Credit cards can provide excellent benefits to customers, yet they can also have various downsides. The use of a credit card is most similar to obtaining a short loan, but you’ll need to know the best strategies to use one effectively. Most major credit card companies offer rewards, but are the rewards significant enough to make the credit card worthwhile? At the moment, there’s nothing better than doubling down on credit card points.
When you use a rewards credit card responsibly, a rewards credit card can save you money on everything from Amazon purchases to travel bookings. But, unfortunately, not everyone knows how to use a rewards credit card to its full potential.
However, many people will choose gamification and loyalty programs with specific companies over credit card points that offer flexibility. As we’re about to show you, that can sometimes backfire.
Here’s How Loyalty Programs Have Taken a Hit
Higher Loyalty Program Balances Right Now
Let’s take a direct look at the travel industry. The COVID-19 pandemic has rocked the travel industry beyond comprehension. As a result, hotels have seen record low occupancy rates, the world has witnessed mass border closures, and there have been some travel restrictions in every country worldwide. It’s not unusual to hear of airline or hotel bankruptcies, either.
For many travelers, that meant postponed or canceled trips. That’s resulted in significant refunds of hotel points and airline miles. Therefore, many people have massive amounts of hotel points and airline miles as the pandemic continues. Unfortunately, points and miles are generally a poor long-term investment because their values depreciate over time. Your points and miles are likely decreasing in value right now as the world shuts and you’re not flying.
So if the COVID-19 pandemic or other circumstances has forced you to cancel your trips, you may want to stop earning additional rewards. Otherwise, the following traps might catch you.
Ongoing Devaluations in Loyalty Programs
Numerous loyalty programs have modified their rewards structures as time has gone on. For example, the Marriott Hotel has removed peak and off-peak pricing, and Delta has removed award charts. As a result, it’s become significantly harder to get excellent value when you redeem your hard-earned miles or points.
And guess what? It’s not just the COVID-19 pandemic that has encouraged the modification of rewards programs. Many companies were looking to update these changes before the pandemic started. Some companies have even gone ahead and completed the changes anyway.
Here are some examples:
- Removing partner award charts: United Airlines decided in late April 2020 to remove partner award charts.
- Changing elite qualification from partner flights: As of April 2020, it’s now harder to gain United Premier elite status on partner flights. More importantly, the carrier only gave a single day’s notice before implementing these changes.
So, if you’ve been working towards a certain reward and you see a sudden change — such as requiring more miles — you’ll start to doubt the loyalty of these companies. And it gets worse.
Best Credit Cards of October 2022
The Sudden Rise of Bankruptcies
In the last 18 months, particularly in the travel industry, we’ve seen countless bankruptcies due to the COVID-19 pandemic. There’s a giant risk of wasting any points or miles from a loyalty program if the operator files for bankruptcy.
Now, if you’ve got your points with an airline, bankruptcy has been a risk in the previous 18 months. Let’s be honest; is there an industry that the COVID-19 pandemic has harmed more than the travel industry? Very few, if any.
With that said, history does show that miles and points can be safe during bankruptcy proceedings. You might also ask, but what if a credit card provider goes under? That’s a possibility. However, it’s far less likely.
So now you’ve seen the potential risk and the significant pitfalls of using a loyalty program. Next, we’re going to tell you about credit card points and why they’re a better, safer option.
Why Credit Card Points Are a Better Choice Now
Credit card points are sometimes a better option in the current times. You will minimize the risk of encountering any of the problems above. What’s more, if you’re earning fixed-value points or transferable rewards — they tend to be much more flexible than rewards and points from the travel providers themselves.
Firstly, there’s little risk of devaluation. Secondly, you can use credit card points on any airline. So it’s a win-win both ways. Furthermore, you’re not limited to earning points through credit card spending either. For example, you can use online shopping portals to boost your earning rates. You can also save more through bonus programs and online discounts through a payback loyalty program.
What Are the Best Credit Cards for Rewards Now
If you’re looking for the best credit cards for rewards, we have some excellent options for you. Here are some of the best options currently:
American Express Membership Rewards
American Express launched its membership rewards program 20 years ago. However, it only served domestic airline partners back then. Today, the American Express Membership Rewards program serves various top airlines, and it’s one of the best credit cards for rewards.
These include Virgin Atlantic, Emirates, and British Airways, etc. You only need to click on their AmEx account, head to ‘redeem points’, and transfer points to the various providers. Remember, transferring points is not reversible. So you’ll need to make sure you’re certain that you want to transfer these points before you do.
Chase Ultimate Rewards
Chase started its Ultimate Rewards program with two airline and hotel partners in 2009. Today, Chase works with over ten different airlines and three hotel partners, including Marriott, Virgin, and United. Chase account holders need to go to their Chase Ultimate Rewards portal, select the credit card they want to transfer points from, and choose the ‘Transfer to Travel’ option.
From here, you can link your points to any of the airlines and hotels that Chase works with. Most transactions take place in an instant. Therefore, you can transfer your points and book the flight within minutes. You can’t credit card transfer points to American Airlines, but you have ten other excellent airlines instead.
Capital One Rewards
In recent years, Capital One has improved its transferable rewards program, and they work with over 13 airlines and two hotel partners. The airlines include Emirates, Singapore Airlines, and Cathay Pacific. In addition, the transfer process is effortless. You’ll just log in to your Capital One account and click on “Reward Miles.”
From there, the page will transfer you to all the available partners. You can then choose which airline you’d like to transfer your points to. The only downside of using Capital One rewards to transfer points is the transfer rate. For example, the transfer ratio is two Capital One miles to 1 or 1.5 airline miles.
The Bottom Line
You must have an effective strategy for earning and redeeming rewards. Moreover, you must make credit card points, given the current dire state of the travel industry. Loyalty programs do offer some benefits. Nonetheless, stay aware of any sudden changes or devaluations of loyalty programs.
Sadly, it does happen. It’s not uncommon either. When you double down on credit card points, you can relax more during these difficult times. You’ll also have the option to transfer your points to various airlines and hotels instead of having a loyalty program with one company which may lead to devaluation or bankruptcy.
You just need to ensure you get the best credit card for rewards to suit your lifestyle.
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