Credit Card Rewards: Don't Let Good Points Go Bad

Most people have points, but few people know how to use them.

That's according to a new study by rewards points consultant Brian Kelly, whose blog thepointsguy.com helps people find and make the most of the right rewards programs for them.

Kelly's study found that nearly 73 percent of Americans enrolled in either credit card rewards programs or frequent traveler programs don't know how many points they have. That's one of the most expensive travel mistakes you can make.

"The way people need to think about miles and points, especially the credit cards points, is you're getting a percentage back of what you spend," Kelly says. "So when you're not maximizing that spend, you're losing money."
We talked to several points pros to find out the best ways to accumulate, track, and manage points programs. Here are their tips.

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George Hobica, founder and CEO of AirfareWatchdog.com, has found a unique way to maximize his travel points rapidly. "I never buy anything online without first checking the airlines' shopping malls. Same prices, same brands, but bonus miles in addition to what I earn on my credit card," Hobica says. "For example, I earned 10,000 miles buying a sofa; and 2,000 miles merely by renewing my mobile phone contract with AT&T by going through the American Airlines site rather than going to attwireless.com to do so."

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Once those points are earned, Hobica says he doesn't use them to buy flights, but rather to upgrade from coach to business or first class. "I often buy a one-way fare from NY to L.A., for example, on United or American for $150-$180 and then apply 15,000 or 17,000 miles to upgrade to a business class fare that would otherwise cost $2,500," Hobica says. "To me, that's great value. Spending 25,000 miles on a $250 round-trip economy-class fare doesn't make sense to me."

While Hobica also opens and closes travel-related affinity credit cards to earn promotional reward points, the practice can have negative long-term effects on your credit history and rating, and shouldn't be undertaken lightly.

Minimize Programs, Maximize Rewards

Mike Sprouse is the president and CEO of Sprouse Marketing, a Chicago-based boutique marketing agency, and frequent business traveler. He recommends keeping the number of rewards programs to a minimum, which makes points easier to accrue and track.

"Most companies running loyalty programs count on you never redeeming them," Sprouse says. "Having points spread out over fewer programs, or just one or two, will ensure redemption opportunities are top of mind and you don't forget about them."

Even people who never travel, or never travel for leisure, can take advantage of reward programs by redeeming points for gift cards, dining out, clothing, or household items. Kelly says, "If you're someone who travels a lot on business and the last thing you want is to travel in your personal time, getting a card that gives you 2 percent back on everything you spend is giving you cash back in your pocket."

No Credit Card? No Problem

Credit cards aren't the only ones offering rewards programs. Sprouse says that even without them, rewards abound.
"No credit card? No problem. My favorite program out there is Southwest's Rapid [Rewards] Dining program -- it's really a great idea and program. You earn points by eating or going to clubs. Pretty cool."

Kelly recommends accruing all rewards points into a central credit card points bank, like through Chase or American Express, each of which has multiple travel partners, and redemption opportunities for everything from books to music to groceries. He suggests using a travel app like TripIt or Award Wallet to track reward points and their expiration dates.

Using a few of these tips will ensure that you never let good points go bad.