Banks and airlines have become besieged in massive airline credit card account holder cancellations since flying got to a virtual standstill since COVID-19 first devastated the world.
Card cancellations include consumer-initiated cancellations as well as bank-initiated cancellations.
The popularity of airline reward credit cards, once a major motivator for frequent flyers, has been dying out like an Energizer battery running out of juice.
No or little need for flying has caused many airline credit cardholders to abandon their once-coveted cards, letting go of millions of accounts.
The mass exodus of the travel rewards account-holders voluntarily surrendering their cards presents a real challenge for credit card issuers. It’s also affecting the banks’ affiliates promoting the cards.
Why consumers are closing out travel rewards credit cards
The coronavirus pandemic has caused flying and travel in general to come to a standstill. So, what good is a travel reward credit card?
About 46% of consumers carry a travel rewards credit card. So, with no travel plans in the near future, what is going to happen to points and miles acquired? Even if some account points may never expire would the holder be willing to continue paying the annual fees? For example, the Delta Skymiles Platinum American Express sets you back $250 a year in fees.
Airline credit card/Travel Rewards Cards cancellations
According to ValuePenguin, a major affiliate-website for travel rewards cards, the number of rewards card cancellations are staggering. The demographics of people canceling are broken down to generation-groups among its customers:
- 41% of Millenials. That’s more than 4 out of 10 cardholders within the Millennials group closing out their cards. On top of that, another 34% have considered closing out their cards.
- 30% of Generation Z and Generation X.
- Interestingly, only 5% of the Baby Boomer Generation account holders have canceled their cards. This could perhaps be because Baby Boomers often tend to be well established financially. Paying high annual fees on solid mileage points can always be used when the COVID-crisis is over.
At an average, ValuePenguin’s survey shows that 30% of the survey-respondents have closed a travel rewards credit card since the pandemic hit.
Matt Schulz is the chief credit analyst at LendingTree, which is ValuePenguin’s parent company:
“It doesn’t surprise me at all that many people are closing travel cards right now. Many Americans are simply trying to keep food on the table. Hoarding travel miles and points just don’t make any sense for a lot of people at this time.”
Not just travel rewards credit cards
Also, other programs, such as Norwegian Air’s no-credit card travel rewards loyalty program is hurting. Why? Flying is virtually non-existent. Plus, very few people want to risk flying while the pandemic is still spreading destruction among people around the world.
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