Can credit card rewards points be capped?

You’ve started to accrue a sizeable amount of credit card rewards points, only to find your credit card issuer has stopped you from earning any more for that month. This is because many issuers have strict point earning caps where your earning potential may be halved, or stopped completely, when you reach a certain limit each month. 

Generally speaking, rewards points caps may be hard caps or soft caps, meaning:

• Hard points cap – your ability to earn points is completely stopped at a certain points limit.
• Soft points cap – your ability to earn points is reduced (such as halved) at a certain points limit.

The good news is that there are strategies available which may help you to avoid your point-earning ability being limited. 

Big four bank reward points caps

Source: RateCity.com.au. Data accurate as of 23/12/22. Note: Results based on highest sign-up point credit cards from the big four banks. 

How to ensure you earn the most rewards points

If your credit card does come with a points cap, you may want to consider one of two options:

1. Switch to an uncapped reward points credit card
2. Be strategic about your spending

Firstly, you may consider switching to a credit card that does not have a points cap. These credit cards are typically premium-tier options, which may come with higher rates and fees. 

However, if your credit card has a soft points cap, and you want to keep your card, you’ll want to familiarise yourself with your statement cycle. With any points cap, you’ll generally find your points earning is reduced or cut off once you reach a points limit, within a month or a statement period.

For example, your card issuer may have an earn rate of 1:1 up until you earn 5,000 points. After this has been reached, your dollars may only earn 0.5 points. This is usually effective each statement cycle, after which it is reset.

By ensuring you know your card inside and out, you may be able to maximise your earning potential. Look at your latest bill, or hop online, and find out when your statement cycle begins and ends. Your statement cycle should typically influence the time in which your points cap resets. 

If you have two or three big ticket items to purchase, it may be worth spreading these out over three statement periods. This way you are not reducing the number of points you could earn by making these purchases in one month, only to have your earn rate reduced.

Reward points expiry dates

It’s also worth keeping in mind that credit card points can expire. Some credit card issuers set expiration dates on your points, meaning you may need to spend them within a specific time frame, such as every 18-24 months. 

However, most credit cards do not have expiry conditions. For example, the American Express Membership Rewards program does not have expiry dates on its rewards points. You may want to check the terms and conditions of your credit card to ensure yours does not fall into this category.

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