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Travel rewards cards are a popular type of credit card. According to a 2020 survey by ValuePenguin, 46% of US consumers held a travel rewards card. Like other types of reward cards, travel cards reward spending, but with travel-specific perks. Often, consumers can earn airline miles or points that can be redeemed to help fund trips around the US or the world.
However, the COVID-19 pandemic made many of these cardholders rethink the value of their travel cards. With travel abruptly shut down, many had to cancel plans and watch their miles and points sit unused. According to the same survey, 30% of consumers with a travel card canceled it in the wake of the pandemic.
The uncertainty surrounding the pandemic has left many people questioning whether their travel rewards card is really worth the annual fees they pay. After all, why keep a card you can’t that gives you unusable rewards?
But the solution may not be so simple. Many issuers are enhancing their perks and travel plans are beginning to creep back, making such cards competitive and useful in many cases. The ValuePenguin survey actually found 28% of consumers had applied for a new travel card since March 2020.
Let’s dive a bit deeper into the question of whether travel rewards cards are still a good idea, as there is no short answer.
Travel rewards credit cards allow you to earn rewards and discounts to be used toward travel. Consumers earn rewards by spending with the travel card.
Travel rewards cards typically give consumers a multiplier when they spend on travel-related categories, like airline bookings, hotel stays, and transportation. Many also reward spending on everyday categories like groceries, but at a lower multiplier.
Some of the most common perks and rewards available through travel rewards cards include the following:
In addition to the above rewards, many cards offer welcome offers to new cardholders, whether that’s 20,000 airline miles or bonus points upfront depending on specific terms and conditions.
Some travel cards are issued by banks. Others are issued or branded by airlines and hospitality companies, like the Hilton Honors American Express Card. Something to note is that miles and points might only be redeemed with those specific brands and businesses tied to the card.
The coronavirus pandemic significantly curtailed travel as the virus spread, prompting lockdowns across the country and world. This left consumers with a travel rewards card in a bind. All travel was off for the foreseeable future, dealing a double blow to cardholders: They couldn’t redeem the rewards they’ve accrued and using the card would only rack up miles and points that couldn’t be used either.
Despite all their advantages, travel rewards cards were suddenly not looking so great in the eyes of most consumers. There were other factors affecting the situation, too:
Even though 30% of consumers in the ValuePenguin survey canceled their travel cards as a result of the pandemic, there may be some argument that travel rewards cards could still offer consumers value. In fact, 12% of survey respondents said they’d been using their card more after the pandemic.
No doubt, whether to cancel a card or not can be a difficult—and personal—decision. Every situation is unique, and everyone has different levels of wanderlust. If you’re considering canceling your card, keep in mind these factors for why a travel rewards card might belong in your wallet:
While there’s no denying that travel rewards cards lost some of their luster amid the pandemic, they are not entirely worthless.
The resumption of travel and cash-out options all make the decision to cancel a difficult one. While you will know what’s right for you, taking these factors into account will help you land on the best path forward for you and your credit.
Looking for a travel rewards card? You can use our resources to help find the ideal card and rewards package for your wants and needs.
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