The pandemic has halted many people’s travel plans, but it hasn’t stopped rewards credit cardholders from claiming their free travel awards.
A new survey by Bankrate.com reveals that 22% of rewards credit cardholders who redeemed points last year booked a free flight, a free hotel room or both. That’s about the same percentage as in 2019, when 24% of such cardholders did likewise.
Claiming travel rewards during a pandemic may surprise many industry observers, including Bankrate.com credit card analyst Ted Rossman, but Rossman offers explanations for their decisions.
“Some people just love to travel, and they found ways to do so despite the pandemic,” he says. “It’s also possible that some took trips in early 2020 before the pandemic really set in, or they booked a trip in 2020 that they’re hoping to take in 2021.”
The Bankrate.com survey finds that rewards cardholders who claimed a free hotel stay or flight last year were most commonly men, cardholders earning at least $80,000 annually, millennials (ages 25-40) and Gen Xers (ages 41-56).
The survey of 2,449 adults was conducted online Jan. 6-8 and has a margin of error of plus or minus 2%. The results, Bankrate.com says, are representative of all U.S. adults.
The survey also reveals changes in travelers’ payment methods. Of survey respondents who paid for airfare, 68% paid with a credit card, 26% with a debit card and 6% with cash. Of those who paid for a hotel, 60% paid by credit card, 30% by debit card and 10% used cash.
In 2019, a larger percentage of adults — 80% — paid for airfare with a credit card, and a much lower percentage — 13% — paid with a debit card. For hotel payments, 77% used a credit card, and 18% used a debit card.
“Credit fell considerably last year, which I think suggests a debt-averse consumer amidst all the uncertainty in 2020,” Rossman says.
The credit-card analyst advises travelers to use credit cards for travel-related payments and to pay their bills before interest accrues.
“Then you can take advantage of credit cards’ superior rewards, fraud protections and other buyer protections, including travel insurance,” he says. “In other words, using a credit card like a debit card can represent the best of both worlds.”
As many Americans eliminate or greatly reduce the number of travel trips because of the pandemic, is it silly to use a travel rewards credit card instead of a cashback card?
“For near-term benefit, absolutely,” Rossman responds. “Travel rewards usually represent the best value if you’re willing to put in the work and able to travel. If you know what you’re doing, you can often get more cents per point or mile for travel than cash back, although it can be complicated.”
Rossman advises travelers to not stockpile their points or miles and redeem them as soon as possible for free flights and lodging. Points and miles get devalued when airlines and hotels raise the amounts required for earning the freebees.
“If you’re saving for a specific trip, such as 100,000 miles to fly first class to Japan once the world opens back up, then go for it,” Rossman says. “Don’t hoard points aimlessly. Once travel restrictions ease, there will be a glut of points and miles, and airlines and hotels will want paying travelers. They could devalue their points and miles even more aggressively than in the past.”