Rewards Points: How to Keep Them

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There is no shortage of ways for credit card holders to screw up their financial lives, but try a new one on for size. If you don’t pay your bill on time, your credit card company is more likely these days to pull your card rewards points as a penalty, and it’s all perfectly legitimate in the eyes of the federal government.

According to the Federal Reserve Bank’s “Survey of Consumer Payment Choice," about 60% of consumers own a rewards credit card.

As long as card customers are current on their payments, their rewards points aren’t in jeopardy. But pay your bill late, and card issuers are increasingly likely these days to cancel your hard-earned rewards points.

Creditcards.com offers a list of penalties related to rewards points for card owners who pay their bills late.

American Express (Stock Quote: AXP), for example, will block access your rewards points if you pay your bill late, but reinstate them for a $29 fee. Bank of America (Stock Quote: BAC) will pull the points, but reinstate them once the account is current. Citi (Stock Quote: C) will pull the points permanently if your bill is over 60 days late.

The best way to keep your rewards points is to be vigilant, make your minimum payments on time, and learn how to gain leverage with your credit card rewards points.

Here are a few tips to help you hang on to those rewards points:

•    Read the “terms and conditions” fine print – Yes, reading the fine print is always painful. But in this case, it’s also critical. Make sure you know under what conditions your card company can pull your rewards points, and then avoid those traps. Credit card firms are infamous for changing the terms of your cardholder agreement, burying those changes in the fine print. As always, buyer beware.

•    Watch for expiration dates – You can pay your bill on time and still lose your rewards points if you ignore the points’ expiration dates. Plenty of credit cards have expiration dates for redeeming rewards points. And they certainly aren’t likely to warn you that your points are on the clock, so call them and find out where you stand on timing.

•    Set up automatic payments – The best way to avoid losing your rewards points is by paying your bill on time – even a few days early if you can. Every major card carrier has a web site where you can set up a secure automatic payment that comes right out of your bank account. You’ll have to set up the payment system to make at least a minimum payment (to keep your rewards points and your credit score intact) but you can always go in to your account and pay more when you can.

You’ve worked hard to accumulate your credit card rewards points and there’s no reason you should lose all those airline miles over a late payment. If you keep your eye on the ball and know the rules and payment deadlines, your rewards points should be safe from the icy clutches of your credit card company.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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