Credit Cards Rewards Outlook For 2023

2022 has been an interesting year, with post-pandemic travel rebounding, inflation skyrocketing and many credit card issuers offering additional perks, launching new cards or rebranding existing cards.

Although inflation still seems to be on the rise and there’s a potential recession approaching, that’s not stopping travelers. Expedia has deemed 2023 the year of “no-normal” travel, as people are ready to get out and see the world in all sorts of ways. This means credit card rewards could be more relevant than ever to cardholders and budding travelers.

It’s tough to predict the future with exact certainty, but these are our best guesses for how credit card rewards will look in 2023.

Lifestyle Rewards vs. Cash Back vs. Travel Rewards

Back in 2020/21, many cards began to offer additional lifestyle rewards since cardholders weren’t traveling as frequently, such as increased points for shopping at grocery stores. Some of these went away as travel rebounded, while some stuck around.

According to a study from Booking.com, 72% of responders said that despite economic and political concerns, traveling in 2023 “would still be worth it.” Since people are on the move once again, travel rewards cards will continue to stay relevant to consumers.

But considering the state of the economy, cash-back cards may offer some value to cash-strapped cardholders. Only time will tell if issuers focus on lifestyle rewards and cash-back to make everyday purchases a little easier or focus more on travel rewards as travel rebounds.

Flexible Rewards Aren’t Going Anywhere

We’re living in uncertain times—travel is on the rise, yet a possible recession looms. From one day to the next, frequent flyer programs are devaluing miles, so holding on to a large stash of credit card rewards for a rainy day could even backfire as points could be a volatile currency.

This is why flexible rewards cards will remain popular in 2023. With so much uncertainty, one thing is still certain: The ability to transfer points to a variety of programs or use them to purchase travel outright via a portal ensures credit card reward points remain valuable to many types of travelers and spenders, even if or when a specific loyalty program devalues its points.

Credit Card Rewards Like Points and Status Will Become More Valuable Than Ever

As travel costs (and all costs) continue to rise, credit card points become even more valuable, even as programs devalue their point currencies. As good-value redemptions become increasingly harder to come by, this makes those really incredible point redemptions even more elusive but also more rewarding.

As elite status also becomes harder to earn due to revamped loyalty programs focused on revenue (for example, American Airlines finally joined Delta and United in changing its loyalty program, which is now based on earning Loyalty Points to get elite status), both co-branded and flexible rewards credit cards that offer elite status or help fast-track cardholders toward an easier, quicker path to earn status will be coveted.

Big Bonuses

Although a possible recession may mean otherwise, we hope that higher bonuses will still be a thing in 2023. In 2021 we saw the Chase Sapphire Preferred® Card offering a 100,000-point bonus. The Amazon Secured Card* also offered 100,000 bonus points in early 2022.

When wondering if these high bonuses will return in 2023, our crystal ball isn’t quite sure, but we hope so.

Our best tip for 2023: If you see a solid bonus, jump on it quickly. In an uncertain economy, high bonuses may not last long.

More Credit Card Lounges

Lounge access is one of the most lucrative rewards credit cards can offer, and credit card lounge programs are expanding in 2023.

Chase’s lounges are part of the Priority Pass program, where membership is a perk of many premium travel rewards cards like The Platinum Card® from American Express (Terms apply, see rates & fees) and the Chase Sapphire Reserve®, among others. The Chase Sapphire Lounge by The Club opened in October of 2022 in Hong Kong, with several more on the radar for 2023. A representative from Chase told Forbes, “We look forward to opening our first domestic lounges in select airports next year, including Boston Logan International Airport, LaGuardia Airport, Philadelphia International Airport and Phoenix Sky Harbor Airport.”

Capital One opened its first lounge in DFW in 2022, with others set to open in Denver and Dulles in 2023. Enter for free with the Amazon Secured Card* and get discounts on entrance with other Capital One cards.

Better Travel Portals

Credit card companies have recently focused on their own travel portals, aiming to offer easy, user-friendly experiences for booking travel and redeeming rewards. Capital One launched its travel portal in 2021 and continues to expand it. Chase will soon launch ChaseTravel.com, which will be available to all Chase customers.

Although using credit card rewards points to book travel via travel portals doesn’t always provide as high of a value as transferring points, travel portals offer cardholders added flexibility and ease, especially for booking brands that aren’t transfer partners.

Possible Government Regulation

With proposed acts like the Credit Card Competition Act of 2022, there is a possibility that credit card rewards could be affected by legislation. In simple terms, this particular act would aim to lower the transaction fees merchants pay to open up the market. If these fees are lower, credit card companies may not have the funds to offer customer-friendly rewards like lucrative reward bonuses.

Bottom Line

Ultimately, there’s a lot that could happen when it comes to credit card rewards in 2023—for better and for worse. Our predictions are based on what we’ve seen in the industry over the past few years, but you never know what could happen.

Our best tips for 2023? Jump on credit card bonuses, get creative with redemptions, take advantage of lounge access and book those trips. Since the future of credit card rewards is always uncertain, don’t sit on those points. Use them!

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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