April 23, 2019
Free airline tickets and free hotel rooms are mighty appealing. That explains why one in three Americans has a credit card in their wallet that earns travel rewards.
But a recent survey by NerdWallet finds that a lot of these cardholders don't understand the rules. Only 18 percent knew that the average value of a point or mile is one cent. Most people thought it was worth a lot more.
"That could lead to not taking the trip at all or you could spend a lot of cash to cover what your points don't cover and possibly even go into debt to take the vacation," said Sara Rathner, NerdWallet's credit card expert.
While you may want to save up rewards to take a big trip, Rathner cautions against hoarding your miles or points for too long.
"Credit card point values can change over time, as we just saw, for example, with United changing its mileage awards chart from a static to a dynamic pricing model," she explained. "You could be hoarding for years and have an expectation of an amount of travel you can book with them, and then overnight, like that, it just changes."
Thinking of getting a travel rewards card?
Consider this: They typically have an annual fee of $50 to $100 and higher interest rates than traditional cards. So, if you don't pay your balance off in full each month, don't even consider getting a rewards card. That interest will wipe out the value of those miles or points.