The $205 You Don’t Know You Have

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Given that most families’ budgets are stretched tight during the holidays, would it surprise you to learn that you have a little more than $200 that you’re never going to use? A new study says Americans “throw away” nearly a third of the credit card rewards they earn over the course of a year. Want to be $205 richer? Read on. According to Colloquy, a marketing research company, each household earns an average of $622 annually in credit card cash back, points or miles, which adds up to a substantial $48 billion. Despite this windfall, we don’t claim an average of $205 worth of those rewards. This means that we’re essentially handing credit card companies a total of $16 billion every year in unclaimed rewards value.

There could be many reasons why people don’t claim their rewards. Maybe they forgot about them or don’t really care about rewards. Holders of some cards, such as carrier-specific airline cards, might be stymied by blackout dates or other restrictions on the use of their rewards.

(MORE: The 6 Best Travel Reward Credit Cards Right Now)

It’s also possible that consumers’ spending is scattered across several cards, so they never accumulate enough rewards points or miles to cash in with any single program. Colloquy research says we collectively hold 2 billion loyalty memberships, or an average of 18 per household. To give your purchasing power more clout, take stock of your spending habits and consider consolidating your credit card purchases to just a few programs that have the rewards you like best.

When it comes to making the most of that extra $205, there are a few things to keep in mind. First of all, don’t spend more than you otherwise would by falling into the trap of viewing rewards as “free money.” It’s best to use them for things you already planned to buy. In general, travel cards give you a better redemption rate if you cash them in for travel-related rewards, and using your points for merchandise is almost always a poor deal. If you do the points-to-dollars conversion, you’ll find that the “price” you pay for the item is generally higher than the purchase price would be if you just went out and bought it.

(MORE: Just Rewards: Americans Trade In Credit Card Points for Cash)

Finally, these rewards are worth exactly zilch if you also carry a balance on these cards. Rewards cards tend to have higher APRs than other cards, and the money you pay in interest far outweighs the value of any cache of rewards you accumulate.

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