In my post “COVID Credit Card Enhancements Ultimate Guide,” I detailed all of the enhancements credit card issuers have made to their travel cards to persuade customers to keep those cards rather than cancel during this time of virus-induced stay-at-homedness. Some of the enhancements are so good that, for many, it actually makes sense to sign up now for these cards rather than waiting until travel resumes. This is especially true for Amex Platinum cards and Hilton cards. See these posts for details:
In some cases, card issuers have made it easier to earn existing travel credits through non-travel activity. Here’s a summary:
- Citi Prestige (May through December): Purchases at Supermarkets and Restaurants (including takeout) count toward the card’s $250 Travel Credit benefit
- Amex Hilton Aspire (June through August): Purchases at US Restaurants (including takeout & delivery) apply to the card’s $250 Hilton resort statement credit
- Amex Marriott Bonvoy Brilliant (June through August): Purchases at US Restaurants (including takeout & delivery) apply to the card’s $300 Marriott statement credit
The above changes are great. Sadly, though, there are many airline fee and travel credits with which we haven’t been given alternate options. Here’s a partial list of cards that offer credits for all travel (besides the aforementioned Citi Prestige card):
- Chase Sapphire Reserve: $300 annual travel credit
- US Bank Altitude Reserve: $325 annual travel credit
And here’s a partial list of cards that that offer airline fee credits:
- Amex Platinum Cards: $200 annual airline fee credit (with selected airline)
- Amex Gold Card: $100 annual airline fee credit (with selected airline)
- Amex Hilton Aspire: $250 annual airline fee credit (with selected airline)
- Bank of America Premium Rewards: $100 annual airline fee credit
- Chase Ritz Card: $300 annual airline fee credit
- Chase Southwest Priority Card: $75 annual Southwest travel credit
- Citi® Expedia®+ Voyager Card: $100 annual airline fee credit
- CNB Crystal Visa Infinite: $350 annual airline fee credit
- UBS Visa Infinite: $250 annual airline fee credit
- UBS Visa Infinite Business: $350 annual airline fee credit
I wish the card issuers listed above would follow the lead set by Citibank with the Citi Prestige card. Travel credits on the Prestige card were already easy to earn (since you could earn them with any travel, not just airline fees), but now they’re absurdly easy. Cardholders have all of the rest of the year to earn their $250 in credits through purchases at supermarkets and restaurants. Since the card already offers 5X at restaurants, earning the credit this year should be incredibly easy for all cardholders.
While it would be great if the other card issuers would copy Citi’s approach, I don’t think that’s likely to happen. So, that made me wonder, can we take advantage of the travel industry’s relaxed change and cancellation policies in order to use up our travel credits?
It used to be common practice for people to use up their airline fee credits by buying airline gift cards. For example, Amex Platinum cards offer $200 per year in airline incidental fees. And if you used your Platinum card to buy a gift card from your selected airline, Amex would see that as an airline fee and reimburse the purchase. Last year, though, they stopped crediting gift card purchases in that way.
While there are still options for earning airline fee credits for things that aren’t strictly fees, it’s more difficult than ever to do so without flying since Amex has started clawing back fee credits when they see that those fees were returned (if you cancelled the associated tickets, for example). So, what can we do if we don’t have any near term travel plans?
Buy airline credits, indirectly, instead of gift cards
It occurs to me that one option is to use travel credits and/or travel fee credits to indirectly buy airline credits instead of airline gift cards. Many airlines currently have generous change and cancellation policies for tickets purchased this month (and often into June). In many cases, you can buy non-refundable tickets and later cancel them and get airline credit at full face value. In some cases, this could be just as good as buying a gift card to that airline.
Here’s how it might work to indirectly buy airline credit:
- Buy a very cheap flight during the dates that the airline in question allows flexible cancellations. If you have a card that offers general purpose travel statement credits, use that to pay. You should then get reimbursed by the credit card company for paying for travel. In some cases, cheap airfare looks like airline incidental fees to the credit card company, so you might have luck getting the statement credit if you pay with a card that only reimburses airline fees.
- After purchase, modify the reservation in order to add incidental fees. In most cases, allowed incidental fees include checked baggage fees, itinerary change fees, pet flight fees, seat assignment fees, and more. Pay with a card that reimburses airline incidental fees. If using an Amex card, make sure that you have selected this airline as your preferred airline before doing this step. IMPORTANT: Make sure that the add-on is refundable. For example, avoid paying for Southwest EarlyBird Check-In since that is explicitly not-refundable.
[This step is needed only if your card rebates airline fees and not airline tickets]
- Later, cancel your flight. The entire purchase price, including the add-on fees from step 2 should be rebated to you as airline credit.
Buy airline miles, indirectly
Air Canada and Southwest have announced that, for tickets meeting certain requirements, they will offer the option to get back miles instead of airline credit. Air Canada will price their miles at 1.3 cents each. For example, if you cancel a $130 ticket, you should be able to exchange it for 10,000 miles. Southwest hasn’t yet announced the exchange rate of credits into miles (Southwest points), but I’ve been told directly by the Director of Loyalty at Southwest that the rate will be “favorable, and not punitive.”
Here’s how it might work to indirectly buy airline miles:
- Buy a cheap flight. See the section above for more details.
- After purchase, modify the reservation in order to add incidental fees. See the section above for more details.
[This step is needed only if your card rebates airline fees and not airline tickets]
- Later, cancel your flight. You should have the option to refund the entire purchase price, including the add-on fees from step 2, in the form of airline miles instead of cash back.
Specifics about indirectly buying Air Canada miles.
Air Canada’s policy is described here. Here are the basics:
- Tickets must be for travel between March 1, 2020 and June 30, 2021
- Existing bookings qualify
- New bookings must be made by June 30, 2020 in order to qualify.
- If you booked directly with Air Canada and you need to cancel for any reason, you can convert your ticket to an Air Canada Travel Voucher that has no expiry date or to Aeroplan Miles with an additional 65% bonus miles (i.e. convert credits to miles at 1.3 cents per mile).
- For customers who booked through a travel agency, Air Canada is working to make these options available.
Specifics about indirectly buying Southwest points
Those Members who have travel funds that are set to expire or funds that are created between March 1, 2020 and September 7, 2020 will have the option to convert those travel funds into Rapid Rewards points at the same rate you would be able to purchase a ticket with points today.
When you cancel a purchased ticket, you receive travel funds that usually expire within a year. In addition to extending the expiration date, Southwest is planning to make it possible to convert those funds to Southwest Rapid Rewards points (which never expire). It’s unclear what they mean by “at the same rate you would be able to purchase a ticket with points today” since that rate varies due to differential taxes & fees on different flights. But, I expect that the rate will be reasonable. I’ve been told directly by the Director of Loyalty at Southwest that the rate will be “favorable, and not punitive.”
The key thing to remember here is that you must cancel a purchased flight before September 7th for you to have the option to convert the refund into points. I’d recommend that you cancel well before September 7th in case it takes a while for the funds to be deposited.
Only partially tested
Our post Amex Airline Fee Reimbursements. What still works? shows reader’s experiences of the types of things that Amex has rebated even though they are not in the official list of allowed incidental fees.
Things I don’t yet know:
- Are there any problems with getting incidental ticket add-ons refunded as travel credits or miles? Example issues:
- If the airline simply refunds the charge to the credit card you used to pay, this won’t work.
- Some add-ons are non-refundable. One example is that Southwest EarlyBird Check-In is non-refundable.
- Are there any gotchas with the conversion of credits to miles? We don’t yet know Southwest’s conversion rate, so we don’t yet know if it’s a good or bad idea to do it. We also don’t know if there are any hoops to cross.
- If we bought airfare through an online travel agency, is any of this possible? Air Canada says that they’re going to make their refund options available to travel agencies, but they haven’t yet announced the details.
Is this ethical?
I don’t believe that there’s a fixed absolute line between right and wrong. Instead, I try to go by my gut feeling. To me, the approach I documented above is similar in kind to signing up for a credit card to get the welcome bonus even though you know you’ll never use the card. In both cases we’re playing by the rules even if we understand that the rewards were intended for other purposes.
I have no doubt that many will disagree and say that what I wrote is unethical. And that’s fine. I respect that opinion. Everyone draws their ethical line in the sand in different places. Some readers will take issue with where I draw the line. If that’s you, you have every right to that opinion. Others draw their line much further out than I do, and I respect that too.