3 Reasons You Should Never Hoard Credit Card Points

Earning points can be one of the biggest perks of paying by credit card. If you stick to your regular spending habits and pay off your card every month, you'll come out ahead with the points you earn. But sometimes points can cause people to make poor financial decisions.

There's overspending just so you can earn more points. And even worse, spending money to earn points while you're in credit card debt. There's also a big mistake that doesn't get talked about as much: hoarding credit card points.

Some people treat rewards credit cards like a video game, as if they're going for the high score. They earn millions of credit card points, and then let them sit around, unused. It might not seem like a serious issue, but doing this costs you, for a few reasons.

1. Your points could become less valuable

There's no benefit to holding onto credit card points. They aren't going to increase in value, like stocks or money in a high-yield savings account. But they could easily decrease in value.

Loyalty programs sometimes go through devaluations; the airline or hotel raises the number of points required for award bookings. Let's say you have 500,000 airline miles. The airline starts charging 50,000 miles for tickets that used to cost 40,000 miles. Your miles won't go nearly as far anymore.

Even if your points don't lose any value, it's better to save money now than later. Because of inflation, the value of our money gradually (and sometimes not so gradually) decreases. If you can save $1,000 using your points today, that's better than saving $1,000 in a year or two. You could also use that money to add to your investments or your savings, both of which are more valuable than credit card points.

By the way, this applies with cash back credit cards, too. If you have any cash back sitting around, use it, because it's not getting any more valuable.

2. You could lose them

With most credit card rewards programs, your points don't expire as long as your card remains open. I'd recommend double-checking to make sure. But normally, if you keep your rewards card open, all the points you've earned with it are safe.

However, if your card issuer ever decides to close your account, you could lose all your points. This doesn't happen often, but it's possible. For example, if your card issuer suspects you of gaming its rewards program, it could shut down your account. Some people who have purchased large amounts of gift cards to earn points have had this happen to them.

Or if you run into money troubles and aren't able to pay your credit card bill, your card could be closed for that reason. The bottom line is it's risky to hoard points since you don't have any protection if your account gets shut down.

3. There are always ways to use your points

One of the most common reasons people hoard credit card points is because they don't know what to do with them. Or they're waiting for that perfect redemption opportunity where they'll get $0.05 per point.

If you check all the options in your card's rewards program, you'll almost certainly find a way you can use your points. With travel credit cards, the best option is to use them for travel. That's a great excuse to book a luxurious vacation for yourself, or a staycation if you can't travel far. If that's not an option, you may be able to:

• Get cash back for your points
• Donate your points
• Redeem your points toward previous purchases

You may not get the maximum value for your points. But when you have more points than you need, getting something for them is better than having them sit around. You might also want to think about using other credit cards going forward with rewards that you have no trouble redeeming.

The whole point of earning credit card points is to save money, and you only save money with points when you use them. If your rewards balance has been going up and up, it's time to focus on redeeming all those points you've earned.