TPG UK’s 7 credit card commandments
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Whether you’re a credit card rewards novice or full-on expert, there are key rules to follow.
As the saying goes, “everyone makes mistakes,” and the points and miles game is no exception. Whether you’re brand new to the hobby or a seasoned pro, the potential for errors is always there.
In this guide, I want to share my seven “commandments” for travel credit cards to help you avoid some of the most common mistakes made by cardholders.
Thou shalt pay thy balance in full
To me, keeping a balance is a cardinal sin when it comes to credit cards.
Unfortunately, I know several people who treat credit limits like free money, spending at will without any definitive plan to pay the balance down. Aside from being a surefire way to wreck your credit score (and hurt your ability to open cards or obtain a mortgage or other loan in the future), this behavior will also cost you money.
Most rewards credit cards carry high-interest rates — so running up a balance and not paying it off every month will negate the value of any points or miles you earn.
How to comply
Whether you have one credit card or 10, always spend within your means and stay organised. Personally, I use an Excel spreadsheet to project out my bank account for at least three months, so I know that my outflows (payments, checks, etc.) never exceed my inflows (income).
Thou shalt not miss a payment
Though not nearly as bad as running a balance, missing payments can be very costly. For starters, most credit card issuers charge a late fee of around £12 if you submit a payment even a single day late.
Payments made beyond your due date can also greatly impact your credit score. Your payment history makes up a part of your overall credit score, and while one missed payment isn’t fatal, several are a cause for concern.
How to comply
Take advantage of the direct debit features available on just about every credit card.
When I open a new card, I set a calendar notification for four to six weeks later so I remember to add my bank account and/or set up direct debit payments. Just make sure you always have enough money in your current bank account to cover the direct debit payment each time, or else the payment won’t go through and you will be hit with a late fee.
Thou shalt not cancel a card and lose thy points and miles
A hazard of cancelling a credit card is forfeiting the points and miles you’ve earned.
On many credit cards connected to a specific airline or hotel chain, this isn’t an issue, as what you earn automatically transfers to that program’s account. However, other points and miles simply sit with the card issuer until you redeem them, including American Express Membership Rewards points.
Be sure to redeem before cancelling cards with these types of rewards, as they will disappear once your account is closed.
Also, remember you must have an active American Express credit card in order to redeem your British Airways companion voucher.
How to comply
Use the points before cancelling the card, either by transferring them to a partner or redeeming them directly for travel, statement credits, etc. Always check your account online before calling to cancel a card.
Thou shalt not allow thy rewards to expire
While some loyalty programs (such as Virgin Atlantic, Delta and United) don’t put an expiration date on rewards, others will wipe out your account after a certain period of inactivity.
That period is generally at least 12 months, though it can be shorter (or longer during the pandemic). For your Avios points, you’ll need to earn or redeem at least one Avios every 12 months to keep your account active.
How to comply
Check out TPG’s tips on how to keep your points and miles from expiring. To be safe, I always recommend making at least one purchase annually on every card in your wallet and earning points or miles through a shopping portal for any types of points or miles for which you don’t have an associated credit card.
Thou shalt not miss out on a welcome bonus
Using a rewards card or travel card for day-to-day spending is a great way to boost your earnings throughout the year, but one of the biggest drivers of credit card applications is the welcome bonus.
You can miss out on a huge influx of points by not spending enough in the specified time frame (usually three to six months). Some things to keep in mind when it comes to these requirements:
- The clock usually starts ticking as soon as your application is approved: The time frame to hit the bonus usually doesn’t start when you receive the card, but rather starts immediately upon account approval. If you’re unsure of that date, call customer service for your card and ask.
- Annual fees, transferred balances and cash advances do not count: For instance, if you got in on the latest offer for The Platinum Card from American Express, the £575 annual fee will not help you hit the minimum spend threshold.
How to comply
Knowing the specific time frame and what counts is half the battle, but you also need to track spending. Spreadsheets, calendar reminders and money management tools can be very helpful for staying organised.
Thou shalt not ignore cards with annual fees
If you’re new to this hobby, you may believe (as I once did) that cards with an annual fee are terrible.
However, many of these cards offer lucrative sign-up bonuses, ongoing benefits and anniversary bonuses that more than cover the annual fee. In addition, some of them waive the annual fee for the first year, giving you a free one-year trial before you have to decide whether you should keep the card for the long term.
How to comply
By visiting TPG U.K., you’ve already taken the first step. Our expert analysis will help you maximise your earnings and rewards on these cards, including TPG’s guide to the best U.K. credit cards. Subscribe to our newsletter to keep up to date with limited-time-only offers.
Thou shalt pursue retention bonuses
Once you take the plunge and open a card with an annual fee, there are still ways to reduce the cost of the annual fee.
If you don’t think the value you’ve received from the card justifies the annual fee, you can always call your card issuer when the annual fee comes due and ask about waiving the annual fee, or receiving some bonus points in exchange for keeping the card and paying the full annual fee.
Remember that the issuing bank wants you as a customer, so it doesn’t want you to close your account. It is not common in the U.K. to receive a no-questions-asked annual fee waiver, though if you have been a long-time loyal customer with plenty of spend on the card each year you may be offered points for keeping the card.
I do recommend doing this only for cards that you would actually cancel without getting an offer. If you ask for it, don’t get it and keep the card anyway, the issuer might flag you (or your account) as the person who cried wolf because they know you won’t follow through on your threat to cancel.
How to comply
Call the number on the back of your card when the annual fee comes up, and tell them you’d like to cancel the card due to the annual fee. Then, see what happens.
There are many things that you absolutely should (and should not) do concerning your travel rewards credit cards. Hopefully, this list of commandments has given you some food for thought, whether you’re looking for one of the best cash-back credit cards or a premium travel rewards card.
When you’re ready to start traveling again, using the points, miles or cash back to manifest a nice holiday will deliver a deeply rewarding feeling. However, it’s important to make the most of every card you open and use it regularly.
Additional reporting by Chris Dong and Ben Smithson
Featured image by Maskot/Getty Images.
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