Those travel rewards you receive on your credit card by making purchases? They’re becoming less rewarding.
Gabe Saglie, senior editor of Travelzoo, joined Thursday’s show to reveal the latest travel reward trends that every traveler should know about:
AIRLINE CREDIT CARDS ARE SQUANDERING YOUR REWARDS
• Airlines have been devaluing their frequent-flier programs for some time, stepping up the number of miles required to qualify for free flights and adding restrictions.
• Until recently, banks had still been sweetening their rewards programs -- adding more flexible redemption options and bigger cash-back bonuses to snag customers. Now, with the economy contracting and fears rising about credit card delinquencies, banks are trying to cut costs and bolster profits. Many card issuers have been testing shorter expiration periods, higher redemption fees or earnings caps on rewards.
CitiBank’s Thank You Program
As of March 1, there is a shift from a fixed point to variable point system. 100 points for $1 of travel on a $400 flight = 40,000 points vs. 20,000 fixed points once required for a domestic flight. A business class ticket up to $2700 could once be redeemed for a standard 90K miles; now it’s 270,000 miles.
As of October 2008, there is a change from a tiered system to a system that adds two zeroes to the cost of your flight: A $350 flight will cost you 35,000 points, as opposed to the industry standard it once used (25,000 for a domestic round-trip ticket)
Raised the minimum redemption thresholds. Now redemption begins at 10,000 miles for $100 in air travel; used to be minimum 5,000 for $50 in air travel
AmEx Delta SkyMiles
Eliminated double points on a broad range of purchases. Also: members of the exclusive Centurion Card that once got 2 nights for the price of 1 at Mandarin Oriental hotels in Boston, Miami and Hong Kong now get a $200 credit with one night (rooms usually room $500+)
THE REALITY OF MILES
• A limited number of seats on each plane are designated eligible for award travel.
• Thanks to programs such as credit card mileage deals, the number of people with heaps of miles is greater than ever before. Thus, the limited number of seats available for award travel can be filled very fast, and very early.
• Many discounted fares are not eligible for upgrades of any kind.
• Not all miles are created equal. Miles earned on flights actually flown carry more weight than miles earned using your credit card, for example. Only miles actually flown qualify travelers for Delta’s "medallion" status, for example, which grants automatic upgrades based on availability. All miles are redeemable, but these types of extra perks do not adhere to credit card miles.
HOW TO GET YOUR MONEY'S WORTH WITH YOUR MILES
• Airlines are raising minimum redemption thresholds. In essence, they will offer flights valid for mile redemption on dates where they have some of their lowest load factors. If your dates are flexible, you can still use your miles for free flights.
• Some airlines, like JetBlue, offer more of a point system. You get a set number of points for each flight and then a free roundtrip flight once you get 100 points. But you still need to be flexible with dates to redeem.
• A better way to save: Flight deals are so hot right now, sometimes it's better to pay for the flight and use the miles for an upgrade or just save them (although many industry experts suggest using miles in times of economic uncertainty).