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Research: Travel Rewards programs and their drawbacks -

Travel rewards is another set of financial tool that is offered to customers by different credit card companies as an incentive to its loyal and regular customers. The travel rewards offered are very flexible and they offer points or airline miles, which can be exchanged for air travel, accommodation or both. Every time the customer uses the card for travel related spending, more points get added. These points can be used to get hotel accommodation, car rental or other priority services while travelling.

Travel rewards remain connected to a particular spending pattern and therefore a customer should choose a travel reward scheme that has no limitations to the grace period for which the points will remain valid. The user should also get the option of rolling over the unused reward points for the next billing cycle.

Drawbacks of the travel reward program

Travel reward programs might sound to be very exciting and money saving but there are certain limitations of the program.

  1. Credit cards that offer travel reward programs charge higher annual fees then the normal cards. This annual fee if calculated might be found to be more than the rewards earned. The more the facilities offered with the travel reward cards, the higher the annual charge will be.
  2. Using travel reward cards for making daily purchases stands fit if the user wishes to just earn points before paying off the bill in full within the grace period. This actually helps the user in gaining points as well as remaining debt free. In case the user has the tendency to overspend, then travel reward cards can stand out to be a burden since the late payment fees and surcharges for such programs are very high than the normal.
  3. Redeeming the travel rewards point stands out to be another drawback in many cases. Airlines have certain dates on which the aviation industry does not entertain any kind of rebate or discounts. These days are called “Blacked out” days. The same goes for hotels and other travel facilities that do not entertain any kind of rewards on these days. Eventually most of the blacked out days are in the peak seasons when the vacations start and people are in a mood to travel. As per the survey done by GMAC mortgage, many of the reward card holders have not been able to use their reward point because easy redemption options are not available. The travel reward programs will have little value if the customer has to pay the surplus charges for using the card as well as be unable to take advantage of the reward points. It starts to become a burden.

Again travel reward programs can be of little use if the user needs to travel with his family or friend. The reward points are acceptable for a single individual only and that is usually the cardholder, getting a second person travel under the same privileges and facilities become impossible. This becomes a challenge for users and sometimes they stop travelling.