Oct 03, 2020

Should You Trash Your Travel Rewards Cards in 2020?

Many small business owners finance their business using credit cards, which are easier to qualify for than more traditional loans or rounds of funding. When choosing the right credit card for your business, you should choose one that makes it easy to conduct business, gives you enough flexibility based on your business model, and offers rewards that align with your interests.

Travel rewards credit cards are some of the most popular options available for personal and business use. If you’ve got the travel bug, these cards can be a great way to build up airline and hotel points, get cashback on flight tickets, or make doing business internationally easier with lower foreign transaction fees.

With the COVID-19 pandemic closing borders and canceling travel plans, however, do they still make sense?

The Perks of Travel Rewards Cards

Travel rewards cards offer up the tantalizing idea of taking vacations for free, using the money you’re already spending. 

“Of all the different types of cards that you would have in your wallet, the one that gets you most excited is the one that gets you daydreaming about all the wonderful things you could be doing,” Brian Davis, Sun Country Airlines’ CMO, told Skift. “If you offer me 2 cards, 1 that gets me gas, and 1 that gets me a vacation, I want the vacation. The gas I have to get anyways. The programs that get people daydreaming are the cards that get to the top of the wallet.”

Typical travel rewards cards perks include:

A real-life scenario for a business owner with a travel rewards card means mixing business and pleasure. “I put all my marketing ad spend from Facebook and Google on my business credit card and pay it off monthly. I’ve racked up 500,000+ miles by switching from my operating account to a business credit card,” entrepreneur Jeff Root told Forbes

The downside? The majority of travel rewards cards have steep annual fees. Chase Sapphire Preferred, one of the most popular options, has a $95 fee, while American Express Gold is $250. 

And if you’re not traveling, most of those perks are completely useless. While you can bank your miles and points for future travel purchases, you’re currently missing out on the “travel” part of the travel card. Is it worth it?

The Best Travel Rewards Cards Right Now

The short answer: yes. There are still great credit card offers on the table right now, especially if you plan on traveling in the future.

The best travel rewards cards are actually cards you can use more flexibly, with points for anything. “Now is the time for card issuers to expand their non-travel rewards awards, including creative options and ones that offer more value,” writes credit card guru Jason Steele for Business Insider. “This will allow cardholders to earn reward points and miles, knowing that they could redeem them for something else if travel isn’t possible.”

Travel cards have already started to expand their offers. Credit cards like Chase Sapphire Reserve and Capital One Venture added points for food delivery, dining out, and entertainment streaming services, while American Express is giving statement credits for computers, telephone bills, and streaming. Other cards are looking to boost business by adding temporary perks on more general spending items like groceries and gas. The Points Guy has a very handy table on business cards, including the best for travel rewards.

So, Should You Cancel?

That depends on 2 things: your level of optimism and your credit score.

Canceling a travel rewards card right now reduces the amount of credit you have available, so if you’re using it to fund your business, you’ll need to come up with an alternative. 

Second, canceling a card can put a ding on your credit score, depending on how long you’ve had the card and what your credit utilization is. You’ll want to make sure you’ve completely paid off any cards before canceling and that you’re paying attention to the balance of credit across your cards. This minimizes the risk to your credit score.

As for your level of optimism, you’ll have to decide whether the annual fees for these types of cards are worth it as they offer more flexible options. Even without travel perks, are you still getting value out of the card? That depends on your business spending.

With credit card companies scrambling to recover their business, it can actually be a great time to open a travel rewards card, with an extra $4,000 in credit and 80,000 points from Chase Sapphire, 100,000 Marriott Bonvoy points from Marriott Bonvoy Boundless, or 60,000 points from American Express upon signup. If you’re already itching to travel again or you feel confident you’ll travel in the future, it may still be a great choice for your business.

“The last few months of quarantine have made me appreciate the value of points and miles even more,” writes Ariana Arghandewal for The Points Guy. “One day, we’ll take to the skies and travel freely again. When that day comes, I’ll be well prepared with a stash of valuable points, elite status, and travel perks.”

About the author

Kayla Voigt
Kayla Voigt
Always in search of adventure, Kayla hails from Hopkinton, MA, the start of the Boston Marathon. You can find her at the summit of a mountain or digging in to a big bowl of pasta when she's not writing. Say hi on Instagram @klvoigt.

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