Welcome to a regular feature on Eye of the Flyer! This blog series covers “rookie” topics pertaining to either a Delta or other travel-related theme (sometimes both!) and attempts to break down each topic to a basic level. You can read up on all the previous posts HERE. Now on to this featured subject!
We’re at an interesting time of year. It’s the gift-giving season. And some of us are chasing credit card bonus awards for meeting various spending thresholds.
Those of us who buy presents generally put a few bucks more on our credit cards now than during an average month. So that helps make earning credit card bonuses a little easier.
But it’s also when things can get messy.
Refunds: The Points and Spending Threshold Killer
If you read this blog, chances are you’re using a payment card earning some type of rewards: probably travel points or cashback. We love earning points or some extra money whenever we make a purchase.
Most of us have — at least once — bought an item and then returned it. Not exchange it for something else but return it all together. We’re sometimes given the option of a refund to our original payment method (credit card, debit card, cash, etc.) or store credit. (Other times, the merchant simply decides for us and we don’t have a choice.)
Well, the points (or cashback) we earn from a purchase get taken away from our credit card accounts if we return an item and request a refund.
The same goes for eligible spending thresholds. Let’s say you just meet the $25,000 spending requirement on your Delta SkyMiles® Platinum American Express Card. You spent $25,150 on eligible purchases during a calendar year (remember, fees and interest don’t count as eligible spending). Congratulations! You earn 10,000 bonus MQM (a little higher this year, actually) and knock out that Delta Amex MQD Waiver.
But then you return $151 worth of purchases — and your card is refunded is that money. Then your eligible spending is $24,999. Plan on forfeiting those bonus MQM. And unless you spent money on any other eligible Delta Amex cards, you’ll be short of meeting the $25,000 MQD waiver.
And yes, credit card companies and any of their travel partners can clawback your rewards retroactively or possibly debit your account.
I know people who learned this the hard way. Like, they finished December with the 10,000 MQM bonus. Yay! But then maybe someone in their family (perhaps an authorized user) returned something and requested the card be refunded the purchase amount. Yup. The 10,000 MQM disappeared in January.
How to Prevent the Great Return Clawback
There are a few simple practices that’ll preserve your points and spending totals.
Spend Over Your Minimum Requirements (If You Can Afford It)
If at all possible, don’t spend the exact amount of money required for a credit card bonus. For example, the Delta SkyMiles® Reserve American Express Card awards 15,000 bonus MQM for cardholders who spend $30,000 in purchases during a calendar year. Don’t spend $30,000 (or just over that) and then move to a different card (tempting as though that is). Go a few hundred dollars (or even a thousand bucks) over that. This way, you add a little padding “just in case.”
Here’s a caveat to that: don’t spend money you don’t, won’t, or can’t have. Going into debt for credit card rewards points isn’t worth it. Trust me. So if you can’t afford to spend that little extra, don’t.
Get Those Gift Receipts!
Make sure to include a retailer’s gift receipts when giving presents to others. This way, they can exchange your gift for something else, if need be. (Or just get them a gift card 🙂 )
Ask for Store Credit
If you return something and know you’ll shop again at that particular retailer, ask for store or merchant credit. This is generally what I do when returning something to Amazon. I’m a regular Amazon shopper and can blow through credit pretty quickly 🙂 .
This, too, goes back to the don’t spend money you don’t, won’t, or can’t have. Don’t hope you can float yourself some money if you really can’t.
Make Sure Your Authorized Users Know What to Do (Families, Businesses)
Do you have any authorized users on your credit card accounts? Make sure you have a plan for what to do in case something they buy with those cards needs to be returned. They may think they’re doing you a favor (i.e. saving you money, etc.) by refunding a purchase back to the master account. But that might end up biting you in the behind if you need to reach a minimum spending threshold. Whatever you want to do, make sure everyone is on the same page.
Some credit cards offer bonuses for spending made during a calendar year. Shopping for gifts this time of year can help us meet those thresholds. But returning items can clawback our points and spending totals if we’re not careful. So if you can afford (and will use) it, get store credit whenever possible.
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