If you own one or more credit cards, chances are you are enjoying some kind of rewards program. With it, you earn points, miles, or cash back for the amount you spend in purchases each month.

However, when it comes time to redeem those points, too many consumers make some pretty easy mistakes. Hey, you spend a lot on that rewards credit card. Those rewards are precious, and they should not be squandered so carelessly. But that is exactly what you are doing in some cases. So let’s take a look at the common points and mile mistakes that you should avoid at all costs.

How does one make mistakes when redeeming points? You will if applying them to items that do not have much value. Alternatively, if you let them expire entirely, you lose value altogether.

Some cardholders do not explore all of their options when they are trying to book a flight with miles. Others just do not do their homework on the best days to fly a certain airline or stay at a particular hotel property.

Redemption of points and miles can be greatly affected by a variety of factors. These include seasons and time of year you wish to book. Be careful, and take these things into consideration. Otherwise, you could be paying more for those reservations than you would if you just used cash instead.

Redeeming Your Points

You need to better understand how to avoid making common mistakes when you redeem points. Therefore, it is important to understand the redemption policies of your program.

It is likely you haven’t done it yet. Therefore, read the user agreement that came with your credit card. It should outline what form of rewards you can earn and which purchases will yield the most earnings. They may also give you the redemption rates on your points or miles or cash back. Thus, knowing what those are will be helpful in ensuring you get the most value for them.

When it comes to points or miles, you can typically earn one point or mile for every dollar you spend. Some cards will have additional bonuses. With these, you can earn two or three for each dollar. Maybe you can even get a large windfall of points or miles as a sign-up bonus.

Be careful about how you earn your points. That is because you are spending money to receive them. Plus, you do not want to waste those rewards. In many cases, you can assume that each point or mile is worth roughly one cent each.

Though, you can increase that value based on how you spend them. For the sake of argument, we’ll stick to that one cent per point or mile valuation. Thus, let’s say your card offers you 20,000 miles as a sign-up bonus. That breaks down to about $200 if your rewards program allows you apply them to certain things. This could be air travel or hotel reservations.

Perhaps your card earns hotel points or airline miles. In that case, you will need to be careful about spending those rewards. It should be based on the time of year you want to book your reservations. It is also contingent upon the destination, and the card’s policies for redemption.

Many programs require a minimum of 25,000 or 35,000 miles to book an airline ticket or a hotel room. However, you may have trouble finding availability of seats or rooms at the minimum. You may need to spend more points to get the flight or room you want on a certain date.

Additionally, it may be more economical to pay cash for those bookings and hold on to your points. The number of points you apply to a reservation could have more value or less value depending on a number of factors. Thus, you’ll want to do some research and comparison shopping first. In doing so, you will be able to comply with the policies of the rewards program. You’ll still get the most value out of your hard-earned points or miles.

Lastly, many rewards programs impose expiration dates on the points you can accrue. One of the biggest mistakes you can make is to let those points go to waste completely. It is better to get something for them instead of nothing. Maybe you aren’t able to get the maximum value for your rewards.

Then, the best thing to do is cash them in for anything if you know they are about to expire. A lot of consumers opt to hoard and collect their points to use later. Yet, later may never come. The price of those items will inevitably rise, as the cost of all things do eventually. Therefore, the quicker you use them, the more value you can get from them.

With some cards, it’s possible that you are able to choose how you can receive your rewards. You may be given the option of cash back as a statement credit or getting points or miles. Thus, it is important to know which offers you the best value. That can also help prevent you from committing these eight huge credit card point redemption mistakes.

1. Applying Your Rewards toward Merchandise

When you earn points you typically have a few options when it comes to redemption. Some issuers offer a collection of merchandise that you can buy from their online shopping mall. Think first, before you redeem them for those heated slippers or that digital camera.

How many points are you going to expend to make that purchase? Can you find it elsewhere for a cheaper price? The best rule of thumb when redeeming points for merchandise is not to do it. You have so many better options.

Let’s say it’s going to cost you 7,500 points for a digital pocket pedometer. In that case, find out how much it would cost to buy that item elsewhere. Chances are the points you are using will garner less value than trading them in for cash instead, then buying it with your credit card.

It is possible you’ll end up paying less for it with your credit card and earn more points in the process. You’ve now pocketed the difference between the two choices. Plus, you will have received points instead of spending them.

There’s another reason not to make a purchase with your points. You will not get the same consumer protections as you would if you put that item on your credit card. If the pedometer is damaged or stolen, you are out of luck if you bought it with your points. However, if you paid for it with the card, you may have purchase protection. You can then have the item replaced or be reimbursed the cost. Thus, you are able to buy a new one.

2. Forgetting to Calculate and Compare

You do it whenever you buy something. Why not do it when you are about to redeem your points? There is one big redemption mistakes we make. It is not calculating how much that item actually costs when it comes to using points to pay for it. Neglecting to do so can also hamper your ability to compare costs when you are making a purchase.

Let’s go back to that one cent per point formula. That is the common valuation with most cards. You’ve decided how to trade in your rewards. You could redeem them for cash back or you could get a better deal applying them to travel reservations.

Let’s say you book through the card issuer’s booking system. You could get 15%, 20% or more value when redeeming them for the latter option. Okay, that sounds like the better deal.

Now, you start to investigate what flights or hotels are available for your points. You might not find anything suiting your desired dates or destination at a lower points cost. Anything you do find desirable is going to cost more of your points.

If that is the case, you may as well take the cash, regardless of the percentage bonus. In doing so, you’ll pay for the reservations you want. This way, you’ve held on to your points. Thus, you can apply them to something that has more value. You will have saved money by paying for the flights outright.

You weren’t blindly redeeming your points for what was available. Instead, you redeemed them for the cash. You will have saved money on the difference between the point’s price of the ticket and the actual retail price.

3. Trusting the Airline Website or Phone Agent

Most rewards programs that offer points or airline miles refer you to their website. Thus, you can search for available flights to book with those points or miles. Yet, there’s that common refrain of no availability on dates that are most desired by cardholders. That does not necessarily mean you are totally out of luck.

The biggest mistake here is to believe everything that the website tells you. It is not always an intentional effort to deceive customers. Some websites just aren’t operated as well as others. One airline’s website may not list the flights of a network partner.

Your rewards may also be applicable to flights on one of those carriers. You may also find some of these websites to be poorly developed and buggy. That makes redeeming your points an even bigger hassle.

It is why you never want to rely solely on the information you find on any particular airline website. The information may not be up to date. Plus, they may not include all of the options that are available to you as a rewards program member.

Maybe you can’t find anything suitable on the website of one airline. In that case, you could always visit the websites of all the other airlines in that alliance or network. Though, that is no guarantee you’ll find what you are looking for either. Plus, it’s a hassle to visit five or six different websites just to redeem your rewards for an airline ticket.

Your other option is to call the airline directly. Speak to one of their booking agents. Do not feel like you are going to get total satisfaction through this method either. Though, you may get a little further in finding flights on partner carriers in the network. You may get an agent who is not exactly well-versed on all the specifics of how their points redemption work.

Perhaps they are unwilling to do a little extra legwork to search for multiple dates. Maybe you just feel like you are not getting the best customer service. Feel free to thank them for their time and hang up. Then, call back and speak to someone else. They may be better educated and more patient in assisting you.

4. Lacking Flexibility

One of the easiest ways to fail at redeeming your points or miles is lacking flexibility in your travel dates. In fact, getting the most value on a redemption is to search out what is actually available. Do that instead of trying to find availability for your desired dates.

The airlines use a complex and mysterious system for deciding which flights are available to rewards members. It is possible that certain dates will never be eligible for booking with points or miles. Therefore, do not make reservations on dates that you have carefully chosen with your boss or employer if you can’t switch them. If you do, you may not be able to use your rewards to get that flight or hotel room.

However, if you are able to move your start and end dates by a day or two you may indeed find availability for the points you want to spend. This, of course, may also rule out making last-minute travel plans to a desired destination at a certain time of the year.

Planning in advance is often a critical component to redeeming your points or miles. Failing to do so is a big mistake. That is, unless you do not care where you fly. Let’s say you suddenly get an urge to travel but do not care where you go you. You may only need to get away for a few days.

In that case, search through whatever is available and book it! However, don’t expect to get the exact destination on the exact date at the exact time with rewards. That is the case if you are only trying to book it a few weeks or a month before you want to leave. You are almost never going to find what you want. That is even if you are flexible with dates and destination. Planning way in advance will bring about better results.

5. Booking a Car Rental with Points

There are a few reasons why redeeming your points to rent a car is a big mistake. First of all, you can rent a car for as little as $15 to $20 in most cities. That is easy to cover with cash. Why waste the points?

However, let’s say you are trying to rent something bigger and more expensive than a budget mid-size vehicle for about a week. That could cost significantly more. Thus, you think it might make sense to use points instead. Well, you are wrong! It is going to cost you more. Additionally, you do not have the ability to cancel the reservation if your plans change.

There is a reason it might cost more. It’s because you will want to pay the additional $11 or $15 or whatever it happens to cost for the daily collision damage coverage. Do not use your points. If you do, you are not covered by the rental car protections that come with paying with your credit card.

You don’t want to take the risk of driving without the collision damage waiver. Therefore, you are going to be shelling out more money for that rental car. That is because even if you’re using points, it makes it a more economical transaction.

Using your points also presents another issue. When you pay through that method you are basically paying for the reservation in advance. With most car rentals, you do not pay until you pick up the vehicle. Plus, if you need to cancel, you can do so without losing any money. You do not really have that option when you use points. That is because the transaction is non-refundable.

6. Redemption for Gift Cards

Anytime you have the choice to redeem your rewards for gift cards, you should opt for cash instead. This is particularly true if your gift card options are limited in where they can be used. It is always better to get a reward in cash. It’s because it can be spent anywhere you choose. That’s instead of getting that monetary equivalent on a gift card which is only useful for certain retailers.

However, let’s say your options are only limited to gift card redemption instead of cash. In that case, use common sense. Make sure the cards you get are applicable at stores where you regularly shop or intend to shop. It does not make a lot of sense to redeem your rewards for a gift card to The Home Depot if you’ve never set foot in one before.

Comparison shopping is important here as well. This is because you could be given choices. You may be able to redeem a certain number of points for a variety of cards at different amounts. Therefore, weigh your options. If you can redeem 3,500 points for a gift card of $35 at one retailer or a gift card of $50 at another, choose wisely.

7. Neglecting Options to Transfer Points

There are a number of rewards programs that allow you transfer your points or miles from one program to another. You are basically applying the rewards in your program to get benefits available in another one. This could yield you a higher value for your rewards in the process.

Yet, do not expect it to be easy, despite how it may appear. Some cards have a large network of partnerships. They allow you to use your points in all of those alternative rewards programs. You may need to do some serious homework to find the best benefit for the points you are willing to transfer over.

Since this can be a big hassle, most consumers ignore their options for transferring points. However, that is a mistake. You could find some seriously great deals just by spending some time. Thus, track down all of the options that are available in other programs.

8. Wasting Your Points

Never EVER do this. Allowing your points to expire or closing a credit card that had accrued a considerable number of rewards is not very smart. That is especially the case since you worked so hard to get those rewards.

However, you may be facing a conundrum of points that are nearing their expiration date in a few days or weeks. Perhaps the amount of points you’ve earned still falls short of the minimum required for redemption. That does not mean you should let them go to waste. Instead, you can take steps to ensure that you get the value you are due.

One way to do this is to spend some more on the card. This will bump up your points total to the minimum requirement. Though, that is not an excuse to go out and spend extravagantly. Instead, purchase gift cards to a retailer where you would normally shop.

That way you are getting the points for the purchase of the cards. Additionally, you have those cards ready for use when you need to go shopping in the future. Get some gift cards from Target or Walmart. Select stores where you can buy necessities like household items and groceries. That way you are being responsible with your spending and your points as well.

Our Final Thoughts

These are just eight of the most common mistakes that consumers make when redeeming their points. There are others out there. Thus, you need to be careful about spending your points no matter what kind of rewards you can earn.

However, be careful about using rewards credit cards. Many consumers have a tendency to spend beyond their means just to get their points or miles. That can lead to credit card debt troubles. Then, you’ll end up having to fix your credit score instead of enjoying those rewards outright.

Credit card use can be helpful to build a credit history. However, you won’t if you overspend past your credit utilization ratio and miss your payment due dates. And remember that although earning points can be exciting, sometimes the risk of poor financial management is greater than the reward — so use those rewards cards wisely!