Capital One: Americans Use Rewards to Offset Travel Costs

According to a Capital One survey conducted in the first week of June, more Americans will use rewards accumulated on their credit cards to defray the cost of their summer vacations – 40% of rewards card holders, as opposed to 33% last year. The Capital One Rewards Barometer, a quarterly survey of adults who currently have a credit card with a rewards program, included over 1,000 participants. While more people are planning to travel, as opposed to having a “staycation,” nearly half of respondents said that high gas prices will factor into their plans. The high cost of fuel may hit in more ways than one: in addition to cutting back on driving, Americans may choose to fly less because of rising fuel surcharges.

Redemption patterns: hotels trump all
Among surveyed cardholders planning to use their rewards to supplement their vacation, the preferred redemption options were hotels (55%), airfare (48%) and gas (42%). “Planning a summer vacation can be stressful given today’s economic conditions. With soaring gas prices and increasing airline fares, consumers are seeking greater value from their credit card rewards to maximise their benefits,” said Troy Jamison, VP of Loyalty Services at Capital One.

However, many consumers were dissatisfied with their rewards program: although 43% of cardholders redeemed rewards in the past 3 months, only one in four was completely satisfied. 26% cited blackout dates on their airline credit cards as their main frustration, while 24% pointed to their inability to book a last-minute trip.

optimising rewards cards for summer travel
If the Capital One Barometer reveals anything, it’s that American rewards credit card holders like to have choices. Choosing the right rewards credit card and redeeming what you earn wisely can help you get the most out of your points in a way that’s best for you.

  • Loyalty vs. flexibility: If you know that you often stay at one hotel or fly on one airline, you’ll get higher rewards with a branded credit card. A more generic card will not give as high of a rate, but will have broader earning and redemption options. For example, the branded BP credit card earns 5% rewards only on BP gas, while a broader gas credit card may only give 3% at all gas stations.
  • Miles vs. credits: If your credit card pays out in airline miles, remember that you’re usually still on the hook for taxes and fees, which can run in the hundreds of dollars. If you can redeem for a travel credit, you can use your rewards to offset any travel-related expense, from a plane ticket to in-flight meals to hotel stays to gas.
  • Remember the fees: Frequent international travellers should look for a credit card that doesn’t have a foreign transaction fee, because the 3% charge adds up quickly. Also, some cards will give you credits against other expenses, like baggage fees or the government Global Entry program.

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