Over the last five years, an array of travel credit cards with exceptional benefits have hit the market and others have been refreshed to include new perks. The popular Chase Sapphire Reserve® launched in 2016 with great fanfare, for example, but was recently reimagined to include new benefits from Lyft and DoorDash along with a higher annual fee. The Platinum Card® from American Express, on the other hand, added new credits for Uber in 2017 to go along with existing benefits like an airline fee credit and the broadest airport lounge access available today.
Other premium travel credit cards, including several Marriott Bonvoy cards and the Hilton Honors Aspire Card from American Express, were also launched over the last five years, bringing forth the largest selection of perk-heavy travel credit cards the market has ever seen.
In a cruel twist of fate, however, 2020 may go down as the year when hardly anyone could actually use the travel perks and rewards their credit cards offer. The spread of COVID-19, also known as coronavirus, has a large swath of the country on lockdown, and it’s possible international travel won’t be a feasible option until much later in the year.
You may have a large stash of points and miles sitting around that you’re wondering what to do with. It’s possible to cash in some types of points and miles for cold, hard cash. But just because you can, it doesn’t mean that you should. Here’s what to keep in mind before you decide whether to cash in your points and miles.
When it Makes Sense to Cash in Points or Miles
Should you go ahead and cash in all your points and miles? You probably won’t be traveling much over the next few months anyway, if not at all until at least the second half of the year. If you have a sizable stash of points and miles, it can absolutely make sense to assess your redemption options to see if your points haul could actually be useful for non-travel options.
Here are some scenarios where it could make sense to give up your rewards for something more practical and useful in the short-term.
Cash In Rewards to Cover Basic Living Expenses
A record-setting 3.3 million people filed for unemployment benefits during the week ending on March 21, 2020, according to recent analysis. With so many temporarily out of work and surely more to come as the economy lingers in coronavirus limbo, it’s easy to assume that many Americans could benefit from credit card rewards that can be cashed in for non-travel options like statement credits or gift cards.
Fortunately, many travel credit cards offer these options, ranging from Chase Ultimate Rewards credit cards like the Chase Sapphire Preferred® to Citi ThankYou Rewards cards like the Citi Premier℠ Card or Citi Prestige® Credit Card.
Cash-back credit cards, which tend to come with no annual fee, also offer options like statement credits, gift cards or even cash transferred to a bank account, which could be immensely helpful if you need help covering regular bills or buying essentials like food or household supplies.
As an example, consumers who carry the Citi® Double Cash Card could use their card as a hail mary during these troubled times. Cardholders who sign up for this card option earn 2% back on all their purchases—1% when they make a purchase and another 1% when they pay the card off. This card doesn’t charge an annual fee, and rewards can be redeemed for a check, a statement credit or credit to a linked account, meaning cardholders can utilize rewards to fill their gas tank, stock their refrigerator or pay bills charged to a credit card directly with their points.
While gift cards may seem like an unusual option during periods without income, keep in mind that many rewards programs like Chase Ultimate Rewards let you redeem rewards for practical options like Walmart or Amazon.com. This means you could use your rewards for toothpaste and shampoo from Walmart, or even groceries. And obviously, you can order practically anything on Amazon.com, including groceries from Whole Foods.
Use Rewards to Invest
Maybe you haven’t lost any income during this crisis, but you would like to cash in rewards to build real wealth. Considering how volatile the stock market has been, and the fact that the Dow recently dropped below 20,000 for the first time since January of 2017, you may be wondering if now is a good time to invest.
While you won’t be able to move gift cards or credit card statement credits into your Vanguard or Fidelity accounts, credit cards that offer cash back in the form of a check can be useful if you want to invest in a brokerage account or put money into a traditional or Roth IRA.
Donate Your Rewards
Also consider whether you want to donate your rewards, keeping in mind that this could be a good option if you’re motivated to help with the pandemic but you don’t have any cash to spare. An array of rewards credit cards let you donate your points and miles to many noble causes, although you’ll have to check your specific credit card’s terms and conditions to see which options are available to you.
If you have a Discover credit card like the Discover it® Cash Back, for example, you could donate your rewards to a handful of charitable partners including the American Red Cross and the Children’s Miracle Network.
If your credit card doesn’t offer a direct donation option, you could also see about cashing in rewards for a statement credit to cover a charitable donation charged to your credit card.
Should You Redeem Points and Miles for Travel Right Now?
While travel deals abound for near-term travel as well as travel later this year, it’s hard to say at what point in the year you should feel safe redeeming points and miles. While some experts believe domestic travel will open for some parts of the country as soon as May of this year, it’s a possibility that international travel options will be limited or halted completely until many months later.
After all, the European Union has banned non-essential travel for at least 30 days, which was announced on March 16th, 2020. Other countries ranging from China to New Zealand also have their own travel bans in place, but it remains to be seen how long they will last.
That makes cashing in your points for travel a tricky move, but there are some steps you can take to protect yourself, including booking reservations that can be cancelled easily. To accomplish this feat, you’ll simply need to look over the change and cancellation policies of airlines, hotels and tour companies you plan to book travel with, including any emergency cancellation policies they’ve created to combat travel uncertainty caused by coronavirus.
For example, Marriott Bonvoy is allowing new reservations to be cancelled up to 24 hours before the scheduled arrival date with no fees or charges as long as the change or cancellation is made by April 30, 2020. Hilton Honors has the same policy in place, except theirs is for reservations that are cancelled or changed through June 30, 2020. This means that, with either of these hotel programs, you can book a room and decide to cancel up to 24 hours before your arrival date without penalty, provided you do so before the policy end date.
Cruise lines are also trying to lure customers back with flexible policies that let consumers cancel up to 48 hours before departure. This is true with MSC Cruises new “Cruise Assurance” policy as well as Royal Caribbean’s “Cruise with Confidence” program, although you should note that cancelling with either program would leave you with a credit for a future cruise instead of a cash refund.
The point is this: If you see a sweet deal on airfare, a resort you’ve always wanted to stay in or a cruise package for later this year, you should make sure you have the option to cancel for a refund or at least for travel credit as this situation unfolds. If you book prepaid travel plans with no emergency cancellation policy, you could be left holding the bag.
The advantages of cashing in points and miles now are compelling, but that’s particularly true if you’re facing financial hardship. Using your rewards points for statement credits or gift cards that help you keep lights on or food on the table is a smart move—especially if the alternative is going without or falling behind on your bills. At the very least, credit card rewards used for practical purposes could buy you some time while you wait to qualify for unemployment insurance or receive your stimulus check in the mail.
It might also be wise to use your rewards to invest in the stock market while it’s down, or even to invest in causes you desperately care about. No matter what you decide, you shouldn’t feel bad about it. After all, your rewards are yours to keep or spend however you want.
Still, there are plenty of reasons to hold onto your points and miles if you don’t need them for emergencies provided you still have your job and a roof over your head. This is especially true if you’re someone who earns rewards for travel with the goal of scoring free airfare, hotel stays, cruises and more. In general, rewards from travel cards are worth more if used on travel.
With the travel industry completely upended and suffering staggering losses that only worsen by the day, it’s completely reasonable to expect sweeping travel deals on airfare, cruises, hotels and more for the duration of 2020. Brands are going to have to make big moves to get people out of their homes and back into airplanes, rental cars and cruise ships, and the best way to encourage new travel is to lower prices across the board.
It’s important to realize the opportunity cost that comes with cashing in your rewards now. If you earn rewards for travel and you can hold onto your points and miles a little longer, it’s possible you’ll be able to cash them in for exceptional travel deals a few months from now.