Credit Card Travel Benefits and COVID-19

As COVID-19 fears spread, cardholders may choose to cancel a trip purchased with their credit card. Many airlines, car rental companies, event organizers, and hotels will be understanding, considering the current pandemic. However, cancellation and return policies are not consistent from one company to the next, and some companies may be hesitant to give up that revenue, since it is unclear when travel will return to normal. Because of this, there is no guarantee a cardholder will receive a refund if they cancel a reservation.

If a cardholder is denied a refund for canceling a trip or reservation, they may turn to credit and debit card issuers for assistance, or to attempt to dispute the charge. Unfortunately for the cardholder, it is also unlikely that the issuer will absorb the travel expense if there are no chargeback rights. Instead, if the card provides travel protections, the issuer may refer cardholders to the benefits service provider in case trip cancellation insurance covers the loss.

Trip cancellation coverage is in place to protect cardholders who cancel their travel plans for a covered reservation. Although this is a great benefit, it may not cover a loss when the cardholder cancels because of a concern over the COVID-19 pandemic. Although this may vary by the service provider, the guides to benefits for major card brands specifically state that travel cancellation coverage does not cover a cancellation because of a “… disinclination to travel due to an epidemic or pandemic.”

By now, issuers are already receiving calls related to changed or canceled travel arrangements purchased with a debit or credit card. Issuers may be tempted to refer the cardholder to the card benefits provider. Instead of referring cardholders to the benefits provider, it may be best to refer them to their card’s guide to benefits first, or to at least warn cardholders that trip cancellation coverage is not guaranteed depending on the circumstances. Giving the cardholder a heads up on the potential limitations can help avoid cardholder frustration if the benefits provider declines coverage.

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