Limits on credit card rewards that customers should check for on fine print

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Credit Card Applications » Research » Guides » Travel with Credit Cards » Limits on credit card rewards that customers should check for on fine print

Limits on credit card rewards that customers should check for on fine print


Updated: December 26, 2012

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Credit card rewards are provided by card issuers to attract customers. These rewards are also provided as an incentive to reward those customers who charge their credit card a lot more. However, credit card rewards are not unlimited and credit card customers must remember that at the end of the day, even the credit card companies are trying to make a profit. This is why there are a lot of limits placed by the credit card companies on the reward programs. Customers should be aware of these limits by thoroughly looking at the fine print to make sure they understand the terms and regulations of the reward programs. Monthly and annual caps Many credit card issuers place a monthly as well as an annual cap on the rewards that can be redeemed by a credit card customer. This cap can work in many ways. If it is a cash back offer, the annual cap could limit it to a few hundred dollars and the monthly cap could restrict the amount of cash you can get back in a single month. This means, even if you are eligible for cash back and have spent quite a bit on your card, you may not get all the cash back as per the percentage promised by the card issuer. The monthly and annual caps could make a big difference to the savings of the credit card customers, which is why customers should be aware of these caps. Rewards redeemable only from the inventory Some credit card companies also own retail chains where some of the items might be highly overpriced. Credit card issuers also usually have tie-ups with other brands. The rewards in such cases might be redeemable only at select outlets and merchants, which means customers cannot really get the rewards they were hoping for and instead select from what is available. Shopping at a select merchant store, which is not usually preferred by the customer, is another compromise that comes from reward programs. Conditional discounts This could be annoying and sometimes a loss making venture too. In this case, credit card issuers will allow credit card customers to avail discounts on some merchandise but conditionally. This means there would be a 20% off on a brand, provided the customer purchases at least 500 dollars worth of merchandise for example. Such type of conditional discounts, actually lead to increased spending from the customer which is the original intention of the credit card. This is also one of the strategies of credit cards to limit the usage of the rewards by the customers. The card issuers thus try to have the cake and eat it as well. Expiration Credit card companies use expiration as a strategy to make credit card customers use up their reward points. If there was no expiration, customers would save their points for purchasing something later when they need it. But if the points are expiring within a month or two, the customers are really left with no choice.

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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