Do You Understand Your Credit Card Rewards and Perks?

You accumulate 25,000 in miles on your credit card and you get a free airline ticket, right? Well, one free airline ticket may not mean much if you don’t have enough cash to pay for other vacation-related expenses. What if you simply need more cash?

Yes, you may be able to redeem those items for cash or gift certificates!

I recently decided to redeem the miles on one of my credit cards. I went to the company’s website and lo and behold, the program had changed since I signed up a few years ago. All of a sudden, I realized that I could get not only miles, but gift certificates too. It turns out that for every 5,000 miles, I could get a $25 gift certificate. So I figured… well, I’ll cash in 25,000 miles and get $125 worth of gift certificates for use on groceries and at the hardware store. Then, in a not-so-prominent place, my eye caught a little button that said “get cash”. It turns out that, if I opted for the credit card company to send me a check, or credit my card balance, I could actually get $300! You’d think that they would offer the cash option as less of an incentive than gift certificates, but it turned out to be quite the opposite. So I opted for the cash and used the money to purchase a medium-sized freezer in order to stockpile frozen goods when they’re on sale.

What about perks? Warranties - Many large credit companies will offer to match a manufacturer’s warranty. In order words, if I purchased my freezer with cash, I would simply get the standard one-year manufacturer’s warranty. By taking the cash, putting it on a credit card that matches the warranty, and charging my freezer to the card, I got a two-year warranty. Identity theft - What type of identity theft assistance does your card offer? Some companies will refund the amount to you immediately upon reporting the issue, seeing you as innocent unless proven otherwise. Other cards will refund the amount only after a lengthy investigation. Travel Insurance - How much travel accident insurance does your card provide, if any? When you rent a car and charge it to you card, how much coverage do you really have?

If you don’t have a recent copy of your card’s terms, guidelines and programs, call your card to get a copy.

Read Mail From Your Credit Card Company Carefully

Every day, we’re bombarded with mail and most of us sort it over a trashcan, extracting items of interest and discarding the rest. Periodically, among the stack is a notice from your credit card company announcing changes in the agreement. If you have more than one card, you may become nonchalant, assuming they are increasing their late fee and you simply file it away with the statement.

I urge you to read these notices carefully!

Here’s why…A few months ago, I had diligently researched credit card rates online and signed up with a popular bank that was touted the best deal by consumer sites, offering a rate of 9.99%, an award program and no annual fees.

Recently, in an attempt to lower my bills, I grabbed my statement to double-check my rate. Lo and behold, the rate on the statement had jumped to 26.99%! After picking myself up from the floor, I wondered how on earth the rate had jumped so high. Had I accidentally paid late? Had I gone over the limit? I immediately contacted customer service and was informed that I had not paid late, but it was simply a “universal rate adjustment”, meaning that the rate had been adjusted for all customers, and that I had been notified 8 weeks ago of the adjustment by mail. I grabbed the folder where I stash all the statements and other correspondence, and there it was. I’ve attached a copy below, with personal information blacked out for security purposes.

It is absolutely unbelievable to me that these companies can get away with this. The letter makes no reference to the ridiculous rate hike, but rather conveniently distracts the consumer by not only placing an ad for DHL Express Shipping in the middle, but by enclosing a DHL flyer. The cardholder agreement fills the entire back of the letter in tiny size 6 font, and ¾ of the way down the page, in the middle of a paragraph, it outlines the new rate. I had to read the agreement three times to find it.

They thanked me for being a valued customer and offered to lower my rate to 19.99% just because I called. I offered to take my business elsewhere and never use this card again.

(click on the image to enlarge)