Worried about canceled flights? How to avoid losing money if you have a trip coming up

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If we've learned anything from the ongoing coronavirus pandemic, it's that circumstances can quickly change. At the same time, most of us didn't expect things to drag on this long.

Though many people are delaying plans like weddings and vacations well into 2021, as the U.S. Centers for Disease Control and Prevention advises against all nonessential travel and customer service reps work around the clock to process billions of dollars in airline refunds, there are some brave souls who are booking flights and dreaming of far-flung locales.

But before you make plans, thoroughly read your airline and credit cards' flight cancellation policies. Whether you can get a refund — and how that refund is delivered — depends on both how you booked your trip (with points or in dollars) and who you booked it with.

Sometimes it's the airline that cancels your flight. And sometimes, you are the one who makes the decision to change your plans. Either way, there are a few steps you should take if you need to rebook travel.

First, check to see if your flight is covered under your credit card's trip cancellation insurance, or travel insurance, a feature that most of the best travel rewards cards offer. Under normal circumstances, travel insurance covers non-refundable travel expenses (including airfare, tours and hotels) when the full amount of each was purchased with your eligible travel card. 

But travel insurance is limited to circumstances that are beyond your control, such as illness, severe weather and/or a terrorist attack. Travel insurance doesn't cover precautionary decisions, such as choosing to cancel a trip for fear of contracting coronavirus. (Read about what trip cancellation insurance does and doesn't cover.)

And there's another hang-up: If your airline makes the call to cancel your flight, it's the airline who is on the hook for reimbursing you, not your card issuer. The U.S. Department of Transportation requires airlines to issue refunds provided the flight lands or departs from U.S. soil. But that doesn't always mean the refund comes in cash or points.

Travel rewards writer Holly Johnson of Club Thrifty tells CNBC Select that she canceled her family's four Delta flights to the U.K. and received a $5,000 travel credit instead of a refund in cash or points. Her decision to cancel was not covered under trip insurance, as the flight still proceeded as scheduled despite the U.K. being under quarantine order.

Though flight credits are better than nothing when you're faced with the cost of canceling a family vacation, you may still not want to risk losing your points, Johnson cautions. 

For a different flight that she booked with TAP Air Portugal before the pandemic, she used 107,000 Chase Ultimate Rewards® points that she earned using her Chase Sapphire Reserve® and Chase Freedom® cards. TAP Air Portugal canceled, and Chase would not refund her rewards points unless she paid a per-person cancellation fee of $150. Johnson again accepted flight credits, but that would not have been her first choice.

"I would have rather had my Chase points back, but considering all that has gone on and how unprecedented Covid-19 is, I am fine with the flight credits," she says.

One way to avoid this dilemma is to charge your flights on your credit card and save any airline or credit card points (which are often worth more when redeemed for travel) for future vacations when travel will be safer and easier.

But some airlines and airline cards are more lenient than others. For a third flight that Johnson had booked before coronavirus, American Airlines agreed to refund all of her miles, including taxes and fees, when she decided to cancel.

If you're planning to book an upcoming flight, be prepared by knowing your card issuer's refund policies. This will help you decide whether to use points (that you might not be able to get back) or just charge the expense on your card.

Keep in mind that your card might have different terms than what's on the issuer's website, depending on what Visa or Mastercard tier it is and when you became a cardmember (card issuers routinely update their card benefits). To find out exactly what kind of trip cancellation protection your travel card comes with, read the guide to benefits that came in the mail with your specific card, or call and ask a customer service rep before you book your flight.

Here are the trip cancellation/refund policies for some of our top travel cards.

American Express® Gold Card: The Amex Gold Card's benefits guide states: "Coverage is provided that reimburses an Eligible Traveler for reasonable additional expenses (including but not limited to meals, lodging, toiletries, medication, and other personal use items) incurred for a Covered Trip that is delayed more than twelve (12) hours, if the Covered Trip delay is caused by a Covered Loss." Terms apply.

This benefit extends only to eligible travelers, which may include the primary account holder and their family members who charge an eligible trip expense to the card. "Covered Losses" exclude circumstances that are made known to the public before the trip, such as canceling a flight you booked to a destination with a high coronavirus risk. Read more about Amex's Covid-19 FAQs.

Capital One Venture Rewards Credit Card and Capital One VentureOne Rewards Credit Card: While Capital One's travel cards come with benefits like accident insurance, 24-hour travel assistance insurance, roadside assistance and auto rental collision damage waivers for car rentals, you are not be covered with trip cancellation insurance. If your upcoming flight is canceled, you would need to request a refund from the airline, not Capital One. (Benefits only available to accounts approved for the Visa Signature card. Terms apply.)

Chase Sapphire Reserve® and Chase Sapphire Preferred® Card: Known as the most robust travel cards on the market (especially the Sapphire Reserve), Chase is offering Covid-19 travel assistance and urging customers to call before booking fights. Normally, cardholders and immediate family members are covered for circumstances outside of their control, whether they charge a trip to their card or pay with points. However, choosing to travel during the era of coronavirus will most likely not qualify as a reason for reimbursement.

The Chase website states: "If you need assistance with travel changes and cancellations, we'll help you understand your options, whether you paid with your credit or debit card or used rewards. Visit our site for updated information on how to adjust your trip." Read more about Chase's Covid-19 FAQ. 

If you currently have a travel rewards card with unused points or miles, consider using them for expenses like groceries and takeout food. Some travel cards are still offering flexible redemption options beyond the summer. 

For instance, Capital One Venture Rewards Credit Card and Capital One VentureOne Rewards Credit Card cardholders can redeem their miles as a statement credit for eligible food delivery, takeout and streaming services through September 30, 2020.

Finally, if you have a bunch of airline miles saved up, you might simply save them until they expire (some never do). Hold off for now and redeem them for vacation when we get the full green light to travel. 

Information about the Chase Freedom® has been collected independently by CNBC and has not been reviewed or provided by the issuer prior to publication.