Here’s how COVID-19 will Impact Reward Credit Cards

As of now no medicine or treatment is available for this zoonotic virus which has made it a serious healthcare issue. The only way we can contain the spread of this deadly virus is by staying indoors and practicing physical distancing. In order to balance shrinking businesses, people are coming with new and innovative ideas. Banks and financial institutions are adapting efficiently to the changing market situation.  

Back in time, before the pandemic, it was quite common for banks to offer lucrative reward schemes to get more and more customers. However, with the strengthening grip of the novel coronavirus and disrupted travel across the global banks have to reassess their reward travel cards to become accustomed to the new normal.  

Premium reward cards that come with a heavy annual fee and tempting reward schemes are the ones to get affected extensively mainly due to the reduced demand for such products. Customers are now looking for reward credit cards that can get them practical rewards that are claimable during the pandemic such as lifestyle, cashback, instead of travel and movie discounts which earlier counted as the most popular segments in reward. 

Transitioning from Travel to Lifestyle Rewards

It is astonishing to witness the dramatic transition that the whole world has undergone in such a short span of time just because of a microscopic pathogen. When it came to rewards travel was one of the most popular segments amongst a large number of cardholders not just in the UAE but worldwide. However, due to COVID-19 travel, hospitality, and aviation have been affected substantially and now customers are looking for reward credit cards that allow redemption of points on the day to day purchases such as groceries, gas, online food, etc.  

With more and more people choosing online delivery services instead of visiting stores and market themselves, it is quite evident isn’t the most popular category anymore. In order to balance and retrieve market-shares credit card companies are coming with new reward categories that are getting popular amongst customers as an indirect result of the pandemic. Apart from lifestyle, another category in the segment of reward credit cards that has gained instant popularity within the past few months is discounts on digital OTT platforms such as Netflix, Amazon Prime, Hotstar, Zee 5, etc. 

Keeping the latest market trend into consideration several major market players have started coming up with new reward credit cards such as the CBD one that offers rewards exclusively in the travel, and entertainment segment. Furthermore, companies have started realizing that this trend is going to last for a long time if not permanently. Therefore, in order to stay in the market, it is essential to come up with products that meet the immediate needs and demands of the customer.  

Emphasizing Lesser on Travel Rewards

The novel coronavirus has left the world hostile and travel has been affected dramatically. People are afraid that they might get infected during traveling from one place to another and secondly, no one is aware of the fact that when another lockdown might be imposed which can make things worse for the people traveling. Before the wrath of COVID-19 people chose travel reward credit cards that would get them free flight tickets or airmiles but not anymore. At this point in time, people are looking for reward credit cards that can help them save money instead of getting hot deals on flight and travel.  

This rapid decrease in the number of people traveling has affected airlines greatly. In order to cope with this stressful period, several airlines have announced an extension of the validity of airmiles, frequent flier status. Professionals that constitute a major portion of the frequent flier segment have switched to remote working environments with most of the jobs being done online. This not only saves them from getting infected by the coronavirus but also saves a huge amount of money.  

Reward credit card providers are trying their level best to get things normal by providing jaw-dropping offers. However, even after several attempts, they are unable to get business back on track due to the wrath of COVID-19.  

Alterations in the Reward Programs 

As mentioned, most of the reward credit card providers are modifying the redemption programs with their products to stay in the market. More and more banks have switched or are switching to categories like lifestyle, decor, fashion, online dining instead of travel. Furthermore, people with travel credit cards might experience an increase in their monthly or annual fees as an effort to protect their revenues.  

In a Nutshell

The novel coronavirus has affected us physically, emotionally, and financially and its long-term impacts are still unidentified. Henceforth, the only thing we can do as of now is staying indoors and getting accustomed to the new normal till the time there is no treatment or vaccine available.