How Credit Card Rewards Are Evolving

If nothing else, 2020 has proved just how quickly things can change. 

Your budget, for instance, which used to include weekend getaways and concerts or theater, may now be pared down to essential, everyday items. Just as our lives have changed this year, so has the way we use our credit cards.

For example, take that co-branded airline credit card you opened last year for its travel benefits and lounge access. Its value might draw new scrutiny when it’s time to pay the annual fee but you haven’t been on a plane in months. 

Or maybe you opened a card with great rewards on entertainment like movie and concert tickets, and are now left wondering when you’ll get to actually earn those rewards amid ongoing event cancellations. 

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While this year has forced a shift in how some cardholders use and gain value from credit cards, it doesn’t mean your rewards cards are now useless. As our spending habits evolved over the past months, issuers responded in turn. 

Many of these changes bring more value than ever to regular, everyday spending, a benefit for rewards pros as well as those who historically haven’t put much thought into credit card rewards. 

“A lot has changed,” says Ted Rossman, industry analyst at CreditCards.com. “You should reevaluate what cards you have, how you’re spending, and what you want to get out of that card.” 

A New Era for Credit Card Benefits

A few years ago, it wasn’t uncommon for credit card companies to pull in new users with eye-popping sign-up bonuses worth hundreds (if not thousands) in points value. But for a while now, credit card issuers have shifted away from bonuses and upfront benefits in favor of long-term, ongoing rewards.

“Even before the pandemic, we saw credit card companies take steps to make it harder to earn welcome bonuses and other benefits,” says Chris Dong, who reports on credit card benefits and points & miles for The Points Guy, which shares a parent company with NextAdvisor.

He points to Chase’s rumored 5/24 rule, which (unofficially) prevents anyone who has opened five or more credit cards in the past 24 months from being approved for a new Chase card, as well as Amex’s once-per-lifetime restriction when it comes to earning welcome bonuses on new cards.

While the evolution didn’t begin when COVID-19 hit the U.S. early this year, it may have accelerated the trend. 

Spending During a Pandemic

On one hand, issuers have tightened lending standards for new applicants across the board and even pulled some cards off the market altogether. But many have also increased efforts to keep current cardholders (and keep them spending), rolling out a host of benefits tailored to pandemic-era everyday purchases.

“When the pandemic first began, we saw issuers get really aggressive about leaning into this ‘new normal,’ Rossman says. Many realized early on that travel was no longer a priority, and many cardholders would soon become wary about paying travel card annual fees without reaping the benefits, he says. 

“You’re worried about your job, you’re worried about your finances, and begin thinking ‘Why am I paying this annual fee for a card I’m not using?’”

Increasingly, card issuers pivoted to meet cardholders where they are.

Short-Term Fixes

Early in the pandemic, some issuers reacted quickly, introducing new rewards on the purchases consumers were making at home. 

American Express, for instance, reacted early with limited-time offers (through December),…