5 Rewards Credit Card Tricks and Gimmicks You Didn’t See Coming

by Neal Frankle, CFP ®

This is a guest post about credit card tricks. Laura Edgar is a personal finance specialist at NerdWallet, an unbiased credit card comparison website dedicated to helping you find the best credit cards.

In many ways, a rewards credit card is fairly straightforward and it’s not tough to maximize your credit card reward points. You’ll earn cash back, airline miles or points for making your daily purchases, and you’ll probably earn higher rewards in certain purchase categories depending on the type of card you have. A rewards credit card is actually a great way to get something for nothing, assuming you have a solid credit score and consistently pay your bills on time. Unfortunately, you’ll have to do more than that to get the most out of your card. Although recent legislation like the CARD Act of 2009 has prevented credit card companies from shadier dealings, like rate hikes on your existing balance, rewards card marketing gimmicks haven’t disappeared. You’ll have to pardon our Negative Nancy attitude, but credit card companies will always find a way to pull the wool over your eyes. Credit card nerds like us just can’t catch a break! We’re pretty busy keeping up with all the new gimmicks and gotchas, but here are five of the sneaky moves we see most frequently.

1. Reward maximums

In a perfect world, “3% back on gas” means 3% back on all your gas purchases, forever. Too bad that great rewards rate might only be good for a limited time, or valid up to a certain limit. For example, the Citi Forward offers 5 points per dollar on restaurant and entertainment purchases, but only lets you earn a maximum of 75,000 reward points per calendar year. That’s pretty reasonable for the average person (a $40 dinner for two every day for a year nets you 73,000 points, for example), but for the big spender, it’s a huge disappointment.

Sometimes, reward maximums only apply to a specific category. As much as we like them, rotating bonus category cards, like the Chase Freedom and the Discover More, are particularly notorious for this. These cards offer 5% back on any purchase at a few different types of retailers that change every few months. However, you’re only eligible for 5% back for your first $1,500 in qualifying purchases every quarter. Again, this is just fine for most people, but big spenders will be happier with a different card.

2. Advance reward sign-ups

If your rewards card advertises a special bonus category, don’t expect to qualify for it automatically. Some cards require you to sign up each quarter to qualify for the bonus categories. If you miss the deadline or get lazy, you’re stuck with the base rewards rate, usually 1% back on all purchases. 5% rotating category cards always make you sign up for the bonus categories in advance. Some, like the Chase Freedom, allow you to sign up retroactively, but most others won’t. Why would they do that? Let’s just say you’re not the only credit card carrier who might forget or get lazy.

Making you responsible for claiming your bonuses is a great strategy for credit card companies, because it’s technically your fault, not theirs, if you forget. Pretty sneaky, right?

3. Minimum spending thresholds

Okay, so maybe you have to sign up for extra bonuses in advance, but at least you can take your base rewards rate for granted, right? Wrong! With some rewards cards, you’ll need to spend a minimum amount first. The Chase Freedom consistently offers 1% back on all non-bonus-category purchases. With the Discover More, however, you’ll only qualify for the 1% base rate when your total annual purchases exceed $3,000. Prior to that, all your non-bonus-category purchases will earn 0.25% back, a staggering 75% lower than the industry standard. Yikes!

4. Confusing reward redemption systems

Ever wonder why some rewards cards give “points” instead of cash back? The value of a point is completely arbitrary, and that allows credit card companies to make up their own reward redemption rules. If you’ve ever been to a carnival that makes you earn tickets to collect prizes, you know exactly how this system works. Perhaps it costs 10 tickets to get a piece of candy and 1,000 tickets to earn a small stuffed animal. Judging from the quality of items, you can guess that a ticket is worth around a cent on average, but the prize booth doesn’t have to keep this consistent. Credit cards with cash back are fairly simple, but regular rewards programs keep you on your toes.

5. Inconsistent redemption rates

Most point-earning rewards cards give you a different value for your points depending on how you choose to redeem them. Citi ThankYou Points offer a pretty consistent 1-cent-per-point redemption rate for gift cards, loan repayments, and music downloads, but the value of your points goes down by as much as 50% if you opt to redeem for merchandise. With some cards, you may also have to spend a minimum number of points before you can redeem them for any at all! Citi’s ThankYou rewards program requires you to earn 2,500 points for most of their gift cards, since they typically start at $25 denominations. Bank of America’s World Points program, however, requires you to hoard 25,000 points before you can redeem them for their full 1-cent value on anything.

Stretching your rewards to the max

You can be sneaky too, it turns out. Different redemption rates can work in your favor, but only if you’re earning rewards on top your existing rewards. Most credit card companies have special partnerships with major retailers, and you can use this to your advantage. Try shopping through your credit card’s company’s online mall to earn extra points or additional cash back on your purchases.

Neal’s notes – I have to admit – the entire points structure confuses me and makes me wonder if it’s worth it. I tend to ignore the issue and defer to my wife who insists that we get miles so we can travel. I have no idea if it’s worth it or not. What say you?


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{ 3 comments… read them below or add one }

rick b February 17, 2012 at 5:02 AM

No one ever got rich using credit cards! These are all tricks to get you to spend more money!


Neal Frankle September 11, 2012 at 6:15 PM

Excellent point. But as long as you are spending the money — is it worth it to focus on a great points card?


Ann February 13, 2012 at 2:37 PM

I so agree with these credit card reward tricks. I signed up for a Discover card and have been so disappointed with the gap between what it promotes and actually rewards, that I merely use it for its extension to my credit line and just pile all charges onto my 1% back not matter what, no matter how much/little I spend Motley Fool card.

I had not realized what a fair to me reward system it has!!


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