Missed Rewards: How Bad Swipes Drain Earnings

Leaving Money on the Table with Poor Card Selection

Even among consumers who have a solid mix of credit cards in their wallet, many fail to use the best card for each purchase, leading to significant lost rewards.

Data from 300,000+ Kudos members shows that:

• Nearly half (46%) of transactions were made with a suboptimal card, meaning the user could have earned more rewards by using a better option.
• The average high-spending user ($50K+ annual spend) lost between $441 and $2,087 in missed rewards simply by not using the best card in their wallet.

This means that even consumers who have strong rewards cards are failing to maximize them, often defaulting to convenience rather than optimizing their card usage.

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‍Where Consumers Fail to Use the Best Card

‍Data from Kudos shows that inefficient card use is especially common in key spending categories. The top areas where users frequently fail to use the optimal card include:

• General Stores – 25% of transactions where the best card was not used happened at general merchandise stores, where rotating category bonuses or store co-branded cards already in their wallets often offered higher rewards.
• Dining & Fast Food – 19% of transactions in this category did not use the best card, even though many cards in their wallets offered 3-4x points on dining.
• Grocery Stores – 15% of grocery transactions were made with non-optimal cards, despite many users having grocery cards offering 4-6% cashback.
• Gas Stations & Transit – 10% of transportation-related purchases (gas, rideshares, public transit) were made with suboptimal cards, missing out on potential 3-5x points per dollar based on cards that members had in their wallets.

Streaming services, on the other hand, had the highest rate of optimal card usage, likely due to autopay setups and users deliberately linking the best card for those recurring payments.

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‍How Much Consumers Lose by Not Using the Right Card

‍By analyzing actual transactions, Kudos found that the average consumer with $50k+ in annual spend missed out on hundreds of dollars in rewards per year simply by swiping the wrong card:

• Users with 2-3 cards lost an average of $441 per year.
• Users with 4-6 cards lost $651 annually by not optimizing their spending.
• Users with 7+ cards lost $2,087 annually—despite having access to more high-earning cards.

This highlights a "paradox of choice"—while having more cards should, in theory, lead to higher rewards, the added complexity actually reduces optimization, leading to greater losses. Tools like Kudos help solve this by automatically selecting the best card for each purchase, ensuring users maximize their earnings without the hassle of manual tracking.

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‍Who Is Most Likely to Use the Wrong Card?

‍Certain user behaviors and demographics make people more prone to suboptimal card usage:

1. Users with more cards are more likely to make mistakes.
   
   • Consumers with 7+ cards had the highest rate of incorrect card usage and left the most rewards on the table.
   • Those with fewer than 3 cards tended to use the correct one more often, simply because they had fewer choices.
2. Higher credit score users are more likely to use the wrong card.
   
   • 52% of transactions from users with a 740+ credit score were made with a suboptimal card.
   • In contrast, 74% of transactions from users with poor credit scores (300-579) used the best available card, likely because these users have fewer cards and default to their primary one.
3. Users with auto-pay and habitual spending patterns rarely change cards.
   
   • Many consumers set their default card for online purchases, subscriptions, or mobile wallets and never adjust—even when better earning opportunities exist.

Why Consumers Use the Wrong Card

‍Even when users have strong card lineups, they often fail to use the optimal card for each purchase, leading to lost rewards. The top reasons we heard from users include:

• Forgetting Category Bonuses – Many users default to using one or two cards for all purchases rather than selecting the best card for a specific category. For example, using a flat-rate cashback card instead of a dining-focused card that earns 4x points on restaurants can mean leaving hundreds of dollars on the table annually.
• Unclear Spending Categories – Some purchases, like Uber rides or meal delivery, may not code as users expect, leading them to use the wrong card. Without clear guidance, they miss out on enhanced rewards from category-specific cards.Some purchases may code differently than users expect because merchants are assigned specific category codes by payment networks. For example, purchases at stores like Target or Walmart might code as "general merchandise" or "discount store" rather than "groceries", even when buying food items there. Without clear guidance, users may unknowingly use a card that earns fewer rewards than expected, leading to missed earnings on everyday purchases.
• Inconvenience of Switching Cards – Users often cite the hassle of remembering which card to use, especially for small or recurring transactions. Instead of optimizing for maximum rewards, they rely on the same card out of convenience.
• Lack of Tracking Tools – Without a system to track and remind them which card is best for a given purchase, users fall back on default habits rather than maximizing rewards. Our data shows that cardholders used the optimal card for only 54% of transactions, meaning nearly half of purchases could have earned more rewards.

Unused Perks – The Free Money Cardholders Forget

Credit card perks extend well beyond cashback and points. Many premium cards offer high-value benefits like travel credits, shopping protections, and complimentary memberships, yet millions of cardholders fail to use them. These unused perks represent a huge missed opportunity, with Kudos data showing an average of $624 in annual value left on the table per user due to unredeemed credits—excluding card protections, as we don’t have a reliable way to measure their utilization.

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Even with these perks automatically available to cardholders, many go unused due to lack of awareness, complexity in redemption, or failure to track expiration dates. Many valuable credits and perks also aren’t automatic—they require cardholders to actively enroll or activate them first.

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Where Consumers Miss Out the Most

From travel perks to everyday spending, the most overlooked benefits fall into four key categories:

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(1) Travel Perks Left on the Table:

Many travel-related credits are left unclaimed because they require proactive activation or specific redemptions:

• The American Express Platinum Card provides a $200 airline fee credit, but it only applies to incidental charges like baggage fees and seat upgradesAdditionally, cardholders must enroll and select an airline within a limited annual window, making it easy to overlook and frequently underutilized
• The Capital One Venture X offers a $300 travel credit, but it must be redeemed through the Capital One Travel portal, restricting flexibility.
• Uber Cash credits from American Express Gold and Platinum cards expire monthly if not used, resulting in missed savings for many users.

Kudos data shows that 21% of users with access to the Chase Sapphire Reserve’s $300 travel credit didn’t use it at all. Among the 79% who did claim it, they only utilized 87% of its total value, even though Chase defines “travel” remarkably broadly. The credit automatically applies to clear travel purchases like flights and hotels, but also covers everyday transportation like Uber rides, parking garages, toll roads, and subway fares. This means cardholders could be missing out on automatic credits for their daily commute or local transportation, not just vacation expenses .

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(2) Everyday Subscription Benefits Often Ignored:

‍Many rewards cards offer subscription-based perks, such as complimentary memberships or discounts, yet redemption remains low across the board:

• The American Express Platinum Card provides a monthly $12.95 statement credit for Walmart+, but 43% of eligible users never used it.
• The Disney Bundle Credit ($7/month) on select Amex cards was redeemed by only 26% of cardholders, meaning most users didn’t apply their $84 in potential savings on Disney+, Hulu, and ESPN+.
• The Chase Sapphire Reserve and American Express Platinum both offer complimentary Instacart+ memberships, yet only 8% of eligible cardholders redeemed this benefit.

Some of these perks require activation, and many cardholders don’t track or remember to apply them, despite the clear financial value they offer.

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(3) Statement Credits for Shopping – High Value, Low Usage:

‍Retailer-specific credits can offer significant value but are often forgotten:

• The American Express Platinum Card provides a $100 Saks Fifth Avenue credit annually ($50 every six months), yet only 44% of eligible users used it.
• The American Express Gold Card offers up to $120 annually in rideshare credits, but less than half of users redeemed this benefit.
• The American Express Business Platinum Card provides up to $400 in annual statement credits at Dell, but most cardholders failed to take advantage of this perk.

Many cardholders simply forget to plan their purchases accordingly, resulting in hundreds of dollars in lost value each year.

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(4) Purchase Protections and Insurance – High-Potential Benefits, Yet Rarely Used

‍Some of the most valuable but underutilized perks include purchase protection, extended warranties, and trip insurance:

• The Chase Sapphire Preferred and Chase Sapphire Reserve both offer trip delay insurance covering up to $500 per person for delays of six hours or more, yet many travelers opt to pay out of pocket for hotels and meal costs during covered trip delays, instead of leveraging this benefit. 
• The American Express Platinum and Gold Cards provide purchase protection for up to $10,000 per item, but claims are rarely submitted. Purchase protection can cover accidental damage or theft within 90-120 days of purchase, but many cardholders never file claims
• Extended warranties, which add an additional year or more to manufacturer warranties on electronics and appliances, are also commonly overlooked, leading cardholders to pay out of pocket for repairs or replacements.
• Cell phone insurance is an often-missed perk, with many premium credit cards offering up to $800 in coverage per claim for stolen or damaged phones, with a small deductible (often just $25–50), when users pay their monthly phone bill with the card. Yet, many cardholders still pay $9–15 monthly for carrier insurance or $199+ for AppleCare+, missing out on free coverage.

Why Do Cardholders Fail to Use Their Perks?

‍Many high-value credit card benefits—beyond points and cashback—go underutilized because users aren’t aware of them or don’t know how to take advantage. The most common reasons we heard include:

• Failure to Track Expiring Credits – Many users forget to use credits like the $200 airline fee credit on the Amex Platinum or monthly Uber and streaming credits, leaving easy savings on the table.
• Complex Redemption Processes – Some perks, like statement credits for CLEAR membership or Saks purchases, require manual activation or specific spending patterns, which deters usage.
• Not Understanding Purchase Protection & Insurance – Cardholders often don’t realize that they have built-in protections for trip delays, stolen electronics, or extended warranties on major purchases.
• Lack of Awareness of Travel Insurance Benefits – Many users purchase separate travel insurance, not realizing that their premium credit cards offer comprehensive coverage at no extra cost, including trip cancellation, lost baggage, and rental car insurance. The rental car benefit can be particularly valuable - cards like the Chase Sapphire Reserve and Sapphire Preferred offer primary rental car coverage, meaning you can decline the rental company’s expensive collision damage waiver (often $10-30 per day) and the card's insurance will cover damage or theft without you having to file a claim with your personal auto insurance first. This benefit alone could save frequent travelers hundreds of dollars per year in rental car fees.

Best Practices of Power Users – How Top Cardholders Maximize Rewards

Not all credit card users leave rewards on the table. Some have mastered the system, consistently optimizing their spending, perks, and redemptions to unlock maximum value. Analyzing the habits of the top-performing Kudos members reveals key strategies that set them apart.

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They Structure Their Wallet for Maximum Earnings

Rather than relying on a single card, power users build a strategic lineup of complementary cards that maximize rewards across all major spending categories.

• They prioritize transferable points programs, allowing them to get higher redemption values rather than settling for fixed cashback.
• They fill gaps in their spending categories, ensuring they have at least one high-earning card for travel, dining, groceries, and everyday purchases. You can use tools like Kudos to see gaps in your wallet and the earning delta on cards that fill those gaps.

They Often Use the Best Card for Each Purchase

‍While the average user fails to optimize nearly half of their purchases, power users ensure they are always earning the highest possible return.

• They track category bonuses and adjust spending behavior accordingly.
• They leverage card-linked offers to earn additional cashback or statement credits on everyday purchases.
• They leverage tools like Kudos that remind them which card to use, preventing missed rewards.

They Fully Utilize Their Perks and Credits

‍Instead of leaving benefits untapped, power users systematically claim statement credits, insurance protections, and other valuable perks.

• They activate and use all recurring statement credits, from travel reimbursements to streaming and rideshare credits. Tools like Kudos can help automate perks tracking.
• They take advantage of time-limited card transfer bonuses, maximizing the value of their points by redeeming them when transfer rates are higher.
• They file claims for trip insurance and purchase protection, treating these perks as built-in savings rather than optional features.

They Optimize Redemption Value

‍Earning rewards is only half the equation—power users ensure they extract maximum value when redeeming them.

• They avoid low-value redemptions like gift cards or direct cashback when better options exist.
• They transfer points to travel partners, regularly achieving redemption values of 1.8–2.0 cents per point, far exceeding the 0.5–0.75 cents per point many casual users settle for.

They Actively Manage Their Wallet Over Time

‍Instead of holding onto outdated cards, power users reassess their credit card strategy as their spending habits change.

• They downgrade or replace cards when they no longer align with their spending priorities.
• They take advantage of new card welcome offers, strategically timing applications around planned major expenses (like home renovations or holiday shopping) to earn high-value bonuses while meeting minimum spend requirements.
• Kudos Data: The top 10% of users add a strategically chosen new card every 1–1.5 years, consistently optimizing their rewards potential.

Methodology

This report is based on aggregated, anonymized data from 300,000+ Kudos users, along with external industry research and issuer program details. The goal is to quantify missed credit card rewards and highlight optimization opportunities based on real consumer behavior.

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Data Sources

Findings are derived from:

• Transaction and rewards data from Plaid-connected Kudos users
• Kudos Dream Wallet analysis, evaluating how optimized card selections impact earnings
• Kudos Hidden Perks analysis, evaluating usage of card linked perks. 
• Issuer program terms, including published rewards structures and redemption options
• Industry research, including reports from the CFPB and third-party credit card analysts

‍How We Calculated Missed Rewards

‍Wallet gaps and inefficient card use were measured using Kudos’ Dream Wallet feature which analyzes:

• Actual spending behavior vs. the best available card for each transaction
• Annualized missed earnings based on category bonuses and spending patterns
• The potential impact of adding the top-matched missing card based on past 12 months of transactions

Unused perks were analyzed by measuring gaps through Kudos’ Automated Card Perks features:

• Comparing available statement credits and benefits with actual redemption rates
• Measuring the percentage of users who activated vs. failed to use key perks like travel and retail credits
• Estimating the annualized value of unclaimed benefits per user

Limitations

‍Findings reflect aggregated spending behaviors and issuer terms at the time of analysis. Individual results may vary due to redemption strategies, changing card benefits, and shifts in consumer spending patterns.