Rewards credit cards provide a great way for earning a little something on every dollar spent with the card. Most credit cards reward purchases with a single point (or 1% back) with select categories offering even more rewards.
On the other hand, there are some transactions that won’t earn you a dime. And that’s the point of today’s article — to show you which transactions won’t earn you any rewards.
1. Cash advances
Getting a cash from an ATM won’t get you any rewards; quite the contrary, you will have to pay the cash advance APR, as well as the fee for the ATM use in case you’re using getting cash from an ATM that isn’t operated by your bank. In addition, if that ATM happens to be in another country, you may also be slapped with a foreign transaction fee (if your credit card doesn’t have a 0% foreign transaction fee).
In other words, you should use your credit card to get cash from an ATM as the very last resort. (Related: 4 Things to Know About Cash Advances)
2. Cash advance checks you receive in the mail
The situation with cash advance checks is very similar sans the ATM use fee. This means paying a transaction fee as well as a higher interest rate on your cash advance. Also, like that’s the case with cash advances, there is no grace period before interest starts accruing.
Needless to say, you won’t get to earn any rewards this way.
3. Balance transfers
In a dream world, we would be earning points from moving money from one card to the other. But these are all transactions between one or two financial institutions, and unsurprisingly — they don’t get to earn you a single point. And this applies even if you’re moving balance from one company’s card to the other company’s card. No points earned. Period.
There are, however, compelling reasons for taking this route, though. For start, you can save a ton on interest payments if you move your balance to a lower APR card. Also, this could be a part of the strategy to help you get out of debt or put it under control.
4. Purchases made with points
Once you earn enough points, you can redeem them for a number of things, depending on the credit card you have. For instance, you can redeem points for free travel (that’s what we do) or get something else in return. You will, however, get the best deal when redeeming for travel services like airfare and hotel accommodation.
As you are redeeming your points for other things, you won’t be earning any rewards — and that kinda makes sense. After all, you are not spending any money from your credit card, but your points — which happen to be earned with that same card. In a way, this is NOT a credit card transaction though it is related to your credit card use. So don’t expect any rewards for spending your points.
Now that you know what won’t get you points, it is time to learn how to best use your rewards credit card. Read this next: The Best Credit Card Rewards Strategy: Take Some Time