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When the economy is uncertain, it makes sense to slash unnecessary expenses and protect your credit. Right now, most of us are not traveling, so the travel credit cards and loyalty programs that we cherish don't hold as much value as they once did. Now is the time to make travel rewards moves to protect your finances and position yourself for future success.
1. Analyze your existing credit cards
Before you can make any moves, you need to take an inventory of what you currently have. Gather all of your credit cards in one spot and write down the important information. This includes:
Name of the credit card.
We don't know how long the current situation will last. You'll need to take a hard look at the fees and perks to decide if the card is a keeper or not. The Platinum Card® from American Express, for example, allows you to use the $200 annual Uber Cash Benefit to order Uber Eats delivery service. You’ll have to decide if it is worth paying the annual fee when balancing it with the card’s other perks and your usage rate of each benefit. Terms apply.
» Learn more: Best credit cards for ordering food right now
2. Review your credit report and 5/24 count
Your credit report is the adulting version of your report card from school. The credit report shows your open and closed accounts, your credit limit and payment history. Your credit report also shows when each account was opened, which can help you determine your Chase 5/24 count for future credit card applications.
To get a free credit report from each credit bureau — Equifax, Experian and TransUnion — go to AnnualCreditReport.com. The government mandates that each credit bureau provide one free credit report every year, but you can now access them weekly through April 2021. When you retrieve your credit report, it will not result in a hard credit pull and your credit score will not be affected.
If you notice any wrong information or unauthorized accounts, write to the credit bureaus or go online to dispute those accounts. Under the Fair Credit Reporting Act, credit bureaus have 30 days to investigate your dispute, but that timeline has been extended to 45 days by the Consumer Financial Protection Bureau.
One thing that is missing from these credit reports is your credit score. You can view your credit score by signing up for free at NerdWallet. You may also have access to your score through your bank’s online portal or app. Knowing your credit score is a key factor in determining your travel rewards credit card strategy.
» Learn more: How to understand your credit reports
3. Downgrade or convert credit cards instead of closing
For those travel rewards credit cards that are not worth keeping, don't be in a hurry to close them. When you close a credit card, it will affect your credit score in two ways: average age of account and credit utilization. Closing an older credit card will reduce your average age, which could reduce your score. Similarly, when you close a credit card, you lose that credit limit. This increases utilization and can cause your credit score to drop.
Instead of closing the credit card, ask to downgrade or convert to a card with no annual fee. For example, you could downgrade a Chase Sapphire Reserve® to a Chase Freedom Unlimited® to eliminate the annual fee. At some point in the future, most banks will allow you to upgrade to a card with more features and a higher fee.
» Learn more: Does closing a credit card hurt my credit score?
4. Switch to a cash back or flexible points credit card
If you don't plan on traveling in the near future, maybe earning airline miles and hotel points isn’t your best option. It may make more sense to switch to a cash back or flexible points credit card.
Flexible points credit cards earn rewards that can be redeemed for statement credits of used to book travel, buy gift cards or transfer to travel partners (among other options).
Cash back cards can help pay today's bills or build an emergency fund for a rainy day. Many financial experts recommend saving three to six months' worth of expenses in an online savings account dedicated to emergencies.
» Learn more: NerdWallet’s best cash-back credit cards
5. Ask to be removed as an authorized user
One of the ways to enjoy travel credit card perks is to become an authorized user on someone else's card. Most credit cards allow authorized users to be added for little or no additional cost. You should take a minute to evaluate if you’re really benefiting from those authorized user perks during this time.
The problem with being an authorized user is that the card is reported on your credit report. If the primary cardholder gets into financial trouble, it can affect your credit score as well. These negative marks can stay on your credit report for up to 10 years. Since you most likely aren't using the benefits right now anyway, this is a perfect time to call the bank and ask to be removed as an authorized user. Take this action before your credit is potentially affected so it doesn’t prevent your ability to get approved for future travel cards on your own.
6. Review your loyalty program accounts
Most airlines and hotels have extended the expiration date of their miles and points. However, not every loyalty program has. Log into your accounts to verify their expiration dates and take note of how many points and miles you have.
If your miles and points are subject to expiration, making an online purchase through the program's shopping portal may extend the life of your rewards. While you're logged in, also search for any benefits that also have an expiration date. For example, you might have a companion pass, travel credits or free hotel nights. You’ll want to double check any expiration dates with the loyalty program’s COVID-19 policy changes.
» Learn more: Simple steps to keep your miles from expiring
7. Take advantage of promotions
For people in a position to take advantage, many banks, airlines and hotels are offering promotions that can make good financial sense depending on your situation. Whether you’re getting in on Chase or AmEx’s increased grocery bonuses, fast tracking your Hyatt status or hunting for American Airlines’ Web Special Awards for 2021, you may find good value in proactively searching for promotions.
The bottom line
When financial uncertainty strikes, taking strategic action is your best option. Making these moves can reduce expenses, build your savings and protect your credit. Additionally, you’ll want to keep track of the miles and points you've worked so hard to earn to ensure that they don't expire while you're focusing on something else. By following these steps, you'll be prepared to seize opportunities that come your way.
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 2022, including those best for:
Flexibility, point transfers and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Bank of America® Travel Rewards credit card
Flat-rate travel rewards: Capital One Venture Rewards Credit Card
Bonus travel rewards and high-end perks: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card