic hotel elite credit, or a free anniversary night makes it easy to compensate for a $95 annual fee; if you actually use them, that is.

Likewise, some fantastic premium travel rewards cards charge higher annual fees that can be well worth it — but only if you maximize their benefits. For instance, cards that charge $550 a year, like the Chase Sapphire Reserve or $695 a year for the Amex Platinum (see rates and fees), offer a range of value-added benefits that can help offset their annual fees. These two, in particular, include Global Entry or TSA PreCheck application fee reimbursements worth up to $100. They also offer annual travel credits for various purchases worth between $200-$300 per year and get cardholders into various Priority Pass lounges. But if you’re not using these benefits, it’s not worth paying that high annual fee.

Related: Guide to credit card annual fees

Not hitting spending threshold bonuses

Many travel rewards credit cards offer cardmember anniversary perks, like free nights at hotels or companion travel tickets, and the opportunity to earn additional benefits by hitting certain spending thresholds each year.

For instance, the World of Hyatt Credit Card confers a free night each anniversary at a Category 1-4 property and an additional Category 1-4 free night for hitting $15,000 in spend in the cardmember year.

Some airline cards, such as the Delta SkyMiles® Platinum American Express Card, offer the chance to earn elite-qualifying miles by hitting (rather high) spending thresholds that could boost you to the next level of elite status.

It doesn’t make sense to spend money on things you wouldn’t otherwise purchase to hit these thresholds, but you should maximize the bonuses your credit card offers if they are within your normal expenditures.

Related: Best travel credit cards

Paying foreign transaction fees

Many issuers have realized that people who want travel rewards credit cards actually, you know, travel. That includes trips abroad. Issuers once levied 2-3% extra on purchases made abroad, but many credit cards now charge no foreign transaction fees for international shoppers. Not all cards waive these charges, however. Notable exceptions include the Chase Freedom Unlimited (3%). Before you travel internationally or even make a purchase from a foreign company without leaving the U.S., read your card’s pricing terms to see whether you might be dinged with extra fees.

Related: Best cards with no foreign transaction fees in 2021

Bottom Line

Rewards credit cards can be powerful tools to help you maximize your travel strategy, but only if you can leverage benefits like category, transfer and spending bonuses, along with fee waivers, lounge access and more. Be sure you are getting enough value from your travel credit cards to justify their annual fees and that you know the terms and conditions of each so you are not hit with fees and other penalties, which might erase the value of any points you earn. That way, you’ll reach your travel goals faster and get that much more value from your credit cards.

Additional reporting by Liz Hund.

For rates and fees of the Amex Platinum Card, please click here.

For rates and fees of the Delta SkyMiles Gold Amex, please click here.

For rates and fees of the Delta SkyMiles Platinum Amex, please click here.

For rates and fees of the Capital One Venture Rewards, please click here.