Searching for a travel rewards credit card that offers free flights and hotels? Before you pick a travel card because it offers the lowest interest rates, know that rarely is one single card best-suited to everyone’s unique travel aspirations.
Instead, each travel credit card offers a unique mix of benefits and drawbacks: Are you better off choosing a bigger sign-up bonus or more points per dollar? How are annual fees and overseas conversion rates factored?
We dug through dozens of different articles claiming to have your best travel-and-credit interests in mind before coming up with this easy breakdown. But first...
What Are Travel Credit Cards?
Travel credit cards offer members points and miles that can be redeemed for free flights, hotels, or other forms of travel. They can be specific to one company, such as American Airlines or Hilton. Or, they can be “general rewards” credit cards, whose points can be redeemed at a variety of hotels, airlines, and other travel partners.
Related: Chase Sapphire Preferred Card Review
How Travel Credit Cards Work
A travel credit card is different from one that simply offers users cash back. Instead, these cards work by giving you points or miles for your day-to-day spending, such as gas, groceries, and more. In some cases, if you spend $3000 in a month, you’ll earn 3000 points!
Of course, there are caveats and benefits tailored for specific spending habits. For example, some cards will allow you to earn more than one point per dollar spent if you book with their preferred merchants or with them directly, such as a Starwood AMEX card that gives you double points when booking a Starwood hotel. But, what if you don’t often stay in hotels or can’t commit to a single airline? Looking at all-purpose travel credit cards may be a better fit (we’ll talk more about this in a moment).
Will Applying Hurt My Credit?
Your credit score will slightly dip with each new “hard inquiry”—that means any credit or loan application you submit for approval, but doesn’t include checking your credit score. However, the dip dissipates quickly. Plus, having a lot of available credit to a low debt ratio is actually much better for your score!
Bottom line? Unless you’re looking to purchase a car or a home within the next six months, applying for a new card won’t meaningfully affect your credit standing.
What to Look for in a Good Travel Credit Card
Here are some basic ins and outs to help you get the biggest travel bang for your credit card buck:
Bigger Sign-up Bonuses: Many travel credit cards offer thousands of points just for signing up—often enough to cover at least a domestic flight or round trip upgrade. Look for a card that offers at least 30,000 points to start, or it may take too long for you to earn your first redemption.
High Points Per Dollar: Most travel credit cards offer one point for every dollar spent. However, cards that are the best fit for you will offer extra points when you shop at certain retailers—hopefully ones you already frequent.
Low Spending Minimum: You’re going to shop anyway, so why not earn points while doing it? Most travel credit cards offer a bonus of 30,000 to 50,000 points when you meet a minimum spending requirement. However, it’s important to double check the amount that must be spent, as users may find the minimum required points to be too high for realistic regular spending.
Low Annual Fees: No one likes paying annual fees for credit cards, but those who travel a lot will find that fee-based cards tend to give better travel rewards schemes. This allows you to accumulate points faster, as well as gives you better access to services, special offers, and stronger travel protection. Additionally, most card companies waive their annual fee for the first year to encourage sign-ups. By choosing wisely, you can save much more on travel than what you’ll spend on the annual fee.
Better Conversion Fees: The majority of credit cards charge a 3% fee for use overseas. This can often negate the great conversion rates that users hope to get while traveling. Depending on how frequently you travel, you may want to look for a card with zero conversion fees or sign up for a travel fee-free card, such as the Charles Schwab ATM card, specifically for overseas spending.
Related: Capital One Venture Card Review
Picking the Best Travel Credit Card for You
Just like no two dream vacations are the same, your needs for travel credit card perks are unique. Think about why you want to use the card and what purchases it will most frequently be used for.
Are you interested in loyalty to a brand and free rewards, or only avoiding fees? Do you want to milk the rewards and bonus system to get free flights, or do you just want a card that won’t charge you a fee for using it overseas?
The whole “point” of points is to find value, so if you find a credit card that will offer something of value to you, that makes it a good offer. Decide what your goals are and pick the card, or cards, that will get you there.
Top 3 Tips for Maximizing Travel Credit Card Offers
1. Strategize. Don’t just sign up for every card with an okay offer. If you have a particular trip or goal in mind, concentrate your efforts on the cards that will get you the most miles for the airline that’s going to get you where you need to go, as well as the hotel where you want to stay.
2. Don’t just concentrate on the sign-up bonuses. The best cards out there are the ones that allow for sustainable points earning through your spending habits. And, for that matter, make sure you are putting every expense possible on a points-earning card so that you are maximizing your earning potential.
3. Do your homework. See what bonuses the credit cards you’re interested in have historically offered and make sure you get the best one possible.
Before You Start Applying
Travel credit cards can be rewarding indeed—as long as you pay attention to the terms, and make it a point to get the best bang for your travel rewards buck. However, no matter what you do, you won't see a dollar for point/mile redemption with any travel credit card. The "dollar value" of your travel rewards often fluctuates, depending on how you earned the points or miles and what you are redeeming them for.
Also, don’t overdo it with multiple cards. It’s important to remember that travel credit cards have minimum spending amounts required before you can earn rewards. Combined, those minimum spending amounts should never be above your monthly budget, because once you start spending extra money to earn rewards, those points are no longer free.
Finally, no discussion of travel credit cards is complete without the warning that they are only best for those who always pay their balances in full and never incur interest. Everyone else should use the card with the lowest annual percentage rate. That said, if you do pay your balance off every month and you love to travel, then you really can get more miles for your dollar.
Do you know any tricks to enjoying extra benefits from a travel credit card or have strong opinions on a particular one? Let us know in the comments!
More on Travel Credit Cards:
- 4 Types of Credit Cards Responsible Consumers Use for Big Rewards
- Good Credit Scores and How to Get There: A Detailed Guide For Moving From Average to All-Star
- A Complete Beginners Guide to Frequent Flyer Programs
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