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Cashing In Q&A columns

Canceling travel might not get your points back

Credit card reward programs might help pay for travel, but if you change or cancel, things get tricky

Summary

Depending on where you book your travel and what kind, things can get a little tricky. You may have to change your plans instead of canceling in order to not lose points, but you may have to pay a fee.

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Dear Cashing In,

How do redeemed travel points get refunded if I cancel? – Norma

Dear Norma,

When you buy an airline ticket or pay for a hotel room, canceling your reservation is pretty straightforward.

If you bought an airline ticket and need to change it, the airline will typically charge you a change fee plus the difference in fare. If you cancel a hotel booking, you can usually receive a refund.

But if you made a travel booking using credit card points, canceling becomes tricky. To understand what happens, you need to understand how reward programs typically work.

It also depends on what type of points you are using – and whether it is a credit card company’s reward program or a program tied to an airline or hotel.

Check out all the answers from our credit card experts.

Ask Tony a question.

See related: Split travel cost between two rewards cards: Is your trip covered?

Rewards breakdown

When you book travel using a credit card rewards program – such as Chase Ultimate Rewards, American Express Membership Rewards, Citi ThankYou Rewards or Capital One’s rewards program – the company pays the vendor actual money.

But instead of having you pay that money to the company, it just deducts points from your account. All the vendor knows is that you have used your credit card to pay for travel.

In these transactions, the card issuer is just the middleman – the go-between facilitating the payment between you and the vendor, like a hotel or airline. If you cancel your travel plans, the vendor will notify the card company to issue you a credit if applicable. The credit will be in dollars, not in points or miles.

But be careful: You still have to abide by the travel vendor’s terms of the sale – just as you would if you used a credit card to pay for a ticket the usual way.

The fine print

With airlines, most economy tickets are nonrefundable. You might be able to change the ticket for a fee. But that means that if you’re using a credit card rewards program to pay for an airline ticket, you almost certainly will not get those points back – and you probably won’t get money back, either. You’ll have to change the ticket, which probably will cost you additional money.

With hotels and rental cars, depending on the type of rate you paid and the conditions attached to it, you are more likely to be able to cancel travel plans without penalty. If you used a card rewards program, your statement will be credited in dollars, not points.

With other award programs, canceling a reservation can result in having points redeposited into your account.

For instance, if you make a hotel reservation using points from a hotel card, canceling your stay will result in those points being redeposited.

Airlines can redeposit miles back into your frequent flyer account if you cancel a flight booked with their miles – but they also usually charge you a redeposit fee, sometimes as much as $200.

Rewards points are just another currency, another way to pay for travel. They can be a smart way to avoid spending cash for vacations. However, they are not a protection against airline change fees.

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Credit Card Rate Report Updated: July 29th, 2020
Business
13.91%
Airline
15.48%
Cash Back
16.09%
Reward
15.82%
Student
16.12%

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