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2020 has certainly been a year of many, many changes. (Would that be the understatement of the year?) It seems like everything – from our home life, to work, to kids’ school lives – has probably been subject to at least a few twists and turns.
With all these life changes, it’s possible your finances may have changed a bit as well. Perhaps you’re trying to save more, spend less, or just reassessing what’s going on in your wallet.
And that might include taking stock of your credit cards. In these last few months, it’s possible your plastic could have gone through some changes, too. That could include edits in how you earn rewards, APRs, rewards redemption, and more. (And we’ll go over these in more detail below.)
Now with the year almost over, it could be a good idea to hit pause and review some changes that’ve taken place in the world of plastic. Here are four potential differences to be aware of.
You’ve likely seen the Federal Reserve lower interest rates a few times, in respond to the Covid-19 pandemic. When the Fed cuts interest rates, credit card APRs tend to lower in response.
A lower APR could be good news for your bill. It essentially means you’ll be paying less interest on any balance you have.
That being said, it’s still a good idea to pay your bill on time and in-full each month, which helps you build (or maintain) a good credit score!
The potential downside of slashed credit card interest rates? There may be fewer options out there for balance transfer credit cards. Balance transfer credit cards are typically used by borrowers who have credit card debt. They essentially transfer their debt to a card with a lower interest rate (or no interest at all, depending on the card’s terms and intro offers).
While some rewards credit cards still have the option to transfer balances, some of these issuers have removed 0% APR intro offers.
Many of us have been reducing our spending these last few months. Or travelling less, and maybe not using our hotel rewards or miles like we used to. If you have a premium rewards credit card that would reward for these things (or spending in general), you may have wondered if it’s worth holding on to.
Regardless of whether you have a cashback rewards card, a card that earns points, or a travel rewards credit card, it might be helpful to know that many credit card issuers have been expanding the ways you can earn rewards on certain cards.
Take eating in, for example. Certain airline credit cards have upped the earnings rate on groceries from 1-2 miles per dollar to 4 miles per dollar, while some branded hotel travel cards have increased it to as much as 12 points per dollar, up from 0 to 6 points per dollar. (Great news for those of us who have been spending more time in the kitchen lately.)
Check with your issuer about any expansions to earning rewards and new rewards categories that might’ve been added as a result of Covid-19.
If you decide that the rewards you could earn aren’t worth it (or don’t make up for the high annual fee), you might decide it’s best to close the credit card account or switch to another credit card offering from the same issuer. Before you do that, though, take a look at our article on canceling a credit card so you’re aware of the associated risks (like a potential ding to your credit score).
We’ve already talked about some issuers rewarding you for more spending in certain categories that might be getting more love these days. (Hello, takeout!)
But certain cards now have more options for how you redeem said points or miles, as well.
Some cards let you redeem your miles or points at a 1:1 rate (where 1 point or mile equals 1 cent) when they’re applied towards flights, hotels, or car rentals. But for all other redemptions, it could be a lower rate, with each reward being worth only half a cent.
In light of Covid-19, and the impact on people’s lives and spending habits, some issuers have expanded redemption options. This way you can still get a great redemption rate, but for purchases that are maybe more relevant in your life at the moment.
For example, some credit card issuers are letting you redeem points and miles (at that valuable 1:1 rate in some cases) for things like groceries, take-out, and dining.
If you’ve been considering ditching your rewards card, some of these changes may make you reconsider. Regardless, it’s a good idea to take a look at any updates to see what you want to do.
Covid-19 has a put a financial strain on many households. Even if you’ve been able to keep working through the pandemic, you still might’ve worried about the state of your finances. Or just felt uncertain about what’s ahead (yup, a common thing in 2020).
Recognizing the potential financial stress some folks are under, certain credit card issuers are offering some assistance to their cardholders, in the form of coronavirus credit card relief programs.
Some programs include emergency forbearance, which is basically a fancy way of saying you could skip or reduce your monthly payments for a set amount of time. Many issuers are also waiving or reducing fees for late payments.
Another aspect of these credit card relief programs is a possibly lower interest rate. As we mentioned, your credit card APR may already be lower as a result of the Fed lowering their interest rates. But as part of these relief programs you may also be able to request a lower APR, if need be.
To take advantage of any of these relief program benefits, check in with your issuer directly.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.