What the New Year Means for Old Credit Rewards

Rewards cards are all the rage lately, but should you use your rewards points before you lose them in 2013? The answer might be simpler than you think.

According to Jason Steele, a credit card expert with Credit.com, most cards don’t have any year-end considerations to speak of. The majority of issuers look to activity, not calendars, to determine when to cut off rewards. So really, the choice to use them is yours.

As one Discover representative explained, “all rewards roll over to the next year as long as the account is still active. And that goes for all of our credit cards.” CapitalOne goes by this logic as well, allowing users to carry over rewards so long as “they continue to accumulate them.” A cursory Google search confirmed that most card issues follow this practice, including Chase, Bank of America, PNC and Wells Fargo, whose websites state that their points won’t expire.

That’s good news for consumers who’ve yet to redeem their cash back rewards, but what about flight rewards cards and points? Are they different? The game of earning points is a tricky one, and as any jet-setter will tell you, it pays to reach a threshold before the year’s over so you can rack up more points. Still, it’s important to remember that flight rewards cards are not the same as frequent flier clubs. Though they provide the same service, the cards’ points won’t expire.

“More likely, there might be some spending plateaus that can be reached by the end of the year in order to be awarded additional points or miles,” said Steele. “For example, several of the Delta SkyMiles cards will offer mileage bonuses when a spending threshold is reached during the calendar year.”

You’ll want to keep track of how many points you’ve accumulated over the year, and then decide if it’s worth it to cash them in come December 31. But most of the time, you’ll want to let them pile up, so you can take advantage of a better deal later on — like a trip to Japan.

“[With flight reward cards], it can make sense to pay bills early, or even to purchase gift cards for use on future purchases,” said Steele. That way you’ll look responsible in the card issuer’s eyes, and won’t have to worry about them shutting off your rewards if you haven’t used the card in awhile. Plus, since airline co-branded cards tend to carry high interest rates, you’ll be doing your credit score a favor by working to pay off the debt on time.

And when time’s on your side, that’s a good thing.

[Credit Cards: Research and compare rewards credit cards at Credit.com.]

Image: Andres Rueda, via Flickr