The idea behind credit card or travel rewards is to reward the customer for spending money through the credit card, airline, or hotel brand so that they can build loyalty and continued spending. Such perks can include free flights, lounges at the airports, free hotel stays or discounts for other amenities. Often these rewards are attractive to customers who are high-users of the sponsors’ products or services as the rewards can be worth more than other credit card rewards, such as cash back offers.
However, recent studies show that customers may be receiving much less while spending more. Points may now have expiration dates, travel dates and stays may have restrictions or blackout dates. As a result, customers’ earnings or spending power may be diminishing.
It is important to review your spending habits to determine which credit card or loyalty program best suits you and make a change if you are no longer receiving value or are paying more in fees than the benefit received. It may also be good practice to “earn and burn”, which involves setting specific redemption goals to use your benefits quicker (rather than accumulating and holding out for that big purchase) so that you can hedge against the possibility of diminishing points value as prices for the perks increase over time.
Of course, a credit card rewards strategy should also be balanced with the negative impact that switching cards too often can have on the cardholder’s credit score. This requires some forethought to avoid switching too often.