The top innovations in credit card benefits of 2020 — and TPG's Editor's Choice award winner
Update: Some offers mentioned below are no longer available. View the current offers here.
Nearly every industry has seen drastic changes in 2020.
Last month, we outlined the year's major developments in airline loyalty and safety during Aviation Week of the TPG Awards — including our TPG Editor's Choice winners in each category.
Credit card issuers — and the impact they have on consumers — are no different. With consumer behavior and many of life's priorities transformed from a year ago, card benefits have had to adjust. And adjust they did.
Throughout the past eight months, TPG has been at the forefront of keeping you up-to-date on the latest limited-time (and permanent) card benefits. Those include my continuously-updated guide to the best cards to use during the pandemic, as well as a monthly list of all the card benefits changes worth knowing about.
As part of these new and shifting benefits, card companies have announced some exciting innovations this year. Let's parse out a few of them and award one issuer with an Editors’ Choice award for best card benefit innovation of 2020 as part of Credit Cards Week at the TPG Awards.
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First, we're traveling less
Earlier in the spring, travel was severely curtailed. And even this holiday season, it remains diminished with a resurgent wave of COVID-19 cases throughout the U.S.
At its most basic level, credit card points and miles allow people to travel — especially transferable point currencies. That's why we do what we do. But if travel wasn't on your radar in 2020 -- as was the case for many -- what were card issuers supposed to do?
According to what we saw, a lot.
Earn extra points for select categories
One of the first major changes we saw involved bonus categories. Starting in the spring, many issuers launched limited-time, enhanced earning rates for specific types of merchants, allowing cardholders the opportunity to take home extra points or miles on a variety of purchases.
Here are some of the most notable updates.
Groceries and streaming
In the spring and summer months, nearly every travel rewards card competed with each other in the hotly-contested grocery and streaming category. In fact, for a brief period, nationwide grocery spending soared due to stay-at-home measures from coast to coast. And issuers wanted a piece of the supermarket pie.
Travel cards such as the Chase Sapphire Reserve offered a limited-time 5x bonus on groceries to entice spending (now down to 3x through April 30, 2021) at a time when travel simply wasn't happening. The Reserve also offered a bonus of 10x on streaming services while stuck at home (offer since expired).
Related: Best cards to use for groceries during the pandemic
Gas and dining
Numerous other non-travel categories emerged with elevated bonuses or credits. Gas and dining took center stage as lockdown measures were lifted but long-distance travel remained limited. For instance, the Marriott Bonvoy Boundless Credit Card increased its regular restaurant and gas bonus from 2x points to 10x points over the summer (now expired).
Finally, as we moved into the fall and holiday season, online shopping became the latest limited-time bonus with consumers largely avoiding in-person retail. When you combine these offers with bonus earnings from online shopping portals, travelers have many ways to pad their loyalty account balances to prepare for a return to travel in the (hopefully) not-too-distant future.
Related: Which card should I use? A pandemic-era guide to navigating card perks and benefits
Redeem points for everyday purchases
Using points and miles towards travel is often the most lucrative way to redeem them, but it's far from the only way.
With many people staying closer to home — and sitting on a glut of points and miles — issuers revealed new ways to redeem. For instance, through the end of April 30, 2021, Capital One cardholders can use their miles for purchases made in the past 90 days on food delivery and streaming services.
Chase also introduced a new redemption option called Pay Yourself Back, providing a higher redemption rate when you use points to cover gas, grocery and home improvement purchases.
In fact, it's the same rate you get when redeeming through Chase's travel portal: 1.5 cents per point for Chase Sapphire Reserve and 1.25 cents per point for Chase Sapphire Preferred cardholders. These accelerated rates are valid through April 2021 — and were even added to new cards in the fall.
Related: I burned 322,121 points and I’m not leaving home — here’s why
Retention offers and benefits
In recent months, generous sign-up bonuses and welcome offers have returned to entice applicants thinking about a new card.
However, the issue of retention remains. How do card issuers ensure people will keep their cards — especially travel-focused ones — when it's time to renew?
Credits and retention offers
From generous retention offers to limited-time perks, Amex made huge strides to keep its cardholders engaged during the pandemic.
For instance, in addition to individual retention offers for cardholders who call in, Amex also emailed select cardholders to offer them renewal bonuses. These “appreciation credits” (what Amex called them) are statement credits following account renewal.
In other words, Amex — and other issuers — have been dangling carrots in front of cardholders to entice them to keep their cards.
The year 2020 showed that cobranded partnerships are here to stay — and will be here for the long haul. For instance, in recent weeks, Amex and Chase went head-to-head in the at-home fitness space to provide benefits to premium cardholders by partnering up with Equinox and Peloton, respectively.
Historically, Chase has also been aligned with Lyft while Amex is in close relations with Uber. In fact, it was recently announced that the American Express® Gold Card would get a brand-new benefit starting in early 2021: up to $120 annually ($10 per month) in Uber Cash, which can be used on Uber Eats orders or Uber rides in the U.S. Card must be added in Uber app to receive Uber Cash benefit.
These are just two of many examples where new card benefits lie at the intersection of branded partnerships.
TPG Editor's Choice winner...
All the card issuers announced a variety of benefit updates to align with the shift in how we all spend. However, one particular benefit came out on top.
Chase's Pay Yourself Back
Our 2020 winner for the most innovative credit card benefit goes to Chase with its Pay Yourself Back program.
From the early months of the pandemic, Chase expanded how you could redeem Ultimate Rewards points for its Sapphire card lineup of the Sapphire Preferred and Sapphire Reserve. Best of all, the redemption rate was fixed at the exact same level it would be to redeem for travel through the Ultimate Rewards travel portal.
The program was extended recently to go through at least April 30, 2021. Chase Sapphire Reserve customers can redeem points at 1.5 cents apiece, while Chase Sapphire Preferred customers can redeem Ultimate Rewards at 1.25 cents each to offset purchases made at grocery stores, home improvement stores and dining establishments, including take-out and delivery services.
You might be wondering: Aren't Ultimate Rewards points worth even more? And you're right. While we value Ultimate Rewards points at 2 cents apiece (thanks to the program’s fantastic travel partners) the simple fact remains that travel isn't fully rebounding anytime soon — especially for international destinations, where cardholders frequently see the greatest potential redemption value.
With robust frequent flyer and hotel program points balances, many TPG staff members and readers alike have found these redemptions to be a good use of Ultimate Rewards points.
Finally, if you have a Chase Freedom (no longer available for new applicants), Chase Freedom Unlimited or Chase Freedom Flex, you can redeem points at 1.25 cents apiece toward donations made to eligible charitable organizations through Dec. 31, 2020. Additionally, Ink Business Preferred® Credit Card and Ink Plus Business (card no longer available) points are worth 1.25 cents each toward online advertising and shipping purchases, also through Dec. 31, 2020.
Chase Pay Yourself Back led the way this year with an enticing opportunity to redeem points on non-travel purchases. The other major issuers — including Amex, Citi and Capital One — have some catching up to do when it comes to the value of using points for everyday purchases.
Even with all of these updates in 2020, I don't expect the innovation in this space to end in 2021. In fact, it should only accelerate as issuers feverishly compete for a larger share of our business. With travel hopefully back into the picture later in 2021, issuers will have to strike a balance between travel-related benefits and continuing with limited-time perks for staying closer to home.
From new (and better) ways to redeem to additional category bonuses and perks, the year ahead looks to be as exciting as ever.