Posted on Wednesday, 23rd February 2011 by Timothy Bell
New rules enacted by Congress over the last few years have resulted in credit card issuers scaling back on their reward programs. Travel rewards, one of the most popular categories, was hit hard with more miles or points required for redemption and fewer earning opportunities. On top of that, new fees for baggage and snacks have caused even more consumers to shun airline reward cards. But with issuers revamping their programs, consumers may find good reason to reconsider them, especially frequent fliers. Even with an annual fee, the changes may make it worth taking another look.
Reward cards in the third quarter of 2010 accounted for approximately 40% of 1.2 billion credit card offers issued, up 30% from 2009. Airlines, in an attempt to lure more of these consumers, are extending money-saving benefits. For example:
- Delta Airlines is waiving the $25 first-checked bag fee to its cardholders and up to ten traveling companions – a savings of $25 per person.
- Continental Airlines is offering sign-up bonuses between 30,000 and 50,000 miles in 2011, an impressive value that can be redeemed for at least one round-trip domestic flight. They are also offering reduced rates on in-flight entertainment and meals.
- Southwest Airlines, which doesn’t charge baggage fees, is moving to a point-based reward program that will make it easier to take advantage of fare sales.
- JetBlue updated their rewards programs by eliminating expiration dates and changed the earnings system to award points per dollar spent rather than by flight length.
According to spokespersons for Delta and JetBlue, the changes have been beneficial. The number of applications spiked with the introduction of the free checked bag benefit and improvements in reward programs.
But for travelers who, for price or convenience, can’t easily stick to one carrier, a generic travel rewards card— like Chase Sapphire or Blue Sky Preferred from American Express — may be a better fit. And unless you plan to use the card regularly, a travel reward card may be more costly rather than a source of savings.
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