How the credit card rewards game will change in 2023
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While the COVID-19 pandemic changed a lot about the way we traveled throughout 2020 and 2021, most of the lingering effects of the pandemic began to dissipate throughout 2022. For example, cruise lines largely dropped their testing and vaccination requirements, and airlines dropped their masking requirements. Most countries around the world have also dropped all entry restrictions and requirements for travelers, other than for individuals traveling from China to some countries (including the U.S.).
That said, the travel rewards landscape is still seeing some long-term effects caused by the pandemic. For example, many airlines and hotels were forced to broaden their cancellation and rebooking policies throughout 2020 and 2021, and some of those changes appear to be permanent. In fact, American Airlines still has no more change fees for many domestic, short-haul international and select long-haul international flights, and Delta Air Lines and United have similar policies.
Many airline and hotel loyalty programs have also made it easier to earn or maintain elite status, either through hotel stays or through spending with a rewards credit card. However, high costs for travel and overall demand continue to drive up costs for awards set by dynamic pricing.
All of this may make you wonder — what other changes could we see come down the pipeline in 2023? Here are some of the trends to expect.
Flexible travel credit cards will remain prominent
Travel credit cards with flexible redemption options will remain popular throughout 2023, mostly because credit card companies now know for certain this is what consumers want. After all, the pandemic taught us that it’s nice to have points that aren’t necessarily tied up in a single program.
Cards like the Chase Sapphire Preferred® Card or Chase Sapphire Reserve® will remain popular throughout 2023 for this reason. These rewards credit cards let users avoid being locked into a single airline program and instead give them the chance to redeem their rewards for any flight, hotel stay, rental car, experience or cruise that’s available through the Chase Ultimate Rewards portal.
Also, remember that the Chase Ultimate Rewards program lets users transfer points 1:1 to airline and hotel partners like Southwest Rapid Rewards, British Airways, United MileagePlus and IHG One Rewards. If none of those options work, Chase points can be redeemed for merchandise, gift cards, cash back and more.
If you want to make sure you don’t get stuck with points or miles you can’t use, consider checking out other flexible credit card rewards programs like Citi ThankYou Rewards and American Express Membership Rewards.
Award availability is awful and prices are high
Most of us know that travel prices surged steadily throughout 2022. In fact, data from the Airlines Reporting Corporation (ARC) found that the average price of a round-trip domestic flight was $558 as of November 2022, after hitting an average of $578 in October 2022.
Hotel prices are also on the upswing. In fact, research conducted by The Family Vacation Guide shows the average price of a hotel room increased by more than 200 percent in many major cities around the world in 2022.
The increase in prices for travel, along with roaring consumer demand, have put those of us who travel with rewards points in a pickle. Available awards are limited due to the surge in demand so far, and programs with dynamic pricing are asking for a ridiculous amount of points or miles for each booking.
I noticed the difference with every single trip I booked with rewards throughout 2022, but especially when it came to booking domestic flights and hotels. High prices and overall demand have made it so that even booking a round-trip domestic flight with a discount airline like Southwest can easily set you back 40,000 points or more.
This issue may only get worse throughout 2023 as more and more programs forsake award charts and move toward dynamic pricing models. For example, American Airlines has long been known for its low-cost domestic flights with miles, and for its stellar Web Specials. However, the airline has announced its intention to move toward dynamic pricing for awards in 2023.
While Web Specials will still be offered through the program, we can expect award prices to rise for the average flight throughout 2023, especially over peak travel dates.
Earning elite status with airlines is easier (but not with hotels)
Almost all hotel and airline programs continued to extend elite status for members in 2022, with many making it easier to earn elite status in 2023 as well. However, most elite status boosts offered by hotel loyalty programs are set to end in 2023.
For example, the Hilton Honors program extended elite status for members with status expiring in 2020 and 2021 until March 31, 2023. Marriott Bonvoy members have also seen their elite status extended through February 2023, whether they earned it in 2019 or 2020. Those who earned Marriott elite status in 2021 already have their status through February 2023.
After these deadlines lapse, however, business travelers and weekend warriors will be largely on their own when it comes to spending enough nights with a specific hotel brand to reach its highest tier of loyalty status.
However, this isn’t necessarily true with airlines since some programs have made it easier than ever to earn elite status without traveling at all. For example, the Delta SkyMiles program will continue letting its members climb its tiers of elite status through credit card spending alone.
American AAdvantage also made this possible with the introduction of its new Loyalty Points program last year, which lets frequent flyers achieve any of its elite status tiers by spending on a co-branded American AAdvantage credit card.
Look out for new travel credit cards and better bonus offers
Finally, don’t forget that every year brings about new top travel credit cards as well as new bonus offers on existing cards. This year won’t be any different, so you should make sure you’re ready to strike while the iron is hot.
For example, we’ve recently been seeing higher welcome bonus offers on co-branded Delta Air Lines credit cards. The American Express® Gold Card — which finally made its popular rose gold color option permanent — also has a high-value welcome offer right now. Specifically, you’ll earn 60,000 points when you spend $4,000 within six months of account opening. Additionally, the popular Chase Sapphire Preferred Card is offering 60,000 points (worth $750 when redeemed through Chase Ultimate Rewards) for those who spend $4,000 on purchases within three months of account opening.
The bottom line
The COVID-19 pandemic has created a lot of uncertainty when it comes to credit card rewards, and some of the initial effects could still be with us for years to come. Fortunately, travel has been on the rebound, and having the right rewards credit card can still help you get where you want to go for less and help you to enjoy a wide range of travel perks you couldn’t get elsewhere.
While the credit cards mentioned above are some of the best rewards credit card offers right now, there’s one thing we know for sure — there are more offers on the way.