Here's why I don't plan to spend cash on travel this year
The ongoing spread of the coronavirus has disrupted the global travel industry in a way we've never seen before, and even the best experts don't know when things will fully return to normal. Like many on the TPG staff, I've been playing around with some fully refundable/cancellable trips for later this year and early into next year just so I have something on the calendar to look forward to, but more than ever I'm going out of my way not to spend any money on airfare or hotels.
While the entire goal of travel rewards is to save your hard earned money and travel for free, I normally pay cash when I find a cheap fare or a low rate at a hotel and try and save my points for more aspirational redemptions. This year, I'm changing my strategy and using points for all my travel for the foreseeable future to try and conserve cash.
Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.
Earn and burn is the name of the game
Points and miles tend to lose their value long term as airlines and hotels devalue their award charts, which is why the unanimous advice in the award travel community is to earn and burn without letting your account balances get too large.
While I'm not currently traveling at the moment, I'm still earning points from spending on my travel rewards credit cards and I have a few new cards I plan to open in the coming months as well. That's to say nothing of the approximately half a million points and miles I had going into this crisis, or the several hundred thousand I've had refunded to me from trips I had to cancel.
The general consensus is that when it becomes safe to travel again, the return will be slow and gradual and we won't just see a snap back to previous levels of air travel. Several airlines are even retiring planes in anticipation of an industry wide contraction. My current points and miles balance is enough to last me for nearly a full year at my pre-COVID travel levels, which means it's likely to last me much longer moving forward. The bigger my account balances get, the more likely I am to use points instead of cash even on cheap tickets where I'm not getting the absolute best possible redemption value.
Save your elite-qualifying spending for next year
If you're struggling to decide whether to use points or cash to pay for a ticket, you can consult TPG's monthly points and miles valuation series to see how good of a redemption value you're getting. If the valuation is right on the fence between points and cash, frequent flyers have one strong incentive to still spend money on their tickets: qualifying for elite status. Not only do airlines not count award tickets toward elite status qualification (unlike most major hotel chains), but all three legacy U.S. carriers also have a revenue requirement to qualify for status.
For this year at least, that's a moot point. Delta, United and Alaska Airlines have all announced that they will extend members current elite status into next year, and American Airlines is widely expected to make a similar announcement in the near future. This makes requalifying for status for next year a moot point, and gives customers a strong incentive to save their cash budget to spend on flights next year, in the hopes of requalifying again for status for 2022 and beyond.
Related: Complete guide to airline elite status during the coronavirus outbreak
Refunds are already proving difficult to get
It's worth repeating that at this point, we don't know exactly how long this pandemic will last and when it will be safe to travel again. I've started playing around with some trip ideas for this fall and winter, but I fully understand that anything I book now might have to be canceled depending on how this all plays out.
Related: Beyond coronavirus: What the future of travel will look like for all of us
Airlines around the world, sometimes with the backing of their local civil aviation authorities, have already made it challenging or downright impossible for customers to get refunds on cash tickets, even for flights that have been canceled. I've been stuck with a few hundred dollars in travel vouchers from Delta, United and American, and am still waiting on two different hotels to process refunds back to my credit card.
With new bookings drying up and refund requests continuing to mount, airlines and hotels are strapped for cash. Once you hand over money to them, you should expect some degree of difficulty or wait time in getting it back in the event you need to cancel. Until we have a better handle on this situation, booking with points and miles feels safer to me as award reservations are much easier to cancel and refund.
Cash is king during an economic slowdown
The uncertainty we're all facing right now doesn't just affect travel bookings, it ripples through every corner of our economy. Companies that are hanging on right now might be forced to close their doors and lay off employees if the current situation extends for several more months, and many more people might find themselves out of work. In that case, the best thing you can do to protect yourself and prepare for the worst is to increase your cash on hand.
Just like airlines and hotels are trying to stay liquid, you should be doing the same thing and making sure that you have cash and credit lines that you can draw on if your financial situation deteriorates. This means that if you have a choice between booking with cash and points, points are looking like an even more attractive option
Related: The best cash-back credit cards
Bottom line
I'm itching to get back in the air again, but even once public health officials give us the all clear to resume non-essential travel, I plan on drawing down on my points and miles balances before I consider spending any cash. There's so much uncertainty in the air, both on an individual and a national level, that keeping your cash accessible and not tied up in a ticket you may have to cancel just seems like the smart idea.
TPG featured card
Rewards
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.