Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. Every week, he answers readers’ questions about credit card rewards programs in his “Cashing In” column.
Ask Tony a question, or see if your question has already been answered in the Cashing In answer archive.
The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of card offers.
Dear Cashing In,
I’ve been using my Citi Costco Visa for
practically everything to get the rewards. Is there any fine print on how long
the balance has to stay on the card? For instance, if I buy a trip for $5,000
today, can I pay it off tomorrow and the rewards will still count? I couldn’t
find any fine print on this, but want to make sure before I pay off balances
early. – Suzanne
It is important to understand the details of
how rewards are accumulated. After all, you wouldn’t want to go to the trouble
of spending a bunch of money on a card only to learn that your rewards didn’t
Fortunately, just about all reward cards
operate in the same way. They give you rewards based on the net purchases you
make every month.
How and when rewards are calculated
What that means is at the end of the month,
your credit card issuer looks at the money you have spent on the card, minus
any credits you have received for returns or refunds. The result is the net
spending for the month. At that point, the card issuer credits you with the
rewards accumulated for that statement period. That includes any category
bonuses you might have earned for spending at certain categories of merchants.
If your rewards are in the form of airline or
hotel miles, they might take a few days to show up. That’s because your card
company has to report them to the airline or hotel. This timing sometimes comes
into play if you are trying, for instance, to hit a certain threshold of
frequent flier miles before booking a trip. After you spend what you think
should get you to that point, you have to wait for your statement to close and
for your card company to report the miles. On its website, for instance,
American Airlines says “transactions may take up to 2 weeks to post.” In my
experience, it is usually more like three or four days.
The important part, then, is that your
rewards are a) reported monthly and b) are based on your overall spending minus
For rewards purposes, it usually does not
matter when you pay off your balance. If you pay off your balance the next day,
the next month, or the next year, the result is the same: You will earn the
rewards based on the month in which the spending took place.
Paying it off in full and early is a good idea
I say it “usually” does not matter, because
one card comes to mind that gives rewards based on when you pay off the
balance. The Citi Double Cash card (no annual fee) gives you 1 percent back in
the month you make the purchase, plus another 1 percent back when you make a
payment. Getting that extra incentive to pay off your balance is helpful, just
in case the threat of punitively high interest rates isn’t enough to prompt you
to pay off your balance each month.
Suzanne, it is commendable that you are
paying off your balance early each month. You can continue to do so with
confidence that you’ll earn your rewards as you should.
Tip: Your rewards are reported monthly and are based on your overall spending minus credits.
See related: How to redeem your card’s cash back reward, Credit card help: 7 ways to get the most from rewards credit cards
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