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Things that limit your credit card rewards

[Thursday, November 18th, 2010]

The rewards that customers receive on credit cards could seem great. The offers include merchandise, travel benefits, cash back or a lot of other things. However, credit card customers must realize that the credit card issuers do limit these rewards programs to a great extent. In some cases, credit card issuers limit the rewards programs enough to wipe off the rewards one can get from these cards. Annual limits are a very good example. Many rewards programs on credit cards limit the number of points that a credit card customer can earn in one year. This is a strategy from the credit card issuer to declare the maximum rewards for the year. Depending on your normal expenses, these reward points limits fall much below what you could earn. Credit card issuers also place an annual limit on the total number of reward points that you can redeem in a year, which means you can earn more points than you are actually allowed to redeem.

Credit card issuers will also impose many types of monthly limits along with the annual limits on the credit card rewards. Even if the annual rewards are limited to 50,000 points, it might not be possible for you to exceed more than 5000 points in a month. The category limits are imposed commonly in rewards programs which promote high rewards such as 3% cash back. It is possible that your cash back will be limited say for example up to specific amount a year. Increasing the expiration of rewards could be another way of restricting your rewards. In some scenarios, the reward points that credit card customers get might end up expiring within a month or two or under certain specific situations like not making a certain number of transactions in a month or not having the right minimum balance.

Another limitation could be that the credit card issuers will allow you to redeem your points only in online malls that they create where the articles available might be highly overpriced compared to their rates at a local retailer. Another way to limit your rewards is by letting you redeem only when you have reached certain threshold of spending. In some cases, the point is entirely lost as you might end up spending a lot of money to achieve the threshold. Many credit card issuers build in costs around rewards like fee for redemptions, shipping and fulfillment fee etc. too.

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