Credit Cards
Points And Miles Strategy During the Coronavirus Outbreak 2022
Editorial Note: The content of this article is based on 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 apply to American Express benefits and offers. Visit americanexpress.com to learn more. Citi is an advertising partner.
The coronavirus has caused a serious impact on nearly every facet of our lives. In particular, the travel and hospitality industries have been hit hard by the crisis. Huge financial losses even caused several airlines to declare bankruptcy during the pandemic, including popular carriers like Avianca and Alitalia.
You may be wondering what will happen to your points and miles if you aren't using them, and whether they may undergo a devaluation soon. For customers with heaps of travel rewards in their accounts, it can be concerning not knowing what may happen to those rewards.
In this article, we will detail what to do with your points and miles to ensure that your rewards are protected during these unprecedented times.
What to do with your points and miles during the coronavirus outbreak
Because of COVID-19, it's likely that the bulk of your points and miles have not been redeemed. While they are sitting, there are a few things you can do to protect them.
-
Keep an eye on them. Just like your checking account balance, your travel rewards should be something you check regularly. There are many cases of people hacking into consumers' rewards accounts, grabbing the points and either redeeming them or reselling them on the dark web. If this happens to you, be sure to contact customer service immediately.
Some rewards programs are less likely to refund your points than others, especially if the points were stolen months prior to you contacting them. Unfortunately, the program may offer no recourse to get your rewards back, so it is also a good idea to maintain strong passwords on your accounts.
-
Donate your points to charity. We all enjoy donating to our favorite nonprofits from time to time. If you have no use for your frequent flyer miles, you can donate them to participating nonprofits. Many loyalty programs partner with big-name nonprofits such as UNICEF, Red Cross or Habitat for Humanity for donations. However, keep in mind that these donations are not tax-deductible.
-
Restrategize for the future. As travel is starting to pick back up, now is the perfect time to strategize for your next adventure. Create a list or spreadsheet of the rewards you currently have, and the estimated points needed for your next trip.
Maybe you need to switch from earning airline miles to hotel points, or vice versa. Or it may be time to sign up for a new travel rewards credit card to earn a "]sign-up bonus. You might even want to consider switching to a cashback card instead so your rewards will be more versatile and you won't be locked into redeeming them solely for travel.
The key to a points strategy is "reverse engineering." Picture the trip you want, and work backward to figure out what points and miles you need.
Get rid of brand-specific points quickly, but efficiently
When the coronavirus hit and caused travel to slow severely, people were suddenly left with huge amounts of unused loyalty points and miles. Now that travel is starting to pick back up, some airlines and hotels have started to devalue their points in order to try to stay afloat. As a result, if you have lots of unused points and miles, you'll want to be sure to use them as soon as possible to avoid getting hit with devaluations.
If you have just a few thousand points with an airline program, such as Delta SkyMiles or United MileagePlus, don't stress too much. However, if you have a substantial amount of points with a specific airline, it may be in your best interest to use those points for other redemptions.
Let's say you are sitting on 100,000 Delta SkyMiles right now. These airline points are worth an estimated $1,300. While it is unlikely that Delta will go bankrupt and not come back, it's risky to leave such a valuable allotment of miles in limbo. In this case, you should evaluate the likelihood of the airline going under. If the likelihood is strong, begin researching alternative ways to redeem your rewards. With Delta SkyMiles, you can use your rewards toward:
- SkyMiles Experiences®
- SkyClub membership
- Merchandise
- Magazines
- Donations
- Gift cards
- Cruises
- Rental cars
- Hotel rooms
While many of these redemption options are far below the value of redeeming Delta SkyMiles for travel, it is better than potentially losing the points altogether. Of these options, purchasing a Delta Sky Club membership will be your best redemption at 1 cent per point. Keep in mind that you can have a complimentary Delta Sky Club membership through a travel rewards credit card, such as the [data-lightrail id="56"]{name}[/data-lightrail] or [data-lightrail id="54"]{name}[/data-lightrail].
See if your status is extended
If you are a frequent traveler who has status with either a hotel or airline, chances are your status has been extended. Nearly every large hospitality brand has released the details for their elite members about keeping their status.
Airlines
Hotels
Details of holding/earning status | |
|---|---|
| Alaska Airlines | Extended through Dec. 31, 2021 |
| Delta | Any status earned for 2020 will be extended for the 2021 Medallion year, which ends Jan. 31, 2022 |
| Hawaiian Airlines | Elite qualifications will be reduced to qualify for 2022 |
| JetBlue | No announcements made yet |
| Southwest | Status extended through Dec. 31, 2021 |
| United | Status extended through Jan. 31, 2022 |
Airlines
Details of holding/earning status | |
|---|---|
| Alaska Airlines | Extended through Dec. 31, 2021 |
| Delta | Any status earned for 2020 will be extended for the 2021 Medallion year, which ends Jan. 31, 2022 |
| Hawaiian Airlines | Elite qualifications will be reduced to qualify for 2022 |
| JetBlue | No announcements made yet |
| Southwest | Status extended through Dec. 31, 2021 |
| United | Status extended through Jan. 31, 2022 |
What to do with your travel rewards credit cards during the pandemic
In addition to your rewards, you should decide what to do with the travel rewards credit cards you currently have in your wallet. Though you may not be cashing in your rewards as frequently as before, your travel credit cards are still financial tools to keep track of.
From credit card theft to cards being shut down for inactivity, plenty can happen to your credit cards while they aren't being actively used. Here are a few tips on handling your cards:
In difficult economic times, lenders become stricter with their lending practices. One of their practices is reducing credit limits for personal and business credit cards — and they can do so without having to inform you. A reduced credit limit may negatively impact your credit score, since it can increase your rate of credit utilization — a major factor in credit scoring.
Example: Let's say you have $30,000 in credit issued to you from multiple credit card issuers, and you're carrying $5,000 in credit card debt. You are currently using 16% of the credit issued to you, which isn't bad. However, if a credit card issuer reduces the limit on one of your cards by $10,000, your credit utilization will increase to 25%. If you're carrying a larger balance, a credit limit decrease can push you over the recommended ratio of 30%. You could even end up with a larger balance than your new credit limit. Sudden changes like this can significantly lower your credit score, which can make it harder to qualify for additional credit.
You should take inventory of your credit cards and your current credit limits. If you see a reduction in credit, be sure to give your credit card issuer a call to see why your limit was reduced.
Sometimes referred to as "transferable points," points awarded by bank-affiliated credit cards like the [data-lightrail id="92"]{name}[/data-lightrail] are much more stable than points with airlines or hotels. While banks aren't invincible to bankruptcy, they offer a safer route to earning travel rewards.
What's more, transferable points can also be cashed in for gift cards or statement credits. If you need to unload points from these cards, you can often redeem them for statement credits at a value of 1 cent per point.
High annual fee cards, such as [data-lightrail id="54"]{name}[/data-lightrail], come with a robust list of benefits. Unfortunately, many of these benefits are closely tied to traveling, which may go unused during the pandemic. Paying upwards of $500 a year for benefits you can't use isn't the financially smartest option.
If your annual fee payment is coming up and you don't plan on traveling, consider canceling the card or downgrading to a less expensive card. Once traveling makes a full comeback, you can always reapply for the card. However, you most likely won't be able to earn the sign-up bonus.
Travel credit cards can provide tremendous benefits and point-earning opportunities. However, it may be smarter economically to switch to cash back cards until travel is back in full swing.
If the coronavirus situation has left you in a financially vulnerable position, it may be advantageous to transition to a cashback credit card. Cash back is far more flexible than travel rewards (you could use your rewards to help cover your bills), and you could even put your cashback rewards toward travel when you're ready. Also, many of these cards don't have an annual fee.
Cashback credit cards will either give you a flat or tiered rate of cash back for your purchases. However, each card comes with specific requirements for redeeming your cash back. So before you select a card, check its policies on how cash back can be redeemed.
Tips for responsible travel
Now that traveling is back on the table both domestically and internationally, albeit with restrictions, it's important to take the necessary precautions before taking a trip.
Follow these useful travel tips to ensure a smooth trip:
1. Check your entry and reentry requirements
You'll need to check the entry requirements for your destination to make sure you've got what you need. Some countries require COVID-19 testing, proof of vaccination and even quarantine on arrival, so you should be sure of what you need before you go. It's also worth noting that in order to reenter the United States from abroad, you will need to take a COVID-19 test one day before your flight.
2. Have travel insurance
Travel insurance can be handy if your travel plans get derailed. With the average cost of a vacation upwards of $3,000 for international trips, having travel insurance can help you recover those costs. There are a few ways to get travel insurance, such as:
- Buying travel insurance from a provider like Allianz
- Purchasing a policy from your travel providers
- Opening a travel rewards credit card with travel insurance
3. Apply for TSA Precheck/Global Entry
TSA Precheck and Global Entry are programs that enable travelers to have expedited security screenings at hundreds of airports. Not only will you save time, but you will spend less time waiting in crowded security lines, helping you avoid any illnesses going around.
Each program gives you membership for five years, and the application process is simple, requiring a short in-person interview to secure your membership. TSA Precheck and Global Entry both have modest prices to enroll at $85 and $100, respectively. And many travel credit cards, such as the [data-lightrail id="1147"]{name}[/data-lightrail], offer up to a $100 statement credit to enroll in either program.
Final thoughts
Credit cards are financial tools that can earn great cash back or travel rewards. However, it isn't advantageous for consumers to hold onto these rewards indefinitely. Points and miles are consistently devalued as brands look for ways to ensure less risk and more profitability.
But if you decide to keep your points or miles, be sure to use them for travel once it is safe to travel again. Rewards shouldn't be hoarded — they should be used to create travel memories with your loved ones.
FAQs
Is it safe to travel during the COVID-19 pandemic?
While it is safe to travel, the CDC recommends getting fully vaccinated before traveling. Unvaccinated travelers should get tested for coronavirus before and after traveling.
Are you at higher risk of catching COVID-19 on an airplane?
Airlines have taken numerous precautions in order to make flying safer for passengers, including higher-quality air filtration systems and ensuring every passenger wears masks. While socially distancing on an airplane is harder to accomplish, the CDC recommends getting vaccinated, wearing a mask and washing your hands often to protect yourself.
What are the requirements for entering the US through air travel during the COVID-19 pandemic?
The U.S. now requires every air passenger to provide a negative COVID-19 test taken one day before your flight. This applies to everyone entering the U.S., regardless of citizenship or vaccination status.