The Biggest DANGER in the Credit Card Game in 2021 – The Credit Shifu

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Hey credit warriors, welcome to the show and today I want to talk about the biggest risk out there right now for those playing the credit card travel hacking game, i.e. collecting credit card points to exchange for luxury travel experiences, like all inclusive resorts, business class flights.

So right now there are a lot of points and miles out there hoarded up in people’s accounts, this is for a few reasons, number one, which is most obvious, people didn’t do a lot of travelling last year with most of the world shut down and restrictions on international travel in place.

Two airlines and hotels turned to selling points and miles to individuals and to banks in order to raise cash to make it through the pandemic. Notably Hilton sold one billion dollars worth of points to American Express last year and other companies made similar moves. We have also seen sales of points to the public with bonuses of up to 100%, many of these deals are only ending now or in the next few months.

And three, as restrictions started easing at the beginning of 2021, card companies started going after new customers with very generous welcome bonuses. Like 100k points on the Capital One Venture, 80k points on the Chase Sapphire Preferred and bonuses of 75 to 100k on various Amex cards. Basically they were using those points they bought in 2020 to entice new members in 2021.

So there are a lot of points out there and this could be a big headache for hotels and airlines, especially for airlines, since hotel chains often don’t own the properties they just manage them, so they were less hard hit than airlines during the pandemic. Delta, for example, posted a $12 billion loss for 2021.

So these airlines and hotels are faced with the dilemma that they have put all these extra points out into the economy and at some point, some point coming quite soon, they will have to honor them for passengers to book flights and rooms. What might they do to make it less of a burden for themselves? Well that is our biggest risk in the credit card game in 2021, devaluations!

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