7 perks your credit card provider secretly hopes you won’t use

When American Express (a CreditCardForum advertising partner) introduced its new $200 Uber credit, some of our forum members contended that this perk was designed for “breakage,” due to the restrictions involved in using it.

Breakage is a concept in the loyalty-program world that refers to unused benefits — and the notion that programs make some of their benefits just complicated enough that many people won’t use them.

In other words, a card issuer may offer a benefit, may even advertise it – and hope you don’t actually use it.

We asked two rewards experts which benefits are particularly breakage-prone.

1. Price protection

Just under half of cards on the market offer price protection, according to our latest Card Benefits Survey. If the price on an item you bought with your card drops (within a certain number of days after the purchase), your card will refund you the difference.

“This benefit is not promoted so it often goes unnoticed by cardholders,” says Alex Miller, founder and CEO of rewards-maximization site UpgradedPoints.

Citi is a stand-out in that it tracks price drops automatically for you (although you still must register your purchase via online banking). The rest of the issuers offering price protection leave the tracking up to you and require you to file a claim, making this benefit quite breakage-prone.

2. Travel credits

Many premium cards will reimburse you (via a statement credit) for “travel” expenses. Yet the hurdles vary by card. The Chase Sapphire Reserve is known for being particularly easy when it comes to its travel statement credits – you make a travel purchase (rideshare ride, plane ticket, dinner at a hotel) and Chase refunds you automatically.

Other cards build a little more breakage potential into their travel credits. The Platinum and Premier Rewards Gold cards from American Express, for example, credit you for up to $200 and $100 per year, respectively, for *some* travel expenses.

“It’s only for airline incidentals like checked bags, seat upgrades, that kind of thing,” says Bryce Conway, founder of 10X Travel. “And it’s only for the airline you designated every year.”

And then there’s the Ritz-Carlton Rewards Credit Card and its $300 annual travel credit, which, says Conway, is particularly work-intensive. You have to contact J.P. Morgan Priority Services by phone to request a credit for an airline purchase within four billing cycles, according to the card’s terms.

The Ritz-Carlton card has another breakage-prone perk – its $100 airline-ticket discount.

“Using this perk is more complicated than just booking a flight with the card,” Miller says.

Specifically, you must:

  • Book your flight through the Visa Infinite Discount Air Benefit site.
  • Book a round-trip domestic booking for between two and five passengers (including yourself).

3. Trip delay insurance

If your flight is delayed due to a storm, don’t just tell yourself “Tough luck” and pay for the cheapest airport hotel or make yourself cozy on the airport floor. Your card’s best-kept secret may be its trip-delay coverage.

Fewer than 10 percent of cards offer this benefit (according to our survey), but several of Chase’s premium cards do. Conway and his wife used their Chase Sapphire cards’ trip delay coverage last year when a snowstorm hit New York.

“We got a nice hotel, dinner, took a taxi and Chase ended up covering all of it,” he says.

Trip-delay coverage doesn’t often get featured in advertisements, though. It’s tucked away in the benefits paperwork, where only a determined few will find it.

4. The most lucrative rewards redemption options

Breakage isn’t always about using vs. not using a benefit. Sometimes it’s about not getting the ultimate value of your points.

The redemption methods your card advertises may be an attempt to steer you toward less-lucrative options for your points. Take, for example, the Chase Ultimate Rewards program and American Express’s Membership Rewards program. Cards tied to these programs often advertise the ability to book travel at a discount via a portal.

“They’ll always offer you an easy way out,” Conway says. “‘Hey, you can book travel right through our website. You get 1 or 1.2 cents per point, it’s super easy.’ If you look at their site, they actually steer you in that direction.”

However, the best value for your points may actually be transferring directly to partner frequent-flier and hotel-loyalty programs, a redemption option you have to dig a bit deeper to find.

For example, 25,000 points may get you $250 to $375 via the card’s portal (depending on whether the portal gives you a redemption discount). But you might be able to transfer those points directly to, say, United and get a round-trip domestic flight worth $450.

Point is, know all your redemption options, not just the one your card issuer wants you to know about.

5. Free annual night

This is a benefit hotel cards frequently advertise, but that some cardholders may leave on the table.

“People read the headlines, and they see they get a free anniversary night if they pay their annual fee,” Conways says.

However, that free night generally expires (often a year after issue). And some free nights are restricted to certain property categories, meaning you may not be able to use yours during your planned vacation after all and may never find another opportunity before it expires.

“For Marriott, you’re limited to up to Category 5,” Conway says. “That’s like a Courtyard Marriott in some cities.”

6. Hotel status

Some cards reward elite status at partner hotels, which gets you such perks as free breakfast and upgrades when available. For example, the American Express Platinum card gives you Gold status with Hilton. However, to get the perks that come with it, you must link your Hilton Honors loyalty number to your American Express Account, a step many surprisingly skip.

“It takes about 30 seconds,” Conway says. “But a lot of people don’t do that.”

7. How to NOT become “breakage”

If certain perks made you sign up for the card, read up on how to claim every last one.

“A few minutes of your time up front can help you reap the benefits later,” Miller says.

If the fine print is daunting, let the experts do the work.

“It’s simple – Google ‘How to use X card,” Conway says. “You can go through the six pamphlets that came with your card, but you’ll find easy how-to guides out there.”

 
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