Nobody Is Really Traveling Right Now. Should You Consider a Travel Rewards Credit Card Anyway?
For a little while this spring, it seemed as if travel might be coming back. But with a resurgence of coronavirus infections in the U.S., most industry observers are pessimistic that business and leisure travel will return to normal anytime this year.
So it may be unlikely you'll want to travel by airline or stay in a hotel anytime soon. But does that also mean you should rule out travel rewards credit cards when you are looking to apply for a new card? Not necessarily.
Travel Rewards Card Benefits Have Changed
The credit card industry knows that travel rewards aren't as attractive as they used to be, and it's been scrambling to adjust. For example, the Chase Sapphire Preferred and Sapphire Reserve were two of the top travel rewards cards before COVID, and Chase has really made a strong effort to keep them relevant in the post-COVID world where travel might not be a priority.
Through September 30, Sapphire Reserve cardholders will receive:
- 5x points on Instacart delivery and pickup orders, on up to $3,000 of spending.
- Up to $50 worth of statement credits towards a monthly or annual Instacart Express membership.
- 5x points on up to $1,500 spent at gas stations.
- 10x points on up to $1,500 in purchases from select entertainment streaming services.
Sapphire Preferred cardholders receive:
- 3x points on Instacart delivery and pickup orders, on up to $3,000 of spending.
- Up to $50 worth of statement credits towards a monthly or annual Instacart Express membership.
- 3x points on up to $1,500 spent at gas stations.
- 5x points on up to $1,500 in purchases from select entertainment streaming services.
New Ways to Redeem Chase Rewards
When it comes time to redeem the Ultimate Rewards points you earn from these cards, you can now use Chase's Pay Yourself Back feature. This allows you to redeem your points not just for travel, but also for purchases at grocery stores, dining charges (including delivery services) and purchases at home improvement stores. Through September 30, you can choose any eligible purchase made in the last 90 days and apply your points to all or part of the purchase.
Sapphire Reserve cardholders receive 1.5 cents per point, while Sapphire Preferred cardholders receive 1.25 cents per point redeemed. To get these values previously, you'd have to book travel reservations directly through Chase.
Additionally, Capital One now allows its Venture and VentureOne cardholders to redeem their reward miles for statement credits towards purchases at restaurants, delivery services and streaming services. This offer is also valid until September 30, 2020.
Additional Sapphire Reserve Benefits
The Chase Sapphire Reserve offers a $300 annual statement credit towards travel expenses charged to your card. But now through the end of the year, you can also earn that credit when you make purchases from gas stations and grocery stores too, so there's no reason to miss out on this benefit, even if you aren't traveling this year.
Even before COVID, Chase had added a $60 DoorDash credit in both 2020 and 2021, as well as a DashPass membership that's normally $9.99 per month.
Is the Sapphire Reserve Worth It Now?
The Sapphire Reserve offers outstanding value for frequent travelers, but few would describe themselves that way these days. But since the Sapphire Reserve has a $550 annual fee, can these new benefits still justify its cost?
To find out, let's first subtract the value of the credits from the cost of the annual fee. First, there's the $300 credit that can be applied to travel, groceries and gas. Then, there's the total of $120 in DoorDash credits for 2020 and 2021. This reduces you net cost of your annual (after the statement credits), to just $130. This is only $35 more than the Sapphire Preferred'S $95 annual fee, which is a small price to pay for the additional rewards, benefits and more valuable redemption options.
And if you're a new applicant for the Sapphire Reserve card, you can earn 50,000 bonus points when you spend $4,000 within three months of account opening, which is always worth $750 towards travel reservations booked through Chase.
Maximizing Sapphire Reserve (and Preferred)
An easy way to earn additional rewards from your Sapphire card is pair it with the Chase Freedom Unlimited. The Freedom Unlimited offers 1.5 points per dollar spent on all purchases, with no annual fee. The Sapphire Preferred and Reserve offer 2x and 3x points, respectively, on travel and dining purchases, but only one point per dollar spent elsewhere.
By combining the Freedom Unlimited with a Sapphire card, you can earn at least 1.5x on all purchases, and receive considerably more rewards every day. The Freedom Unlimited has a nice signup bonus too: It currently offers new applicants $200 in cash back (20,000 points), after spending just $500 within three months of account opening.
Another Option: Earn Rewards for Cash Back or Miles
If you can earn non-travel rewards from a premium travel rewards card, consider the flexibility of earning frequent flyer miles from a cash back card. You can do just that with the Citi Double Cash card. It offers 1% cash back at the time of purchase, and another 1% cash back when you pay for your purchases, for a total of up to 2% cash back on everything you buy, with no limits.
But you don't have to redeem your rewards for cash back; you can save them for when it's safe to travel again. When you're ready to fly again, you can transfer your rewards to frequent flyer miles with 16 different airline partners including JetBlue, Qantas, Singapore, Air France-KLM and Virgin Atlantic. You'll usually get one mile for every cent of cash back earned.
When you're able to redeem your miles for seats in business or first class, or for expensive last minute reservations, it's often possible to realize several cents per mile redeemed. For example, a $6,000 round-trip business class ticket to Europe might cost 150,000 miles, giving you four cents in value per mile redeemed.
Bottom Line: Should You Get a Travel Rewards Card?
No one wants to resume traveling more than fans of travel rewards credit cards, but it's also important to be able to earn and spend great rewards in a way you're comfortable. By considering the flexibility of some of the top travel rewards and cash back credit cards, you'll see how they can offer as much value at home as they do when you're traveling.
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