Credit Card Mistakes: Avoiding the Hidden Costs of Rewards

When it comes to credit card rewards, knowing why you're earning points is crucial. Before opening a card or starting to accumulate rewards, ask yourself what you want to achieve with your points.

Take American Express Membership Rewards for example. These points are ideal for booking international flights, but not so great for cash back or merchandise. The welcome bonus on the American Express Platinum Card can be as high as 175,000 points after spending $12,000 in the first six months.

This can translate to up to $3,000 in award flights, including taxes and fees. However, if you want to use your points for Christmas gifts, their value drops to just 0.6 cents per point.