U.S. News Report Survey Offers Insight into Travel Credit Cards

The U.S. News & World Report just issued a survey reporting on 10 different survey questions aimed at getting insight into the world of travel credit card rewards. The results are roughly what I would expect to see with a few somewhat surprising results. Here’s a rundown of the 10 questions and what the results show us.

1. Do you own a credit card with a travel rewards program?

Only 16.4% of respondents own a travel rewards credit card. This result isn’t surprising since cash back is much more popular than travel credit card rewards. In another survey nearly 70% of people said that cash back was their preferred rewards versus about 35% for travel.

22% of people not knowing if they have a travel rewards card is pretty high, but I’m wondering if these people have cards like the Sapphire Preferred, which earn flexible points that can be transferred to travel partners. It’s possible that these people might be confused if their card constitutes a “travel rewards card” or not. Then again, I’ve met people who say things like, “I’ve got the Sapphire United card” or “I’ve got the Southwest Platinum” so I think some people just simply don’t keep up with cards they’ve opened and this survey could be reflecting that.

2. What was the main reason you signed up for your travel rewards credit card?

Almost half of respondents indicated that they signed up for a travel rewards card for travel airline, and/or hotel rewards. It’s a little vague what exactly they mean by this. My guess is that most people probably thought about the free airfare or hotel stays they would earn through spend with the card, but I think there’s probably overlap with this category and the sign-up bonus category that only received a 7% response.

That 7% figure is much lower than I thought it would be. If I had only considered sign-up bonuses my main reason for getting credit cards 7% of the time, my wallet would probably look much different.

This finding doesn’t surprise me that much based on my personal experience. I’ve met many individuals who have signed up for credit cards and not received a bonus, sometimes because they weren’t even aware of it.  So the fact that close to 34% did not reach a bonus or didn’t know if they had, isn’t very shocking.

The fact that almost 43% of people confirmed they earned their sign-up bonus is good, but I wonder how many of those people earned the best sign-up offers available. I always stress for people to seek out the most valuable sign-up bonuses, especially since the same credit card could come with drastically different offers. I’ve seen offers for the same card vary by 40,000 miles or more, so applying for the wrong sign-up bonus could be a matter of missing out on a free additional roundtrip.

4. How easy is it to redeem rewards in your travel rewards program?

It’s encouraging that 70% of respondents feel that it was easy or very easy to redeem their rewards and only around 7% found it difficult or very difficult. Of course, not all rewards programs are created equally. And it’s one thing to know how to redeem rewards and quite another to know how to redeem them in the most effecient way possible. A lot of people think the work stops after they earn their miles and points, but if you want to maximize your value, that’s often where the work begins.

5. Which of the following challenges do you face, if any, in using your card’s travel rewards program?

The number one specified problem is not having enough points to redeem, while black-out dates or point restrictions came in second. Since sign-up bonuses were the primary concern for only 7% of respondents then it’s no surprise that so many people don’t come up with enough points to use them. Properly searching out and utilizing the most valuable sign-up bonuses is often the key to having enough points for your redemptions.

Black out dates can be a source of major frustration for many. One way to get around these is by using travel portals available through your travel credit cards. For example, with the Sapphire Reserve, you can can book airfare (and other travel) at 1.5 cents per point through the Chase travel portal. This often gets you great value with economy flights and since you’re booking through the portal, you’re not subject to black-out dates/award inventory. Plus, you get to earn miles on your flights. For people who don’t like to mess around with award calendars, this is a great option.

6. On average, how many times in the past year have you carried a monthly balance on your travel rewards credit card?

Almost half of all respondents don’t carry a balance. This is very important because travel credit cards have some of the highest APRs out of any cards and require some of the highest interest payments. At a certain point, interest fees could even wipe out your travel savings and defeat the purpose of earning travel rewards. US credit card debt is on the rise and the highest it’s been since the Great Recession, so this is something to remain diligent about.

While I don’t ever encourage carrying a balance, if it happens here or there, it’s probably not going to cut too deep into your travel rewards. But if you think you might struggle to pay off your balance each month then credit cards offering intro periods of 0% APR like the Chase Freedom might be better options for you, especially if you’re just starting out in the credit card world.

7. If your card has an annual fee, do you know what it is?

16.5% sounds a little high for people not knowing what their annual fee is. However, I think it’s probably very common to forget whether you have to pay $49 or $69 a year for a credit card. While you may not remember the annual fee amount, it’s very important to know when it’s going to hit.

For one, you need to make sure you’re going to remember to pay it if it’s on a card you rarely use. But from a rewards perspective, annual fee due dates are great times to earn extra rewards. You can often request retention offers and earn extra miles just for keeping the card or putting some spend on the card. (You increase your odds of getting such an offer if you’ve put some spend on the card over the course of the past year.)

Some of these retention offers can be for 20,000 plus points, so they can definitely be worthwhile. Other times you might get a your annual waived as a retention offer, so it’s always worth giving it a try. You’ll often have to wait until after the annual fee is due but sometimes you can get issuers to offer you these before you pay your annual fee.

8. Which of the following travel rewards have you redeemed in the last year?

This is probably the most interesting finding to me. Domestic travel is king as around 35% of respondents indicated they’d used in the past year but only 8% used their rewards for free international flights. What would be really interesting is to learn more about this subset and find out what domestic travel rewards were most common. Was it Southwest? United? Etc.

This also sheds light on some of the other responses. The number one complaint was not having enough points/miles for redemptions, yet domestic travel usually involves the cheapest redemptions. This makes me wonder how low the average point balance would be for these respondents.

This response also tells me that a lot of people are not getting outsized value in their redemptions. Typically, international business class and first class is where you’re going to get crazy value with your points, like awards offering 10 cents per point or more.

International rewards can also require many more miles, though. The key to flying these is usually by earning multiple sign-up bonuses or earning points through lots of flying (or both). With so few people focused on sign-up bonuses and struggling to redeem points, it make sense that so few people would be booking international awards. I know some people just prefer not to venture aboard, but I would almost guarantee that if you raised the percentage of people primarily seeking sign-up bonuses, international redemptions would see a spike.

9. Which of the following travel rewards cardholder benefits have you used in the last year?

The most popular benefit is free checked bags followed by priority boarding — both benefits you can get with cards like the United MileagePlus Explorer Card and the Citi® / AAdvantage® Executive World Elite MasterCard®. Airport lounge access came in at only 14.6% but given the rapid expansion of Priority Pass benefits over the past year, I bet that figure goes up quickly (if it hasn’t already).

Only 6.5% used trip delay/cancellation benefits in the past year. These events obviously don’t happen all the time but I wonder how many people could have used them but just didn’t. Trip cancellation and delay benefits are very important and can save you hundreds of dollars (and headache) but many people don’t even know they exist or how they work.

I suggest reading up on understanding credit card protections to find out more about how you can get things like roadside assitance and free meals, hotel stays, and even medication when your trips are delayed. It’s always better to have an idea to what you’re entitled to do before problems hit versus scrambling to find out afterwards.  

10. If you had to guess, what is the estimated dollar equivalent of the travel rewards you’ve earned in the past 12 months?

This is another really interesting question because I’m wondering how many respondents accurately keep track of the value of their rewards. Even for credit cards rewards experts, there’s a lot of debate that takes place about the value of miles and points for different programs.

It’s important to remember that there’s a difference between “value received” and “value saved.” For example, if I booked a $10,000 first class ticket with points, I wouldn’t say I “saved” ten grand on a flight. Instead, I’d probably say I “saved” however much that flight would cost in economy plus or maybe business class (two ways I would actually consider flying).

But even that method can get murky because sometimes I’ve taken 6 or 7 reward flights that I would have not even paid economy for — I simply booked the additional flights because they were virtually free. So my true savings eventually hit a cap and at some point it’s hard to say I’m saving anything because, if I’m being honest, I’m just traveling because I don’t have to pay for the flights.

So things can get quite complicated when calculating the value of your rewards but at the very least I would have a baseline value of my points, so that I could spot poor value redemptions. So, for example, if I’m valuing SPG points at 2.4 cents per point and I see a redemption possibility at the W Miami that will net me 1 cent per point, I can easily figure out that that particular redemption is not great value.

Final word

These are some interesting findings by the US News and World Report. I think it’s evident that many people do not seek out sign-up bonuses, which is typically where most of the value is for travel rewards credit cards. This might explain why fewer people have sufficient points for their redemptions and why so few don’t use them for international trips.

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