Travel rewards cards are an excellent option for those who love taking vacations or who move around a lot for work. Unfortunately, the coronavirus pandemic is significantly reducing the ability to travel. And while the restrictions are starting to lessen, travel is still difficult for many individuals. So, should you keep your travel card if you can’t travel due to COVID-19?
Keep the Card
The first option for a travel card is to keep it. While maintaining a travel card when you can’t travel seems counterintuitive, there are several great reasons why you should consider holding onto your rewards cards during COVID-19.
New Rewards Categories
Several high-end travel cards are expanding their bonus earning categories to account for a lull in travel. The Citi Prestige, for example, now allows cardholders to use their travel statement credit for dining and grocery store purchases.
Chase travel cards, including co-branded options with leading airlines and hotels, now earn additional miles and points on purchases at grocery stores. The Chase Sapphire Reserve and United Club Infinite, for instance, earn 5X points on groceries, while other Chase travel cards earn 3X points in the category.
Related Article: Chase Cards Earn Bonus Points on Groceries – for A Limited Time Only
Use Miles to Pay Annual Fees
The best travel rewards cards come with pricey annual fees. The United Club Infinite Card has a $595 annual fee, for instance. Given the lack of air travel, however, the $595 charge doesn’t seem worth it.
Cardholders are therefore left to foot the entire bill if they plan to carry the card for another year. Fortunately, there are other options. Chase is currently allowing United MileagePlus members to pay their card’s annual fees with rewards miles. While not the best use of miles, it’s an excellent option for travelers who want to keep the card for when travel resumes but want to offset the costs now.
Cardholders can also contact their issuers to ask for a retention credit. These credits provide a statement credit to help offset the annual fee and are a great way to reduce costs while enjoying premium credit cards.
Related Article: Use United MileagePlus Miles to Pay Chase Card Annual Fees
Some card issuers are looking to make the lives easier of travel cardholders through unique “stay-at-home” perks. Amex is leading the way in this category, launching several benefits for cardholders during the pandemic.
American Express introduced statement credits for streaming and mobile phone services to cards like the Platinum Card and the Amex Green Card. These unique benefits help cardholders justify card membership during the coronavirus and provides great value for money.
Amex is also providing a free premium membership to Calm during the lockdown. This membership, a $69.95 value, offers meditation and mindfulness tips and assistance for the year – and is available on all American Express credit cards.
Related Article: Free Premium Calm Subscription with Amex Cards
Downgrade the Card
While there are plenty of great reasons for keeping a travel card, what if you still cannot justify paying the annual fee? After all, what if you don’t plan on traveling often enough in the second half of the year to recoup any losses from the first six months?
Many co-branded travel cards offer two distinct versions of a card: one with an annual fee, and one with no annual fee. With Hilton, for example, there are three: the Hilton Honors Card, with no annual fee, the Hilton Honors Amex Surpass, with a $95 yearly charge, and the luxury Hilton Honors Amex Aspire, with a $450 fee.
Cardholders who don’t want to pay the annual fee on the Surpass can contact American Express and ask to switch to the basic, no annual fee Honors Card. While they may not earn the same amount of points with every purchase, they still retain the points they already have, without the need to close an account.
Downgrading a card has a few important benefits:
- Keeping the account open, to keep any points or rewards already earned.
- Not close an account, thereby keeping your average age of credit up
- Eliminating the need for an annual fee
The easiest way to downgrade (or upgrade) a card is to call your card issuer and discuss which options are available for you at present.
Related Article: How to Upgrade Your Credit Card
Cancel the Card
If there are no downgrade options and you can’t get a credit for the annual fee from your issuer, your final choice is to cancel the card. Canceling a credit card impacts your credit score, as the average age of your credit drops, as does your total available credit. Losing a credit line can increase your credit utilization, resulting in a drop to your credit score. Fortunately, these are all factors you can plan for by reducing spending and closing monitoring your credit report.
What’s the Best Option?
So, what is the best option for those with a travel card they can’t use during the coronavirus shutdown? Should you keep your travel card during COVID-19? The answer depends on the unique circumstances of everyone. For those with Chase cards, there may be enough value with the grocery categories to justify holding on to their premium cards. The same applies for Citi Prestige and Amex cardholders.
For others with cards from smaller issuers or credit unions, the situation is much murkier. The best bet is to contact their lender and see what assistance is available to them. Discover, for instance, is known to provide additional offers for members who ask – but only if they ask. Reach out to your bank and see if they can help, or at least waive some of the annual fees.
Related Article: What Types of Credit Card Relief Do Banks Offer?