Many Canadians have had their travel dreams slip out of reach this year as the COVID-19 pandemic closed borders and forced many airlines to reduce their services.
With vacation plans on hold, credit card users’ travel rewards are piling up, which is leading some consumers to use their points in other ways.
Personal Finance Expert Melissa Leong says there are two main choices Canadians have when it comes to their travel reward points right now.
“You either save them because, like me, you love travel, or you have family out of town and know you are going to use them at some point. When it comes to travel reward points you get your best bang for your buck if you use it towards travel,” she said in a phone interview.
“The second option is that you could use them [on something else]. Other people have different priorities at this time and they may find more use for putting those points towards gift cards, groceries or applying points to pay off actual debt.”
The author of Happy Go Money, who said she has decided to hoard her own travel rewards, warned credit card users should check if their points expire.“If they don’t expire, hoard them. If they do, then you might want to use them,” she said.
Clinton Braganza, senior vice president of customer loyalty and partnerships at Scotiabank, says his team has seen travel point redemption fall by about 40 per cent year-over-year and a 60-per-cent increase in customers using their rewards points to pay down their credit cards.
“Travel has played a significant role in rewards cards year-over-year,” Braganza said in a phone interview. “But many people who usually redeemed their points on travel are now migrating over to everyday spending.”
“This really speaks to the pragmatism of Canadians during these times.”
Other credit card issuers have adapted their rewards programs to meet customers’ changing spending habits during the pandemic, which Jason Rasmussen, vice president of TD Credit Cards, says is centred around online shopping.
Jennifer Douglas, head of North American retail and small business payments at BMO, says changes in consumer spending habits amid the pandemic have put a spotlight on the need for banks to adapt.
“This pandemic has really amplified the need for banks to think more broadly and beyond travel…what we really tried to do is put ourselves in our customers’ shoes during this time,” Douglas said in a phone interview.
Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth Management, says Canadians could start thinking about redeeming their unused credit card points towards gifts for friends and family over the holidays.
“Given the holiday season, now may also be an opportune time to use some of your points to purchase a gift card or other merchandise as many programs do offer special deals this time of year, where the redemption value may be higher,” Golombek said in an email.
“Just go online and see what your card is offering.”