Receiving your first travel credit card in the mail can feel life-altering, but you shouldn't start celebrating-at least not yet. To avoid a catastrophe, you need to know how to get the most from your card while making the fewest number of mistakes.
Unfortunately, the world of travel rewards is ripe with pitfalls to avoid, with complex rewards programs, a gazillion rules, and myriad details to keep track of.
Here are some of the biggest rookie mistakes people make year after year, and how you can avoid them:
1: Missing out on a signup bonus
Most cards offer a signup bonus after you meet a minimum spending requirement within a few short months, and the Barclaycard Arrival Plus World Elite MasterCard is no exception. With this card, you can earn 50,000 points worth $500 in travel-but only if you use your card for at least $3,000 in purchases within the first three months.
What happens if you only spend $2,900-or even $2,990-and your three months are up?
You miss out on the bonus, and it happens all the time.
To make sure you earn what you signed up for, you need to track your spending to the penny and make sure it comes in before your three months are up. If you come up short, you'll miss out.
2: Letting your rewards expire
While some rewards programs offer points that never expire (think: Chase Ultimate Rewards), other programs let your points lapse if you don't use them or earn more within 12-24 months. With the Southwest Rapid Rewards program, for example, you need some movement in your account every 24 months to keep your points active.
Many newbies fail to understand these rules and let their account balances disappear because they don't know any better. To keep your points active, make sure you're earning or burning often enough to meet your loyalty program's standards.
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3: Not maximizing bonus categories
The Chase Freedom card lets you earn five percent back on your first $1,500 spent in categories that rotate every quarter. The bonus category is grocery stores and drug stores for April - June of 2017. How easy is that?
Unfortunately, many rewards hounds miss out on these bonuses because they don't pay attention or fail to understand how they work.
4: Redeeming points for merchandise
If your goal is scoring free travel, then you have no business browsing your favorite reward card's online shopping mall. With travel rewards, you'll usually receive between 1-3 cents in value for each point you earn.
When you redeem points for merchandise, your redemptions are usually worth a half a cent or less.
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5: Overspending to earn rewards
It's far too easy to spend more money just to increase your balance when you're overly excited about the prospect of earning airline miles or hotel points.
To avoid overspending for the sake of rewards, make sure you're only using a credit card as a complement to your budget. If you find yourself shopping only because you want to rack up more points for a trip, you may actually be hurting your finances instead of helping.
6: Getting into debt
This last rookie mistake is the scariest one of all. When you're not used to using credit for everyday purchases, it's far too easy to wind up in debt.
The best way to avoid hurting your finances and racking up credit card balances is to use your rewards card like cash, then pay your bill regularly to stay on track. If you don't pay attention and wind up carrying a huge balance from month to month, your "rewards" could actually cost you in the long run.
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