Behind on your credit-card payments? Your credit score isn’t the only thing at risk. You’re also very quickly blowing up any chance of collecting those rewards that come with your card.
CardHub.com, a leading online marketplace for credit cards, conducted a mini-study that examined the fine print of reward programs for the top six major credit-card issuers. Among its findings:
- In the last 12 months, 15% of U.S. adults have been late making a credit-card payment. The credit-card default rate in 2009 is the highest since 1991.
- If an account becomes delinquent, all points earned under American Express rewards program may be lost.
- If an account becomes two months or more delinquent, all points under the Discover rewards program will be lost.
- Other issuers, such as Bank of America, Capital One and Citibank, generally will not allow you to earn rewards while your account is delinquent. (According to the survey, Chase did not disclose any information about its programs.)
What’s a cardholder to do?
Face the cold hard facts. Reward programs only make sense if you pay your balance in full each month. If you carry a balance or can’t make the payment on time, a reward program isn’t for you. If you’re pinched, you need to curb your spending and pay off the debt.
And let’s be clear here: Issuers can change the terms and conditions of their reward programs at any time or for any reason. There’s no notification period. No warning needed. That’s different from the current rules that require at least 15 days notice before issuers change your interest rate or fees. (Under the new law, that notification must come at least 45 days before any changes are made to your account.)
Yes, rewards are super under the right conditions. Just make sure you’ve picked a card and program that work for you – and pay on time so you don’t blow your bennies.
Want to learn more? Check out my columns for more tips: