In recent months, consumers have sought a larger number of perks for using their credit cards as a means of incentivizing their spending, and it seems as though many are now turning to airline miles and other travel rewards to give themselves added value on their accounts.
Frequent flyer miles and other credit card rewards related to travel arrangements, such as hotel loyalty points, are now part of a consumer run on spending perks that will likely see companies dole out some $50 billion in benefits annually, according to a report from the luxury travel company Alpha Flight Guru. Because of this trend toward using credit cards that reward spending with the ability to make travel more affordable, it will be incredibly important in the coming months for lenders to maximize the perks they offer to borrowers as a means of luring in new consumers and retaining old ones.
"Using credit cards has replaced flying as the top way to earn frequent flier miles," said Tim Gibson, CEO of Alpha Flight Guru. "We found that the best use of points is on international first and business class flights. The potential for savings is as high as 5 percent, or 5 cents per dollar spent on credit cards."
One of the ways in which it may behoove lenders to start issuing more attractive travel rewards credit card offers is by linking them to other perks that might not have come with all accounts in the past, the report said. For example, this might include eliminating baggage fees with partner airlines, giving borrowers the ability to bypass long lines at security and other perks that may not be directly related to the ability to rack up miles.
Already, some lenders are trying to find ways to incentivize card use among their wealthiest borrowers, or those that travel abroad most often. Many are now eliminating the foreign currency transaction fees that used to come standard with all purchases made overseas, and could cost borrowers as much as 3 percent of the total value of a transaction.
For many consumers, it may still be difficult to qualify for premium credit cards offering the most valuable travel rewards programs, necessitating their checking their credit reports. Often, unfair markings can take a toll on their credit standings, making it more difficult to qualify for the best possible deals.