SAN ANTONIO – Credit card rewards can lessen the pain of inflated prices, but many people aren’t claiming them and leaving money on the table, according to a study from CreditCards.com.
The survey revealed that more than 39 million people, or 23% of credit card users, have not redeemed their rewards in the past year.
“You don’t want to be a points millionaire,” said industry analyst Ted Rossman. “It’s important to earn and burn the points strategically.”
He said rewards could lose value over time to inflation, or the credit card company may change its rewards program.
The most common rewards are accrued when card users swipe for groceries, gas, dining out or travel. So, which is best?
“Know thyself,” Rossman said. “Pick cards that lean into your key spending categories and think about how much complexity you are willing to take on.”
He said travel reward cards are more lucrative but more complicated to redeem.
Some cards rotate categories that get a certain percentage of rebate. Some offer as much as 5% or 6% back on certain categories but have caveats, such as minimum balances.
“If you want to keep it super simple, get 2% back on everything,” Rossman said.
In a year’s time, he estimates the typical household can get $500 to $600 back in credit card rewards.
There is a big but, though. The rewards strategy only makes sense if you pay your balance in full every month. Interest rates are sky-high, averaging more than 20%.
“We don’t want you to pay 20% interest to get 1% or 2% or even 5% to 6% cash back or airline miles,” he said.
He says the focus shouldn’t be on rewards but on paying down debt if you carry a balance.