Should you renew your travel credit card for 2021?

Travel credit cards can offer numerous benefits, including the opportunity to earn airline points, miles on purchases, or hotel points. Using those rewards for free flights or hotel stays can save you money, while added benefits such as airport lounge access can increase your credit card's value.

With the coronavirus pandemic derailing trips, however, you may be wondering just how much mileage you can still get from a travel rewards card in 2021.

Should I keep my travel card next year?

Travel credit cards are primarily designed to offer rewards on travel purchases. But even if you aren't planning to charge flights, hotels or other travel expenses in the near future, there are still some good reasons to consider holding onto it.

"Most credit cards with primary travel benefits are now offering alternative benefits to encourage usage," said Alex Miller, founder and CEO of UpgradedPoints.com.

For example, some travel card issuers have expanded airline points and miles redemption options. Instead of limiting you to using rewards for travel, you might be able to apply them as a statement credit for non-travel purchases. And some credit card companies are offering limited time non-travel perks, such as a monthly credit for using your card to pay your cell phone bill.

If you're on the fence about whether to keep your travel credit cards through 2021, consider whether:

• You've already paid your annual fee for the year
• Your airline points or miles will expire and if so, other ways you can redeem them besides travel
• Your credit card offers any non-travel incentives that might make it worth keeping

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What are the consequences of canceling a credit card?

Canceling a travel rewards card could make sense if you want to avoid paying a steep annual fee for a card you may not use. But there are some potential downsides.

"If you cancel, you'll need to reapply if you want the card in the future," Miller said. "And if you have reward points accumulated, you're likely to lose all of them in the cancellation process."

Closing down travel credit card accounts could also impact your credit score. Canceling a card affects your credit utilization rate or the ratio between your outstanding balances and available credit. Canceling a travel rewards card with a high limit could cost you credit score points if your credit utilization rate takes a serious hit.

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Should I change to a new credit card without an annual fee?

Exchanging your current travel rewards card for one without an annual fee could save you money. But whether it makes sense to do so may depend on how you anticipate your travel plans shaping up for 2021 and beyond.

Miller said summer may see the return of a semi-normal tourist season as people seek to escape the cabin fever imposed by staying home for much of 2020. The introduction of a coronavirus vaccine could also see an uptick in travel as people feel more confident about taking trips.

Keeping a card with an annual fee may be easier than changing cards if you expect your 2021 travel plans to resemble your travel habits from previous years. If you do decide to swap it for a no annual fee travel rewards card, consider what will happen to any unused rewards you've piled up.

For example, you may be able to transfer airline points earned with your card to your airline's frequent flyer program. Or if you're opening a no annual fee card with the same credit card company, you may be able to transfer rewards to the new card.

If you can't transfer points or miles, check your card agreement to see if you'll still be able to use them after canceling the card. And if you can't, consider how you can use them up before canceling, such as booking travel, applying them as a statement credit, or redeeming them for gift cards if that's an option.

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Is it better to keep or close a credit card?

Travel credit cards may have lost some of their appeals for now. But that could change as the travel outlook improves.

"By keeping it now, you'll be ready to go once travel resumes," Miller said. In the meantime, you could take advantage of the temporary non-travel credit card offers that might be available for your card. And if you have a card that offers travel points on all purchases, travel or otherwise, you could continue banking rewards on everyday spending or financial emergencies.

If you do decide to cancel, try to time the cancellation right before your card's renewal date. That way, you can get as much value from it as possible if you've already paid for a full year of card membership.

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