Why Credit Card Reward Points go Un-Redeemed?

Planning

oi-Investment

By Investment

Updated: Saturday, July 13, 2013, 11:52 [IST]

When was the last time you redeemed reward points of your credit card? It's strange but true that the reward points which lured us to apply for the credit card are not redeemed often. When reward points go unredeemed, it's a loss to the end user. Let's try to understand why the reward points on the credit card go unredeemed and how to avoid it.

There can be various reasons for non redemption and I am discussing few of them below:

1. Rewards are of no use

There is a huge gap between what you like and what is on the offer. You don't like eating out but the rewards offer discount on restaurant visits. You prefer yoga but the reward points are related to spa treatment. Since most of the time rewards do not align with your preference, they go unredeemed.

How to avoid it

This situation can be avoided if you study the offers related to credit card rewards while applying for the card. Credit card companies provide details of their offer which can help you in picking a suitable card.

2. Lack of understanding and unawareness regarding the reward structure

A lot of reward points go unredeemed just because users do not understand them. Most of the time they are unaware about rewards existence. Most of the time users do not entertain promotional offer calls from the bank. They do not even bother to read the sms and emails sent to them explaining reward structure.

How to avoid it

If you simply do not understand reward structure, please take help of somebody who has used the card earlier. You can even talk to customer care guys and they will be more than happy to help you out. Keep an eye on the promotional mails and sms sent to you as being informed can save you few bucks while planning a purchase.

3. Reward points do not exist

For you, reward points simply do not exist. You are an old client and when you applied for the credit card, reward points were not in existence. This is a common problem with old generation. They live in the old times and lack the attitude to explore new options. They are not tech savvy and information flow is quite slow for them.

How to avoid it

You need to pick some speed as it will help you in saving quite a lot of money. Learn basics of computers and mobile phone handling. At least talk to someone more knowledgeable who can guide you in these matters.

4. The rewards you want are too costly

While analyzing reward structure you got hooked to one option, but it was too costly. To avail this reward you need to spend a hefty amount. You are disappointed and simply stop exploring other less costly options.

How to avoid it

There are quite a lot of options available. Failure to avail one should not stop you from exploring other one. Go for the one which is affordable and free in true sense. It will bring down your cost and on top of it offers are not static in nature. Companies keep on churning them on regular basis which again opens window of opportunity for you.

5. You don't like any of the offers

You are using different credit cards, but none of the rewards excite you.

How to avoid it

This should not stop you from redeeming reward points as they can be used by someone who is in need. Redeem it and give it as gift or use it for charity. This will earn some respect for you in the society which is not a bad deal after all.

Conclusion

Use the above tips so as to avoid expiration of reward points. Reward points are your earning and there is no point leaving them unused.

About the Author:

The author Bimlesh Singh is a financial advisor. He holds a Bachelor's degree from IIT and is a CFA Level 2 candidate. He can be reached at [email protected]

Courtesy:www.investmentyogi.com