“Wait, don’t go!” That’s the latest plea from travel rewards card issuers facing irrelevancy in a world where few people are hopping on flights and booking hotel rooms.
Of course credit card companies are worried: Customers pay around $140 a year on average to carry a travel rewards card — and up to $500 or more for a top tier travel card. That’s a lot to shell out for a product that’s dead weight in your wallet for the foreseeable future.
New temporary rewards rates and perks may drive you to change your card carrying strategy.
To compensate for the sharp pullback in booking flights and hotels, card issuers have been quick to adjust the terms and rewards categories on their annual fee cards, says CreditCards.com industry analyst Ted Rossman. They’ve expanded rewards categories, increased the point value on everyday spending categories, and are even slashing annual fees.
Here’s how several popular travel cards have modified their offerings, according to CreditCards.com:
American Express: Cardholders with the Platinum Card from American Express card can earn up to $320 in statement credits when using it to pay for streaming services and cell phone plans (up to $20 per month on each). AmEx also added Uber Eats to the $200 annual Uber credit. Max out both, and it nearly covers the card’s $550 annual fee.
Chase: Chase Sapphire Reserve is temporarily offering five points per dollar on grocery spending, and extending the 1.5 cent per dollar travel redemption to grocery, home improvement and dining purchases. Cardholders can also now use the $300 annual travel credit on groceries and gas. The company also lowered its annual fee from $550 to $450 through the end of the year.
Citi: If you carry the Citi Prestige Card (annual fee: $495) you can now use the $250 annual travel credit at supermarkets (including grocery delivery) and restaurants, as well as restaurant delivery from DoorDash and GrubHub. Purchases at wholesale clubs and superstores are excluded.
Co-branded cards partnering with Delta, United, Marriott and Hilton have also modified their rewards programs and offered other temporary perks to stimulate spending and ward off cancellations, Rossman says.
The changes seem to be keeping customers happy. CreditCards.com’s June poll found that 81% of annual fee cardholders believe they’re receiving either the same (58%) or more (23%) value from their annual fee card(s) during the pandemic.
Even with the new perks, you may find that your travel rewards card simply isn’t working for you. What then?
7 ways to play your travel rewards cards
While you’re grounded, you might be tempted to cancel your travel card. Be careful: Closing a credit card can negatively affect your credit score. First, consider these moves to help you wring the most value from the points you accrue:
- Negotiate the annual fee: The average annual fee on travel cards that charge them is $139.16 per year, according to a 2019 U.S. News Consumer Credit Card Fee Study, Don’t be shy about asking your card issuer to lower or completely waive it. The same study notes that 34% of travel cards waive the fee for the first year. A CreditCards.com study also noted that 70% of cardholders who asked for annual fee relief got it.
- Swap points for cash: If you’re sitting on a lot of points or miles and don’t see yourself traveling for a while, ask to exchange your rewards for cash back.
- Request a product change: If none of the new benefits appeal to you, contact your issuer and ask to swap your card for one that’s a better fit for your current needs. If you’re more interested in getting cash back, Rossman recommends switching to a no-fee pure cash back credit card where you’ll get a higher payout for the points you rack up. The best cards pay 2% cash back on purchases. Once your yearning to travel returns, you can switch back or find a new card with a sweet sign-up bonus.
- Carefully weigh which card to use: The new temporary rewards rates may change your card strategy. For example, your travel rewards card may now offer better terms on grocery store purchases than your cash-back card. Just make sure to note any restrictions on how you can use the points you earn (e.g. if the high rate only counts toward travel-related perks). Rewards are only valuable if you can use them.
- Donate your miles to a good cause: Most airline and hotel loyalty programs allow members to donate to different non-profit organizations. Visit your credit card company’s rewards hub for instructions on how to send points and miles to organizations that can use your help. To make sure the worthy cause you choose gets the maximum value, compare the per-point redemption value to what you’d get if you redeemed them for cash back and donated the money directly.
- Keep on charging: If your original strategy of racking up points for travel hasn’t changed, keep doing what you’re doing, especially if the points have a long shelf life before expiring. The fastest way to amass rewards is to use one card for all of your purchases, as long as you can pay your balance in full each month. If not, paying high interest rates — which average around 16% these days — quickly negates the value of the rewards you earn.
- Mark your calendar: Many of the new terms travel rewards card issuers offer are set to expire on Dec. 31, 2020. Promotions that relate to specific categories are also temporary, and may change even sooner.
Read next on HerMoney:
- The Dos and Don’ts of Credit Right Now
- 4 Easy Hacks to Increase Your Credit Score
- 7 Ways to Get More From Your Rewards and Points
- How I Traveled The World For 18 Months And Saved Money
- Why I Save Money To Travel
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