Changing Travel Credit Card Providers - United States Consumers
There are various instances when and reasons why a US consumer would use or change their travel credit card provider. Some reasons include a lower their interest rate, reduced or removed blackout dates for using benefits/miles/points, earning specific perks or benefits (lounge access or free check baggage), or to have no fees when using their card overseas. Spending patterns and purchase periods vary depending on the consumer and their goals when using the travel credit card.
WHEN AND WHY CUSTOMERS USE AND CHANGE TRAVEL CREDIT CARD PROVIDERS
- Dynamic Pricing: This refers to unpublished prices that change without notice making it harder to “rack up” air miles/points to put toward a specific trip. Many consumers change to a card with an airline that will publish prices.
- Airlines (United, Delta) have stopped publishing their reward charts, which may result in lower awards as availability and award prices increase. Many change to airlines that publish their reward charts.
- Airlines are reducing or eliminating benefits. People may change cards to get better benefits.
- American Airlines no longer has a rebate program (credit up to 100,000 miles when you redeem from mileage balance).
- No Fee Cards: Many people change their travel credit card provider so they have a no-annual-fee card (American, Delta, and United). This is good for the occasional traveler who can benefit from the card but doesn’t need to be a frequent flyer.
- Perks: In order to get the highest or best perks, consumers often have to pay to be in a higher tier with the airline program. This often means having to have a higher annual fee. People may change cards to get better or specific perks.
- Smaller airlines (such as Frontier Airlines) have introduced travel cards that offer 1 mile for every $1 you spend anywhere you shop. Flying + card spending = 100,000 miles can mean all flights are fully refundable. People may use or change their card provider to earn miles with everyday spending.
- Higher Interest Rates: Cardholders need to watch for higher interest rates—if you don’t pay off the balance each month, the rate may wipe out the mileage balance on the card and they might change cards to get lower interest rates.
- To get low spending minimums: In order to get perks or the sign-on bonus, cardholders have to spend a minimum amount on the card. Cardholders may change card providers to get lower spending minimums to get to perks faster.
- To have no foreign transaction fees: When traveling overseas, you can get the best exchange rates with your travel card and often get no overseas transaction fee.
- To avoid blackout dates or fees, people will change cards so they have maximum days open for travel.
SPENDING AND PURCHASE PATTERNS
- 35% of Americans have a travel credit card that earns points or miles.
- To get maximum benefits and rewards with travel cards, cardholders are advised to use the card for everyday spending (gas, restaurants, bills, groceries, etc.) Travel cards will often give 2x point/miles for some purchases and up to 5x for travel purchases.
- Customers who sign up for a new travel card often use that card for all spending to reach the minimum to earn maximum miles sign-on bonus.
- Customers use travel credit to pay regular bills that are already within their budget so as not to carry the balance over from month to month on credit card.
- Research has found no specific time of year that spending with travel credit cards is higher or lower than traditional cards. General credit card spending was highest in quarter 3 of the fiscal year.
- It is suggested that consumers apply for travel credit cards when they first come out to take advantage of any perks of being a new cardholder.
REASONS FOR GETTING A TRAVEL CARD
- People who travel frequently for work or pleasure get travel cards to get maximum benefits while traveling.
- Businesses and employees use them for all travel expenses, especially in situations where the company pays off the balance and employees reap the rewards.
- People who want to earn miles/points for flights, hotels, other travel benefits/perks.
- No specific time of year was mentioned as to when people get travel credit cards, though decisions are often linked to specific airlines or brand loyalty.
We started this project by using various recommended websites from our early findings. We quickly found a number of reasons why consumers use and change their travel credit card providers. Many consumers often have two or more travel cards to reap even more benefits. Finding hard data or statistics on travel cards specifically was a bit trickier. The statistic that 35% of Americans have at least one travel card was the only clear statistic we could find. Most statistics give numbers on credit cards in general, as opposed to travel credit cards. Through our search, we were able to find that those who do have a travel credit cards use the card like a traditional credit card for everyday spending (gas, eating out, groceries, etc). This is to achieve the minimum spending amount on the card to earn miles, sign-on bonuses, or other rewards with the card. The more you spend with most travel credit cards, the more miles/points or travel perks you can earn.