Adaptive credit reward systems trends as travel emerges to a challenging prospect

15 Oct, 2020 . 4 minutes

Travel credit cards have been losing their appeal after most countries around the world imposed travel bans to contain the spread of the novel coronavirus. But as the travel industry starts picking up pace, credit card issuers are rethinking the benefits of keeping their cards in customers' wallets. The pandemic has grounded millions of travellers, including 46 percent of consumers who carry travel rewards credit cards, ValuePenguin reported. Transportation Security Administration data also shows airport traffic in the United States between April and August at only about 18 percent of last year's level.

ValuePenguin added that with most travellers stuck at home, some millennial travel rewards cardholders (those aged 24-39) are seriously affected. About 40 percent of millennial cardholders have closed their credit cards early, while 34 percent planned to do the same as the impact of the pandemic threatens their credit scores.

With flight and hotel bookings still adversely affected by the economic fallout from the crisis, credit card issuers that offer travel rewards are swiftly responding to what cardholders desperately need during the quarantine. It is important to secure their loyalty and keep them using the cards as they go back travelling again. Several credit card issuers temporarily adjusted or increased the rewards they offer. For instance, American Express provides a complimentary one-year Calm Premium app subscription for cardholders who do not already have one. They also add up to $20 per month in statement credits for qualifying streaming and telephone wireless purchases from May through December as well as a statement credit on Dell purchases to cardholders.

This has proven to be beneficial to their customers and rewards them for their loyalty. The strategies implemented by travel card issuers are accepted by cardholders. Investopedia found that most travel card issuers have already enhanced their perks.

Such strategies are implemented in anticipation of a surge in consumers who started to change their attitudes toward earned rewards, miles and travel points. According to ValuePenguin, 4 in 10 workers with travel rewards credit cards have already cashed out as many travel points as possible. Meanwhile, 6 in 10 cardholders are concerned about their points expiring and whether they would be able to redeem those later. In fact, ValuePenguin has found that 28 percent of American travellers who have experienced how challenging it was to cancel their trips due to the pandemic after booking flights paid with travel points but still not receiving refunds.

Bank of America made a different adjustment by extending the time available to redeem points, while also allowing select customers to use their points for dining or grocery purchases through December 2020. Capital One also offers an extension on the redemption of miles, which can be used for takeouts, deliveries, phone services and streaming services through September 2020.

Chase, another credit card issuer, allows cardholders to use their $300 annual travel credit on gas and grocery spending or get cash back on grocery, dining and home improvement store purchases at a rate of 1.5 cents per point. Discover also gives cardholders the ability to redeem their miles as a statement credit toward restaurant and gas purchases permanently. Flexibility seems to be a major feature in current travel reward offerings. Travel cards with points systems that can be transferred to multiple partners or redeemed on other cash purchases can give customers a better travel experience.

It might not be soon, but personal finance news outlet The Ascent assures that travel will rebound. With this exciting prospect in mind, more providers have bent over backward to maintain their customers' loyalty by relaxing restrictions and offering more flexible credit programs. Obviously, travel customers are expecting credit card issuers to offer the best reward programs with new benefits and extra perks during the pandemic. As important as it is to keep up with customers' financial situations and credit scores, it would be frustrating for travel service providers to resist the change, especially with no guarantee of a significant improvement anytime soon.

Annie Cox, vice president of loyalty solutions at PSCU, the largest credit union service organization in the United States, told PYMNTS that post-pandemic loyalty is about offering flexibility. "We're not just about travel. We have other options, and whatever best fits your needs, you can use your points or your cash back to deliver on that," Cox said.

Sign up for the newsletter

By submitting this form, you acknowledge that you have reviewed the terms of our Privacy Statement and consent to the use of data in accordance therewith.

The APEXX Payment Orchestration Platform is the last integration you will ever need

Lowest cost
We structure ourselves to operate in the most efficient way. We are not an additional cost as we take the place of the payment gateway.
Lead in Orchestration
We enhance the payment experience by driving up acceptance rates thereby reducing friction and lost sales for our Merchants.
Excellent Customer Support
The APEXX Payment Orchestration Platform is architected to the highest industry standards of security and support ensuring that our merchants have the best protection and support access at all times.