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I cancelled my travel rewards credit card this week.
I’m not the only one. According to a survey by ValuePenguin, more than 4 in 10 Millennial travel rewards cardholders say they’ve closed a card since the pandemic began, while another 34% have considered doing so.
Some 41% of Millennials have cancelled their rewards cards, versus 30% of Gen Z and Gen X. Just 5% of Baby Boomers are dropouts, but on average, 30% of all respondents have closed a travel rewards credit card.
I’m no Millennial, but I’ll bet the reasons I cancelled my $250 Delta Skymiles Platinum American Express are similar to theirs: Times are tough, and I’m not traveling due to COVID-19.
Cancelling the card wasn’t about boycotting Delta or American Express for some grievance. COVID-19 has wreaked a terrible toll on the travel industry, and in my opinion the airlines are doing the best they can.
No, closing the card was purely an economic decision. When my latest bill arrived, I discovered the annual fee had been raised from last year’s $195 to $250. With times so tough, I decided to cancel.
The American Express representative on the phone made an effort to keep my business. The offer of a companion pass was tempting. But I have not flown since January, and honestly, have no current plans to fly this year.
Her pitch of a “free” bag with the card was even less successful. Paying for luggage when you fly is certainly annoying, but the first bag on a Delta flight is a reasonable $30. I could fly 8 times before I had gotten my $250 back in value, assuming I was even checking luggage. And only the first bag would be free; a second bag is $40, a third $150, a fourth, $200.
ARLINGTON, VA - JULY 22: Delta Airline employees check in luggage at the Ronald Reagan National ... [+]
The benefits of many reward cards, like this one, are mostly front-loaded. That is, most of the perks are given out in the first few months after you’ve done your qualifying spending.
I can’t remember if I got, 50,000 or 60,000 points when I signed up, but either way, they’re long gone. Sure, you get points when you charge items on the card, but it may not be worth keeping unless you consistently charge enough each month to at least get a free coach ticket. I don’t; I use two no-fee cards that each pay 1% cash back.
Still, if you are really a frequent flyer, and use the card to buy tickets on that airline (one reason they are called “loyalty” cards) you would accumulate points that much faster. The AMEX promotional site says you get 3X miles per dollar spent on purchases made with Delta.
That brings us back to the problem. Why collect frequent flyer points if you have no intention of flying until there is a vaccine? Delta and AMEX appear to recognize this now by offering 2X miles per dollar spent on purchases at U.S. supermarkets.
If you need a travel card, and you plan on flying Delta soon, the card certainly had some tempting benefits.
For new customers, Delta and AMEX offer 70,000 bonus miles and 5,000 Medallion Qualification Miles after spending $2,000 on the card in the first 3 months. (The “front-loaded benefits” thing again.) In addition, you’ll get a $100 statement credit after you make a Delta purchase in the first 3 months. Then there’s the “free” first bag, a companion certificate (I never used mine) a $100 fee credit for TSA Pre-Check or Global entry, $39 entry to Delta Sky Clubs, plus priority boarding in the main cabin.
NEW YORK, NEW YORK - OCTOBER 02: Actress Elizabeth Olsen poses during the American Express and Delta ... [+]
You also get 3X points on hotels and 2x points on restaurants. The card even has a “Status Boost” program that helps you earn extra Medallion Qualification Miles.
If you fly Delta frequently, it’s a pretty compelling deal. But none of it matters if you are not flying. I have not flown since January and last stayed in a hotel in March. I haven’t eaten inside a restaurant since then either, although I’m sure the double points offer is good for COVID-19-era takeout.
The airlines are “up” to 30% capacity. The pattern seems to be relatively short leisure flights first, long (especially international) business trips last. As Barron’s noted, shares in leisure-focused Allegiant Travel are down only 36%, while shares of business-focused airlines like Delta are down over 50% from their 52-week high.
If I do fly in 2020, my motivation will be the opposite of the airlines’ ‘leisure first’ re-opening. If a client were to pay me to fly somewhere, I’d be on the next flight, masks, gloves, sanitizer and all. (I draw the line at hazmat suits and goggles.)
But right now, I can’t justify flying on vacation, to some other place where coronavirus lurks.
Passengers wearing protective masks and hazmat suits stand in line at a check-in lane at Melbourne ... [+]
I’m not saying good-by either American Express or Delta. I’m keeping my no-fee Hilton AMEX card. I had hoped to use my HHonors points on a hotel for my son’s college graduation, but like so many things, it was cancelled.
Nor am I abandoning Delta. I like the airline and have about 150,000 SkyMiles on it. My wife and I had a wonderful vacation in Mexico through Delta Vacations. When we fly again, I may well sign up for the card again. But at this point, a travel reward credit card is not a priority.
“It doesn’t surprise me at all that many people are closing travel cards right now,” said Matt Schulz, chief credit analyst at LendingTree, ValuePenguin’s parent company. “Many Americans are simply trying to keep food on the table, and hoarding travel miles and points just doesn’t make any sense for a lot of people at this time.”
