Credit Card Perks and Default

23 Apr Credit Card Perks and Default

A large portion of existing credit cards carry some sort of perk for borrowers, like cashback or frequent flier miles. Did you notice that those are often taken away if you go into default?

If you are getting close to defaulting on your credit cards, you have bigger problems then worrying over your cashback bonus or points accumulated for the purchase of some goodies.

But even if you aren’t close to default yet, here’s a question: Why are you carrying so many uncashed points in those accounts? These are, in effect, assets which don’t earn you interest while being held for you by the credit card bank. And of course if you go into default, they may be taken away.

This may not be true with programs which purchase points on your behalf in another program. For example, some of the frequent flier credit cards are simply buying miles for you in your account with the airline which may not be lost if you miss a card payment. Each program is different.

So if you notice yourself carrying a balance on a credit card — and carrying a balance of perks they owe to you — it might be a good idea to cash in your perks now, rather than waiting for an uncertain future.

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I have been a bankruptcy attorney since 1989. Our firm represents consumers filing bankruptcy almost exclusively, although I have represented bankruptcy trustees as well as creditors. For 2017-2019 I served on the American Bankruptcy Institute's Commission on Consumer Bankruptcy. Our Report recommended numerous changes to improve bankruptcy law to make it serve everyone in the process more effectively. If you live in Eastern Missouri, visit our website, send an e-mail or give us a call (314) 781-3400. Our website:
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