A quick guide to credit card rewards programs

Quick insights

• Terms and conditions are rules that govern the use of the card and its benefits and rewards.
• Your rewards terms and conditions will explain how you can earn points, miles, cash back or other rewards associated with your card.
• They will also explain how and when you can redeem your rewards.

The more information you have about your credit card, the higher likelihood you can maximize the rewards and benefits. However, you might be overwhelmed by the various terms and conditions associated with your card. Most people don't enjoy reading pages of small print filled with legal jargon. But when it comes to your card and its rewards, there are some terms and conditions you may want to familiarize yourself with.

Understanding credit card fine print

All credit cards have terms and conditions. These are the rules that govern the use of the card and its benefits and rewards. Your card’s terms can typically be found in your cardmember agreement or found on the card issuer’s website. They also may be listed at the top of your monthly credit card statement.

It’s helpful to know and read your card’s terms and conditions—commonly referred to as the fine print — so you fully understand how to use your card and its benefits.

Some disclaimers and terms in your cardmember agreement may include:

• Annual Percentage Rate
• Annual fees
• Minimum payment amount
• Credit limit
• Balance transfer fees
• Late payment charges
• Cash advance charges
• Cardmember benefits

Understanding your card’s fine print can help you avoid surprise fees and manage your purchases effectively. You will likely find an explanation of fees, including annual credit card fees, in your card’s terms and conditions.

Common credit card rewards terms

Your card’s rewards may have additional terms and conditions that can be helpful to understand if earning rewards is important to you. They will explain how you can earn points, miles, cash back or other rewards. These terms may also explain how and when you can redeem rewards.

To better acquaint yourself with the fine print of your rewards, look for the following terms in your cardmembers benefits:

• Eligible transactions: An eligible transaction refers to a purchase that qualifies for earning rewards points, miles or cash back according to the terms of the credit card's rewards program. This typically includes most purchases, but may exclude certain transactions like cash advances, balance transfers or fees.
• Merchant categories: Credit card merchant categories are classifications assigned to businesses that define the type of goods or services they provide, such as groceries, dining or travel. These categories are used by credit card companies to determine where cardmembers earn rewards.
• Rewards points accumulation: This refers to the process of earning points through eligible transactions made with a credit card. The rate at which you accumulate these points is determined by the credit card's rewards program, often varying based on the type of purchase or merchant category.
• Travel restrictions and blackout dates: This refers to specific periods or conditions under which rewards points or miles cannot be redeemed for travel. Blackout dates are often during peak travel times, such as holidays, while travel restrictions can include limitations on certain airlines, routes or types of tickets.
• Expiration dates: This states if and when your rewards and benefits may expire. Dates can be based on the calendar year or the anniversary of your enrollment date, depending on the card and issuer.
• Bonus point details: Some cards offer bonus points for making certain purchases. These terms govern how a cardmember can earn additional, or "bonus," rewards points. This often includes spending a certain amount within a specific timeframe or making purchases in certain categories that offer higher rewards rates.
• Value of rewards points: This details how many points are earned per dollar spent and how those points can be redeemed. This can include the conversion rate for points to cash, travel, gift cards or other rewards, which can vary between credit card issuers and specific cards.
• Rewards caps: Rewards caps are the maximum number of rewards points, miles or cash back a cardholder can earn within a certain period or on certain types of purchases. It can affect a cardholder's spending and rewards earning potential.

This is not an exhaustive list. Be sure to fully read your card’s terms and conditions to understand how, when and where you can earn and redeem credit card rewards.

Rewards tiers explained

Credit card rewards tiers are a system that incentivizes rewards loyalty. They can be based on spending levels, with higher rewards for spending in certain categories. Some cards have membership levels, where cardmembers move up tiers based on spending or account activity, each with its own benefits.

Other cards offer rotating categories with higher rewards rates, or threshold bonuses for spending a certain amount. Understanding these tiers and how they work can help cardmembers maximize their rewards earnings.

Remember, it's helpful to understand the terms and conditions of your credit card's rewards program, including any tiered rewards structure, to maximize your rewards earnings.

Rotating rewards categories

Some credit cards offer rotating bonus categories. These are merchant categories that earn higher rewards rates during a certain period. For example, you might earn 5x rewards for gas during the first three months of the year and 1.5x rewards the rest of the year.

Typical rotating categories include:

• Gas stations
• Grocery stores
• Entertainment
• Dining
• Travel

Rewards categories typically rotate every three to four months and need to be manually activated by the cardmember.

Understanding when and why credit card rewards expire

Credit card rewards and points typically do not expire. Generally, if a card remains open and is in good standing, your points will not expire.

If you or your issuer closes your account, you may lose your rewards, though some issuers might allow you to redeem your rewards within a certain amount of time after closing your account. You also may lose your rewards if you don't use your card for an extended period of time.

In summary

Every credit card has its own terms and conditions that govern how a card is used, and if it has rewards, how those rewards are earned and redeemed. You’ll want to review your card’s terms and conditions to understand its eligible transactions, merchant categories and rewards point accumulation, among others, to determine how and when you can earn and redeem rewards. In addition, it helps to understand any rewards tiers, rotating bonus categories and if and when your rewards expire. The card’s terms and conditions can usually be found in your cardmember agreement.