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Candice Choi

Reward points and miles can accrue easily, but they can disappear easily, too

By Candice Choi
Associated Press / April 9, 2010

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To sweeten credit card offers that come with annual fees, banks are promising richer cash rebates, airline miles, and other rewards. What isn’t advertised is that banks can strip away those rewards for any number of reasons: You made a late payment, or your account was inactive for too long. The rules vary wildly. You may not even notice your points are disappearing if you’re not looking.

Few regulations govern rewards programs. So as you consider card offers, here’s what you should know:

Expiration dates: It’s common for rewards to expire after a set time. Bank of America and Citi allow five years to use your points. That might seem generous, but few cardholders redeem points regularly. Knowing when your points are about to expire can be tricky, too; banks don’t always warn you. So check your balance at least once a year.

Inactivity, late payments: Two more ways you can lose points. At Discover, for example, all rewards are erased if an account is inactive for 18 months or if you’re late on a bill for two straight months.

Your rewards could also be held hostage for a late payment. At Bank of America, you can’t redeem your points if you are 60 days or more late on a payment. You also can’t earn points, since you also lose charging privileges. Once you’re current on payments, you get access to all previously earned points. At American Express, you must pay $29 to get back any points lost for a late payment.

Transferring points: If you’re sitting on miles or points that are about to expire, check if you can transfer them to friends or family.

With airline programs, there’s usually a fee of 1 cent per mile on transfers. So it would cost $100 to transfer 10,000 miles. There may be caps on how many miles you can give and receive.

Donating points: It’s common to have the option to donate points or miles to charity. American Express, for instance, lets cardholders pick from a database of 1 million nonprofit groups, while Bank of America cardholders can pick from about a dozen charities.

Miles or points are sometimes converted into a dollar value for donation. For example, the Hilton HHonors Giving Back donates $25 for every 10,000 points. Donated credit card points and miles generally aren’t tax-deductible, because they are considered rebates on previously purchased goods.

Bartering: Points.com lets members of participating programs swap points or miles. The site is still dominated by airline programs, however. There’s no sign-up fee, so it won’t hurt to check.

You can’t barter directly with other users. Members list the trade they’re willing to make. Another member can either accept the trade as is, or list a similar trade with terms they prefer.

A final note: Be sure to redeem any rewards before closing a card account. Otherwise, they will probably disappear.

Candice Choi writes for the Associated Press.