[ x AS] – $100=[ x AS] – $0So in this case, if your annual spending is more than $10,000, the travel rewards credit card would be worth the annual fee. If it’s lower, you’d want to opt for the card without the annual fee. But even if the rewards math doesn’t work out, a travel card could still make sense.Many Americans with travel rewards credit cards are hanging on to their points/miles.
Reward balances vary greatly from generation to generation. Gen Z travel rewards cardholders have 9,700 points/miles, on average, while baby boomer travel rewards cardholders carry 108,300 points/miles, on average. That’s a lot of free or cheap travel waiting to be had, which is particularly appealing when airline fares are up 25.6% annually, as of January 2023, according to the Bureau of Labor Statistics. Travel rewards cardholders piling up their points may want to reconsider their strategy.Saving up your points/miles to go on your dream trip for free is tempting, but there’s a
for longer than you have to. Point/mile value may go down over time, due to devaluations or falling behind inflation.The value of a point or a mile may vary depending on how you use it. More than a third of travel rewards credit cardholders say they try to get the best possible value when redeeming their earned points/miles for travel while others just redeem their points/miles for whatever travel they have coming up, without considering best value.
A less ideal redemption method is for something other than travel: Among travel rewards cardholders, 22% generally redeem their points/miles for nontravel rewards, like cash back or gift cards. Typically, the redemption value for travel rewards is higher when used for travel rather than cash back, particularly if you transfer points/miles to partner airlines or hotels.There’s nothing wrong with using points/miles for whatever travel you have coming up next.