Credit card rewards and the caveats associated with them

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Credit card rewards and the caveats associated with them


Updated: April 26, 2017

Credit card rewards are offered by a lot of card companies to attract the card holders to spend more. Therein lies the chance for card companies to earn revenues and make profits. Card holders on their part should be careful about credit card rewards. There are several caveats associated with them and invariably seemingly attractive rewards have a catch. Reading the fine print is important from a card holders’ point of view. Here are some of the pointers that you should consider in order to avoid walking into a trap. Cash back caveats Cash back rewards are very desirable and such credit cards are offered only to those card holders with magnificent credit history. However, credit cards sometimes, don’t offer the cash back amount as a direct deduction on bills. In some cases, customers have to claim for the amount which would be sent to them separately as a cheque. In worse cases, the cash back is offered in the form of discount on specific shopping expenses, forcing the card holders to spend even more money. So, it is imperative for one to understand the mode of cash back before exulting at the offer. Air mile caveats Air miles are offered to customers for all their card expenses. These air miles or loyalty points as they are often referred as can be redeemed in various ways. However, it isn’t always easy or profitable to redeem these points. Sometimes there are short expiry dates for redemption of these points, which means card holders cannot go on accumulating their reward points for a long time. There could also be a tab or upper limit on the number of air miles that one can redeem on a monthly or yearly basis. This too could mean one gets fewer rewards than what it seems like on the surface. Frequent shopper discounts There are innumerable caveats that come with frequent shopper discounts. One of them is that you can avail these discounts only at select merchant stores, which are not really preferred by the card holder. Also some of these discounts are based on milestone expenses. In other words, you can see a 25% discount on the frequent shopper card, but the fine print will mention that this discount is valid only for purchases of $200 or more. In order to avail the discount, customers might end up purchasing more than what they would have planned or budgeted for. This isn’t really a reward but a marketing strategy which card holders have to be wary about. Frequent flyer rewards For frequent flyer rewards, one of the problems could be with blackout dates or days on which you cannot book tickets to redeem your reward points. This would mean change of plans or in emergency cases, letting go of the reward points altogether. Besides, the limits on the amount of discount you can expect on your airline ticket would thwart your plans too. These are terms and conditions that will be mentioned in the fine print. You must acclimatize yourself with all these terms and conditions.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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