- What to do with airline and travel credit cards amid coronavirus
- Take advantage of new card offers
- Keep the card open
- Keep an eye on your credit score
- What about credit card churning?
- Stay patient with your rewards credit cards
- Credit Card Travel Insurance for Chase, Amex and Capital One
- Will credit card travel insurance cover the coronavirus?
- What kind of credit card travel insurance do issuers offer?
- Chase travel insurance
- What to Consider Before Closing Your Travel Credit Card During COVID-19 Crisis
- The downsides to closing a credit card
- Ask about annual fee credits or retention offers
- See if promotional offers could offset the annual fee
- American Express Offers
- Chase Offers
- Special bonus rewards and statement credits
- Ask for a product change to a no-annual-fee card
- Consider if you will be able to get the card back
- Will closing the card leave you with “orphan” miles?
- The bottom line
- How to Maximize Your Rewards
- As coronavirus cancels July Fourth vacation plans, should you cancel your travel credit card — or redeem air miles for cash?
- The drawbacks to canceling rewards credit cards
- How to manage your credit cards in a pandemic
What to do with airline and travel credit cards amid coronavirus
With so many Americans canceling travel plans due to the coronavirus pandemic, what will credit card consumers do with their travel and airline rewards points?
No doubt, U.S. adults are shying away from travel during COVID-19. According to a recent Harris Poll, just 33% of Americans say they’ll stay in a hotel and 28% say they’ll avoid flying until the pandemic clears – whenever that might transpire.
In the meantime, how should credit cardholders handle their travel and airline rewards points and perks – whether they plan to fly or not? Credit card experts have a few thoughts on that topic, with these strategies making their way to the top of the travel and airline “to do” list:
Take advantage of new card offers
For the most part, travel-heavy cards have added additional bonus categories, and cardholders should take a closer look. Credible can help give you an overview of the cards and what's available.
“The new offers focus on spending for folks working from home, those ordering online, those eating in more, and utilizing streaming services, for starters,” said James Larounis, travel industry analyst at UpgradedPoints.com.
“For example, one major credit card normally has a $300 a year travel credit, which is now expanding to include grocery shopping.
The card’s annual fee has also been lowered to $450 for renewals, allowing folks who aren’t traveling to access benefits at a lower price.”
When beating the bushes looking for a new rewards card, leverage card comparison platforms Credible, where you can instantly compare many rewards credit cards with a single visit.
SHOULD YOU GET A HOTEL CREDIT CARD?
Keep the card open
There are a few ways to avoid issues for a while – at least until travel opens up again and the plastic perks prove valuable.
“For example, if a credit card has no annual fee, don’t close it,” said Brandon Neth, a credit card and award travel expert at Finance Buzz, an online personal finance platform. “Just be sure you use it once per quarter to keep it active so the bank doesn’t close it for you.”
If the card has an annual fee that exceeds the value you’re getting from it, you can simply change it to another card from the same provider with no annual fee. “If this isn’t an option, ask the card issuer for a retention offer,” Neth said. “This usually covers the annual fee.”
Here’s what you need to know about annual fee credit cards to get started.
HOW TO CHOOSE YOUR SECOND CREDIT CARD
Keeping your rewards card open also keeps new benefits in play. By visiting Credible, users can quickly compare the best credit cards that meet their needs.
“For example, cardholders who now have a new limited-time benefit, a $300 annual travel credit that’s now applicable at gas stations and grocery stores (in addition to travel purchases) until the end of the year, can leverage those rewards,” said Ben Walker, a travel and credit cards writer at Finance Buzz.
Keep an eye on your credit score
Closing any credit card – not just a travel credit card – can negatively affect your credit score.
“That’s because closing a credit card account lowers your total available credit limit and can lower the average age of your credit history,” said Steven Dashiell, credit cards expert at Finder.com. “Both of these play an important role in your credit score.”
Generally, providers and credit bureaus look at the percentage of credit you’re using over time as an indication of how well you’re managing your finances.
5 FACTORS THAT AFFECT YOUR CREDIT SCORE
“You’ll often hear this called your credit utilization ratio,” Dashiell said. “Keeping that percentage to 30% or less is the ideal. If you’re using more than 30% of your total credit available on a regular basis, your credit score might start dropping. Closing a credit card account naturally lowers your total available credit.”
“So where you once might have used 25% of your total available credit, that number could jump up to 30% or more depending on the credit limit of the account you closed,” he said.
What about credit card churning?
Credit card churning – the practice of regularly applying for new accounts just to earn their sign-up bonuses – is allowed right now, but ly isn’t a good idea.
“Credit card churning is rarely worth the time and effort,” said Stephen Weyman, co-founder of Canada-based creditcardGenius.ca, a credit card advisory site. “Most welcome bonuses that are worth getting are for cards with high annual fees, and usually require a high minimum spend to earn the reward.”
Additionally, any time you apply for, use, and cancel a credit card, this will have a negative impact on your credit score. “Churn enough cards, and you’re risking taking on an unmanageable amount of high-interest debt while simultaneously chipping away at your credit score,” Weyman added.
Stay patient with your rewards credit cards
Credit card companies know people aren’t traveling, so they’re taking aggressive steps to ensure consumers keep their rewards cards.
“Folks are spending money on essentials, though, so having options to earn more rewards on these everyday purchases is very helpful. As long as you get value from travel cards, there’s no point in canceling or downgrading,” Walker said.
HOW DO REWARDS CREDIT CARDS WORK?
Credit Card Travel Insurance for Chase, Amex and Capital One
Editorial Note: The content of this article is the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
Terms and Restrictions Apply to American Express benefits and offers. Visit americanexpress.com to learn more.
Life happens, and it can happen at the most inconvenient times — when you have travel plans. That's when credit card travel insurance can help you save thousands of dollars and give you peace of mind before, during or even after your trip.
In this guide, we featured cards from Chase, American Express and Capital One — three issuers that offer excellent complimentary travel protections.
Here is an overview of what is provided by different card issuers and the different types of coverages.
We picked a variety of cards that cater to all different consumer spending profiles, whether you're a frequent traveler or just take a vacation once per year.
Not only did we handpick some of the best travel rewards cards, but we selected a ton of everyday cards with no annual fee that come with travel insurance benefits.
Before you finalize your bookings, be sure to familiarize yourself with the exact terms of these benefits, which we've linked to each card.
In late 2019, the novel coronavirus began making news as a global outbreak began to spread.
Originating in China, the virus has sickened and killed hundreds of thousands, and also left travelers scrambling for options as airlines began canceling flights in January 2020.
Although vaccinations are slowly becoming more widespread, airlines still face difficulty amid canceled flights and testing requirements.
In fact, many domestic carriers have permanently eliminated change or cancellation fees. While there are some exclusions — such as basic economy tickets — you'll want to check with your airline first to see if you can get your money back for your airfare.
Will credit card travel insurance cover the coronavirus?
With any travel hiccup, it is important to understand the terms of credit card coverages. In the case of the coronavirus, each policy will have unique language regarding outbreaks and illnesses.
For example, The Platinum Card® from American Express mentions the following covered losses in its terms and conditions:
- Reimbursement of a nonrefundable amount paid to a travel supplier in case of “accidental bodily injury or loss of life or sickness” of the cardholder or any eligible traveling companions.
- Quarantine imposed by a physician for health reasons.
In other words, if you or your qualifying travel companions become sick or quarantined because of the coronavirus, any additional expenses incurred may be covered under the card's policy.
On the other hand, the terms don't explicitly mention anything regarding epidemics or pandemics, so you may be luck if you want to cancel your travels simply because you want to avoid the coronavirus.
If you continue to travel during 2020 and your trips are interrupted or canceled, The Platinum Card® from American Express may reimburse you for nonrefundable prepaid land, air and sea transportation arrangements.
Coverage for emergency medical and evacuation coverage may also be useful in case you become sick while traveling.
If you are traveling during the pandemic, it may be a good precautionary step to apply and use a credit card for your reservations that offers these policies, such as the Chase Sapphire Reserve® or The Platinum Card® from American Express.
If you are unsure about the terms of your credit card travel insurance policy, it is best to call your credit card company to clarify.
What kind of credit card travel insurance do issuers offer?
Consumers can expect the terms of their credit card travel insurance to vary from issuer to issuer, as well from card to card. In our table summaries, we highlight credit cards that provide outstanding travel insurance benefits. If you don't see your card listed anywhere under its respective issuer, the card may have limited or no travel insurance coverage.
Chase travel insurance
There are several Chase credit cards that offer travel insurance protections. While most plans we've seen limit benefits and payouts to just your spouse and children, Chase has some of the most inclusive definitions of “immediate family member.” This group includes:
- Spouses and domestic partners
- Children, including adopted children or stepchildren
- Siblings and siblings-in-law
- Parents and parents-in-law
- Grandparents and grandchildren
- Aunts and uncles
- Nieces and nephews
- Legal guardians or wards
|Rental car insurance||Secondary|
|Trip interruption insurance||Up to $1,500 per person and $6,000 per trip|
“],[“Rental car insurance”,”Secondary”],[“Luggage protection”,”N\/A”],[“Trip interruption insurance”,”Up to $1,500 per person and $6,000 per trip”],[“\u003Cspan\u003E\u003Ca class=\”ShortcodeLink–root ShortcodeLink–black\” title=\”Chase Freedom Flex Credit Card: Is It Right For You?\” href=\”https:\/\/www.valuepenguin.com\/chase-freedom-flex-card\”\u003ERead review\u003C\/a\u003E\u003C\/span\u003E”,”
What to Consider Before Closing Your Travel Credit Card During COVID-19 Crisis
COVID-19 presents both a health and a financial crisis, and during such a difficult time, you may be looking to cut expenses you see as discretionary. Since you probably won't be traveling soon (or as much), that might include a travel credit card with an annual fee.
Get answers about stimulus checks, debt relief, changing travel policies and managing your finances.
Closing a credit card you don’t need is fine in some circumstances, especially if it carries an annual fee and the anniversary date is looming. However, it’s not completely without risks. Closing a card may adversely affect your credit in a time when you might need it more than ever. And in some cases, your credit card company can even claw back the points you’ve earned.
If you’re on the fence about whether you should keep or cancel your travel rewards credit card, here are a few things to consider.
The downsides to closing a credit card
Credit experts often suggest you shouldn’t apply for more credit than you need, but that’s not the same as cutting down on the credit you already have. The latter can harm your credit scores because of a metric called your utilization rate (or utilization ratio).
Experts usually advise keeping the utilization rate (both per card and of your overall credit) under 30%. But this is a general guideline; the lower your rate, the better. VantageScore bluntly states that the “optimal ratio always will be as close to zero percent as possible,” although it leaves a possibility of having “elite credit scores with higher ratios.”
So if you thought your only job was to pay your bills on time, that’s not quite true. To FICO, the utilization rate is second in importance only to payment history, while to VantageScore it’s the most influential factor.
This is why it’s crucial to know where you stand before closing your account. Let’s say you have three cards with credit limits of $2,000 each.
If you cancel one of them, you’re slicing one-third of your total credit, which has now shrunk to $4,000.
That can be unsettling even in normal times — but especially now, when emergency spending is more ly and can contribute to a utilization rate increase.
On the other hand, if you carry several cards for a total balance of $20,000 and keep a utilization rate of 10% or 15%, then closing one low-limit card should be OK.
The point is, having a good credit score affords easier access to new credit should the need arrive, which is especially important at a time of crisis when lenders are ly to tighten approval standards.
» Learn more: Does closing a credit card hurt my credit score?
Ask about annual fee credits or retention offers
Sometimes a solution to your problem is one phone call away. Just tell the agent that you’re thinking of canceling the card because times are rough and you don’t have an immediate need for the card.
If your account is in good standing, they might offer to reduce the annual fee or waive it rather than see you go. Or they might try to entice you with a retention offer including a points or miles bonus. You’ll never know unless you try.
However, if you carry a balance on your card, you might want to ask them to lower your annual percentage rate instead. That approach could work out even better than getting the fee waived.
» Learn more: How to get a lower APR on your credit card
But be careful — some issuers are quick to close your card immediately upon such a request. To avoid that, tell them you would to speak to the retention department. And be patient, because wait times on the phone may be longer than usual right now. Also, though it may go without saying, try to be unfailingly polite even if they say no.
See if promotional offers could offset the annual fee
Many travel rewards credit cards come with an annual fee, ranging from a reasonable $49 up to a hefty $550 or even more. For frequent travelers, or even those who take only a few trips a year, the benefits that come with the cards generally make the annual fee worth it.
Even if you’re not traveling right now, you may be able to find value from the card in other ways. Many cards offer coupons and exclusive offers that could save you enough money to justify keeping the card.
American Express Offers
If you have an American Express card, you have the opportunity to add AmEx Offers to it. Log into your AmEx account and scroll down the page until you see the “AmEx Offers and Benefits” section.
You’ll see a list of merchants with various offers that you can add to your card. Some will save you cash — just click to add the offer to your card, then use that card to pay for your transaction at that merchant. If you meet the requirements of the offer, you’ll get cash in the form of a statement credit back on your account.
Other offers will earn additional Membership Rewards points above what you’d earn normally for using the card.
The offers available to you may be different from offers your family or friends receive. Add as many offers as you ; there’s no obligation to use them. If you have multiple AmEx cards, even though you may see an offer available on several of them, you’ll only be able to use each offer on one card.
Chase also has an array of rotating offers you can add to your card. Sign in to your Chase account, and you’ll see offers you can activate on your cards.
Chase offers are newer on the scene and not quite as robust as the offerings you’ll find on AmEx. These offers typically earn cash back on your statement instead of extra points.
You can find special offers and deals on your Bank of America credit cards, too. Just scroll down the page when you’re logged in and you’ll see a list of BankAmeriDeals that are available to add to your card.
Chase Offers, these deals are cash-back offers that will be credited to your statement after you pay. Make sure you’re spending enough at that merchant to meet the requirement for the offer, and don’t forget to use the card you added the offer to when you check out.
Special bonus rewards and statement credits
In the coronavirus pandemic, a number of travel credit cards feature special extras for a limited time. Many cards have increased bonuses for the money you spend on groceries, while others are giving statement credits for streaming services, cell phones and electronics purchases.
Here are a few of the special bonuses offered by various cards: (You can find our detailed lists here and here.)
- Up to $320 in statement credits on the The Platinum Card® from American Express for streaming services Netflix and Spotify and for wireless phone services through Dec. 2020.
- 3x-12x per dollar spent on groceries, depending on the credit card.
- The ability to use annual hotel and resort credits toward any U.S. restaurant purchase.
Check out the offers for the cards you carry and factor those savings into the bigger picture when you’re deciding to keep or cancel the card. Watch out for other special, limited-time offers that may crop up on your specific card.
Ask for a product change to a no-annual-fee card
If you don’t care about keeping the same card, you can ask for a product change. In most cases, your credit card company will be happy to offer you a downgrade to a no-annual-fee card with the same credit line. Problem solved.
Before you do this, make sure your credit card company won’t claw back your points if you cancel or downgrade. Read your cardmember agreement or call the issuer to ask what happens if you cancel or change the card.
The Citi ThankYou program, for example, doesn’t take away your points when you product change a premium Citi Premier® Card or Citi Prestige® Card, but you may not be able to transfer those points to an airline (arguably one of the program’s best features).
Other credit card programs may have different product-changing stipulations, so make sure you understand the implications and can protect your points. They may take you far when planes lift into the skies again.
Consider if you will be able to get the card back
If you’re thinking about canceling the travel rewards credit card you have now, but then want to reopen it later when you’re ready to travel, your plans might be foiled.
Chase, which has arguably one of the best portfolios of travel credit cards around, has an (unofficial) policy that could make it hard for you to get a “new” card when you’re ready, even if you had it before. It’s called the 5/24 rule, and it means that in order to be approved for a Chase credit card, you must have fewer than five approvals for credit cards in the last 24 months.
For example, let’s say you closed your Chase Sapphire Preferred® Card now and opened several cards that earn cash back instead. If you wanted to reopen a Chase Sapphire Preferred® Card again next year but you were over five cards in 24 months (from any issuer), you’d ly be denied.
Even if you’re not affected by the 5/24 rule, there’s always a chance that your favorite travel card won’t be available for new applicants, you wouldn’t qualify for a welcome offer or the bank may enforce a longer waiting period before you can get it again.
Make sure you are aware of your 5/24 count, review the issuer policies on timing rules related to welcome bonuses and gather information about reapplying for your specific card before you make a decision to cancel.
» Learn more: Chase 5/24 rule explained
Will closing the card leave you with “orphan” miles?
Thanks to flexible points programs, it’s easy to transfer points to many different airline and hotel reward accounts. You can transfer your flexible points into your airline or hotel account if you need more points to reach the award you want to redeem them for.
If your airline or hotel points were close to expiring, in many cases, you could transfer flexible points to generate account activity and keep them from expiring. Or, if you found an irresistible deal and wanted to transfer your points, you could do so in a few clicks.
Keep in mind that not all airline and hotel rewards programs have transfer partners. Take American Airlines, for example. While it does have a variety of co-branded credit cards to choose from, it doesn’t partner with any flexible programs Chase, American Express or Citi.
Let’s say you close your American Airlines credit card. Once it’s safe to travel again, you find an amazing Web Special award but you don’t have enough American AAdvantage miles to book the trip for your whole family.
You won’t be able to generate more AAdvantage miles by spending on your credit card (because you closed it), and you won’t be able to transfer any flexible bank points into your account.
Sure, there are other ways to earn more miles, but it may not be as easy if you no longer have the credit card.
The bottom line
Closing your travel rewards credit card in the coronavirus pandemic may be the right decision for you. Before you close it, consider the fact that you may not be able to reopen it down the line or that you may be able to get more value to cover the annual fee than you realize.
If there’s an option to downgrade your card to a different version, that could end up being a better plan. You may also qualify for a retention offer when you call to chat about your options with the issuer.
The information related to the Citi Prestige® Card has been collected by NerdWallet and has not been reviewed or provided by the issuer or provider of this product or service.
How to Maximize Your Rewards
As coronavirus cancels July Fourth vacation plans, should you cancel your travel credit card — or redeem air miles for cash?
Before the coronavirus pandemic swept the globe, the Amtrak Guest Rewards World Mastercard was a great deal for David White. But now he’s left wondering whether it would be worth canceling.
White, who lives in Baltimore and works for a software firm, used to ride the train frequently — and with the credit card, he was able to rack up points that he could convert into free tickets. With travel now more perilous because of the pandemic, that strategy has proved less useful.
“It still is a glorified form of public transportation,” White, 27, said. “I’m just not sure how utilized that card’s really going to be until maybe this time next year. So I’m considering all but canceling that card, because any points that accumulate there are not necessarily going to be that valuable anytime soon.”
Adding to White’s frustration: The card comes with a $79 annual fee, and there aren’t many competitive options to redeem the rewards points for non-travel-related uses, he said.
A spokesman for Amtrak noted that the card’s reward program offers redemption options including gift cards to companies Starbucks SBUX, +1.01%, Panera, Macy’s M, +1.67% and Lowe’s LOW, +2.28%. “We understand that our members may not be interested in redeeming their points for travel at this time,” he said.
(A Mastercard MA, +1.19% spokesman said the company defers to its issuing partner regarding issues related to rewards.)
White isn’t alone in his frustrations, though. A recent poll from CreditCards.com found that one in five people who have a credit card that charges an annual fee think they’re getting less value their cards during the pandemic.
“ ‘Annual fees are only worth it if you are able to maximize the card benefits.’ ”
— Brett Holzhauer, travel and credit card expert at LendingTree
Some credit-card issuers, including Chase JPM, +0.95% and American Express AXP, +0.28%, have broadened the benefits associated with their top-tier rewards cards. Many of these cards tended to focus their rewards on travel purchases — but with those being few and far between, they have begun rewarding cardholders for spending at restaurants and grocery stores to keep them as customers.
But not all companies have taken these steps, as in White’s case. “On many annual fee cards, you’re sacrificing value if you redeem for cash back,” said Ted Rossman, an industry analyst at CreditCards.com.
Read more:Airlines must take extreme precautions to keep passengers safe, experts tell Congress
And the annual fees these cards come with can be tougher pills to swallow these days. “Annual fees are only worth it if you are able to maximize the card benefits,” said Brett Holzhauer, a travel and credit card expert at LendingTree TREE, -0.61%. “Benefits travel insurance, airport lounge access and elite status have been rendered nearly useless.”
Most credit-card experts agreed that if a cardholder does not think they are getting the full advantage of a card’s perks, paying the annual fee doesn’t make sense.
The drawbacks to canceling rewards credit cards
Unfortunately for consumers stuck with credit cards they’re not getting much use , canceling the cards isn’t a straightforward solution. Yes, doing so will save them money if they have another annual fee payment on the horizon — but there can be significant drawbacks.
For starters, canceling a credit card can ding your credit score. “Canceling a card affects your credit temporarily,” said Sara Rathner, a travel and credit-cards expert at the personal-finance website NerdWallet. “You’ll want to time it carefully if you’re planning on applying for any other loans in the next few months.”
Also see:Disney will overhaul Splash Mountain ride amid criticism over connections to racist film — here’s the movie they chose
The damage to one’s credit score from canceling a credit card comes in two ways. If the card was one you’ve held for a long time, getting rid of it will lower the average age of your credit accounts. This is one of the factors that drives a consumer’s credit score, and it means your remaining accounts will need to get older for your score to improve. That obviously takes time.
The other issue is that it reduces the amount of credit you have available. That can increase a consumer’s credit-utilization ratio, which can in turn reduce their credit score.
These aren’t the only drawbacks that consumers need to consider, though: “Some travel cards limit how many times you can have them or don’t allow you to earn a sign-up bonus twice, so by canceling, you may be shutting yourself that card in the future,” Rathner said.
How to manage your credit cards in a pandemic
Even if you don’t get much use a card, you don’t necessarily want to put it in a drawer and forget about it.
With one of White’s other credit cards, he faced the threat of a reduced credit limit. Earlier this year, he had put a lot of travel-related purchases on his Chase Sapphire Reserve card as he booked two international trips. He got refunds for those purchases because of the pandemic, and didn’t spend much afterward.
“ ‘Some travel cards limit how many times you can have them or don’t allow you to earn a sign-up bonus twice.’ ”
— Sara Rathner, a travel and credit-cards expert at NerdWallet
Chase later contacted him to say it was reducing his credit limit because of how little he had spent on the card. Many banks have taken steps these — reducing limits or even canceling cards people don’t use — because all of that unspent credit can represent a major risk to issuers’ bottom lines.
White said he was able to get the change reversed, but he has adjusted his spending as a result. He has shifted most of his spending to his card with Chase, yet he still makes occasional purchases on the Amtrak card to avoid having it closed.
“My main concern is a good credit score at this point,” White said. “I would love to buy a house in the next year or two, and I don’t need any even temporary setbacks on my credit limit.”
But cardholders who aren’t satisfied shouldn’t be shy. You can try to ask your credit-card company for a break on the annual fee, for instance. “It’s not just the lower and mid-tier annual-fee cards,” Rossman said. “I recently heard from someone who got a $300 annual-fee discount on the Amex Platinum.”
If that fails, a consumer might want to consider switching to another credit card from the same issuer.
“While you won’t qualify for a sign-up bonus, it allows you to keep the same account open for a much lower annual fee,” Rathner said. “You’ll lose the fancy perks, but you’ll save money and keep your credit score intact.”
The other option is to dig your heels in and save the points up for a dream vacation, Rathner said. Regardless of which route a cardholder takes, though, they should make sure they continue to make on-time payments to their cards so that their credit remains pristine until the pandemic is over.