How Your Credit Card Rewards Could Change in the Future
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Just like everything else, the financial landscape witnessed significant changes in early 2020. Credit card rewards were not spared the turbulence that emanated from stay-at-home orders and business closures. If you use rewards credit cards, which may be cash back, points or travel miles among others, there might be some changes seen.
Here are a few adjustments to note:
All News is Not Bad
Starting with the good stuff, meeting spending requirements after getting an amazing initial reward offer on a new credit card could be challenging. Some of these reward windows have been extended by credit card companies to cater for their customers’ needs. However, one has to be careful because in some cases, such bonuses automatically get increased while others require specific requests for extensions.
When it comes to your travel rewards card, you may think that its perks are being wasted now. With continuous travel limitations, your miles/points may be at risk of expiring. Even when they do not expire, you may need some time before embarking on any journey again as you still feel unsafe doing so. This means that your points will remain dormant.
Conversion of Travel Points
Another advantage under current conditions is the fact that certain companies are now eschewing travel perks due to obvious reasons. Currently firms such as American Express and Chase offer bonus incentives for regular items like groceries, streaming services and mobile phone bills among others. If anything can translate into discounts through cash back on essential purchases this makes sense especially since few people are currently buying hotel rooms or airplane tickets that traditionally come with great incentives.
Encouragement to Spend
Irrespective of how bad off financially someone could be credit card issuers need them to keep swiping their cards. Consequently banks have changed their reward programs in order to encourage usage particularly for cards with high annual fees. It does not make sense then trying to spend beyond $250 per annum on a card whose value has diminished dramatically over time?
According to Brett Holzhauer, a travel rewards expert with ValuePenguin, the credit card issuers want to incentivize spending by offering an annual premium of $500 worth of value for making a purchase.
Some Changes May Endure…
The duration of this current situation is unknown. For example, some observers believe that there will be a “new normal” after the epidemic with some changes becoming permanent such as in credit card reward programmes.
…But Some Probably Won’t.
If things go back to normal again soon, Steven Dashiell who is an expert on credit cards at Finder.com worries about what could happen next. Giving people more categories for rewards may make them used to these benefits. However, when such perks are withdrawn sadness can take place.
The Pre-Existing Shift
Even before the pandemic outbreak, certain credit cards were moving away from providing travel rewards or cash back. A few cards began giving rewards in form of “lifestyle perks” like Doordash delivery discounts and Lyft or Uber ridesharing credits. In addition to other features that come with subscriptions like being members of Disney+ or Spotify among millennials it was another good choice.
Regarding Travel Rewards
Looking at present foreign travelling restrictions may not make travel reward points as appealing any-more. This is why people might think of changing their credit card strategy and decide whether their current one suits their lifestyle and needs because of this situation.
At this point, I would recommend a review of the travel points you may never use. Should this be the case, you could consider switching to a card that serves your present lifestyle better with regard to cash back on groceries.
Expected Freebies
Watch out for attractive sign-up bonuses as credit card companies seek to boost consumer spending. These may result in remarkable opportunities for rewards among conscientious consumers. However, there is an inflation risk. Firms are likely to raise incentive values in order to attract more customers hence reducing the worth of individual awards.
In Summary
Although credit card rewards appear lucrative, they have limitations. You might be paying more in interest expense than the benefits are worth if you carry a balance on your card. Remember rewards have expiry dates. For this reason it is advisable that one redeems them after some time has elapsed because award values fluctuate considerably. Be reminded that getting $50 each month off groceries using cashback will save you $600 on getting an airline ticket yearly.
Associate Writer • Social Media and Cultural Trends Writer
Sebastian creates compelling posts, topics, and reviews of social media and cultural trends to help readers on what’s in and what’s out.
