On a similar note...
On a similar note...
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The coronavirus crisis is giving most of us unprecedented time at home. If you are working from home and looking to fill your time, it could be a perfect time to review your credit cards and apply for a new one.
If you play your cards right, you could exit the pandemic with points to use for an amazing trip to a dream location — or just anywhere that's not your living room or backyard. Here are some ways to use your extra time during the crisis to make sure you’re getting the best rewards for your spending habits and travel goals.
Assess your spending
With extra time at home on your hands, you have an opportunity to update your budget and review your spending habits. While your spending today may be fairly limited, you can look back at recent statements or connect your financial accounts to an app to get an idea of where you spend most.
Common bonus purchase categories include supermarkets, gas stations, travel, restaurants and office supply stores. Some cards offer different rewards in specific categories, while others offer flat-rate rewards for every dollar you spend. If you spend more in certain categories than others, it’s wise to choose a rewards card that features a bonus for those purchases. Now is a great time to assess your spending and align your travel rewards card collection accordingly, which may include applying for a new one (or canceling another).
» Learn More: Best cash back credit cards
Reconsider the best rewards program
Rewards programs regularly make changes to benefits that could make them better or worse for different members. Just because you picked a favorite rewards program a few years ago doesn’t mean it is still the best for you today.
The best rewards cards for most people are cards with points that can be used across many different airlines, hotels and other travel purchases. Airline- and hotel-specific cards make sense for people who are loyal to that specific brand because it’s most convenient, they travel frequently for work or they simply prefer it over others.
Also, consider how your travel preferences have changed over time and will change in a post-coronavirus world. You may have been looking primarily for cheap flights so you could take trips to Europe and stay in a low-cost hostel, but might now prefer rewards that also work for both domestic and international flights, as well as budget and luxury hotels. Make sure your travel rewards programs and credit cards change as your travel preferences evolve.
» Learn more: Travel loyalty program reviews
A good time to build credit
Opening and closing new credit cards has a temporary negative effect on your credit. Due to the coronavirus impact, many people are delaying major purchases like homes and cars. If you don’t have a major purchase planned in the next six months where you may need a loan, it’s an ideal time to make some upgrades to your credit for the long term.
When you open a new credit card, your credit score will probably drop by a few points due to a credit inquiry and a lower average age of credit. But over time, that inquiry will negatively affect your score less and less until it goes away. The card will age and eventually help your credit score, as long as you keep your balance low and pay on time.
A better credit score may not matter much today, but when you are eventually ready for a major purchase, it can save you thousands of dollars over the life of a loan. Plus, you get a new rewards card now to start planning out your future travel and, maybe even some welcome bonus points.
» Learn more: Check your credit utilization ratio and more with NerdWallet's financial calculators
Travel rewards give you something to get excited about
Right now, it’s a good time to make future travel plans so you have something to be excited about. In fact, one study found that planning a trip gives you as much enjoyment as going on the trip itself. In such a challenging time, we can all use something to look forward to.
With a new rewards credit card in hand, you can earn a welcome bonus and get yourself on track for an affordable trip in the future, once it becomes safe. That, after all, is what travel rewards credit cards are all about.
How to Maximize Your Rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
Airline miles and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Wells Fargo Propel American Express® card
Flat-rate rewards with no annual fee: Bank of America® Travel Rewards credit card
Premium travel rewards: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card