10 common travel credit card mistakes you need to avoid
Want to maximize miles, rewards on your card? Stay away from these practices
Making complex credit topics simple
A travel credit card can be the ticket to big savings on flights, hotels, rental cars and other travel expenses. Thirty-three percent of travel credit card users reported earning $500 or more in rewards in the past year, according to a 2018 U.S. News & World Report survey.
But how do you know if you’re using your travel card to its full potential?
In the U.S. News survey, 48 percent of travel rewards cardholders weren’t taking advantage of card features and benefits such as priority boarding, airport lounge access or free checked bags when flying. A 2017 Bankrate survey found that 31 percent of credit card users never redeem the rewards they earn.
Avoiding missteps like these is key for wringing the most mileage possible out of your travel credit card.
Here are 10 other common travel card mistakes to steer clear of as you navigate your way to maximum savings:
10 common travel credit card mistakes
- Redeeming travel rewards for cash back.
- Losing rewards value on loyalty program transfers.
- Letting your miles or points expire.
- Buying points or miles.
- Picking a card that doesn’t partner with the hotels or airlines you prefer.
- Paying an annual fee for perks you don’t use.
- Paying foreign transaction fees.
- Choosing the wrong booking option.
- Not paying attention to rewards categories.
- Letting yourself be wowed by a big sign-up bonus.
1. You’re redeeming travel rewards for cash back.
Your travel credit card may let you redeem miles or points for cash back, but not so fast.
“In most cases, it's never worth it to redeem rewards points for cash because the travel you can get with those points or miles is far more valuable,” says J.R. Duren, personal finance expert at consumer review website Highya.com.
Duren uses the Chase Sapphire Preferred card as an example of how much value you can lose by picking cash over travel. “If you rack up 40,000 points, the cash value of those points is $400,” he says. Redeeming for travel through Chase Ultimate Rewards earns you a 25 percent bonus, raising the value to $500.
Using your points for travel puts you ahead by $100, but you can bump that up even more by transferring points to one of Chase’s travel partners.
Using Hyatt’s loyalty program as an example, Duren says booking an eight-night stay with those points can save you more than $800.
In that scenario, the cash value of your points is doubled. You don’t have cash in hand, but you’ve got something that’s even better: nearly $1,000 savings on travel.
2. You’re losing value on rewards transfers.
Some travel credit cards allow for 1:1 transfers to hotel and airline loyalty programs. The hitch is that you may end up transferring points or miles for a lesser value.
The best thing to avoid shortchanging your rewards value? Read the fine print, says Natasha-Rachel Smith, a personal finance expert at TopCashback.com.
Know how much value you’re getting up front for your rewards. And pay close attention to any hidden costs.
“Whether the point of transferring rewards is to extend the expiration date or gift someone miles, make sure you don’t pay anything out of pocket,” says Smith.
3. You allow your miles or points to expire.
Some travel credit cards have use-it-or-lose-it rewards programs. If you’re not putting your rewards to work, you’re essentially throwing money away.
Robin Saks Frankel, a credit card analyst for Bankrate, says you should know the rules for rewards expiration inside and out.
Smith says you may be able to extend the life of your rewards by making a small redemption or purchase to keep them active. “Earning as little as one point could be enough to keep your rewards balance safe.”
Easy hack: “Set up calendar alerts to make sure you don’t lose out on your hard-earned rewards,” says Frankel.
4. You buy points or miles when you don’t need to.
Certain cards allow you to buy miles or points to get to your next redemption faster. With the Alaska Airlines Visa Signature card, for instance, you can buy miles at a discount through Alaska Air’s Mileage Plan.
But, says Duren, buying points or miles rarely benefits you, even when they’re on sale.
The exception may be if you’re 2,000 points away from having enough points to book a flight or hotel stay and you need a little extra push to get there.
But remember, paying more for your miles out of pocket than you would if you earned them by spending on purchases doesn’t make good financial sense.
Pro tip: Look for deals on miles or points with your frequent flyer program, such as bonus rewards when you purchase miles directly through the airline.
5. Your card doesn’t partner with your favorite hotels or airlines.
Picking a card that doesn’t partner with brands you prefer sets up you for rewards failure early on, says Duren. That includes not understanding where a brand’s best value is for flights or hotels and being unfamiliar with the rules and limits on redemptions.
“My wife and I are Hyatt loyalists, so we know all the ins and outs of upgrades, tier benefits and Chase points transfers,” says Duren. “If we switched to Marriott, we’d have no idea what we were doing.”
It pays to be extra careful when choosing a card that’s co-branded to a specific airline. An airline may offer generous rewards when booking flights, but if it has limited flight routes, those rewards may not take you very far.
6. You pay for travel perks you don’t use.
Free checked bags and companion tickets are sweet incentives to sign up for a travel credit card. The problem is, these freebies aren’t really free if the card has a high annual fee.
Duren says balancing the value of travel extras against what you’re paying for an annual fee comes down to how frequently you travel. “If you regularly fly for business, something like free TSA Precheck is a great perk.” If you only fly once or twice a year? Not so much.
Video: How your points can pay for memorable experiences
The cards that offer statement credits for TSA PreCheck or Global Entry fees also tend to offer other top-shelf benefits, such as free lounge access and annual statement credits for travel-related incidentals. Not surprisingly, they’re also the cards with some of the highest annual fees.
Not sure if that’s reasonable for your budget? “Before you commit to paying a hefty annual fee, take a hard look at your lifestyle to judge if the benefits are worth it,” says Smith.
7. You’re using a travel card with a foreign transaction fee.
Foreign transaction fees can be the bane of an international traveler’s existence. Cards that charge this fee tack on a 1 to 3 percent surcharge on anything you spend outside the U.S. – as well as online purchases made from the U.S. on foreign websites.
The Capital One VentureOne Rewards credit card is one foreign transaction fee-free option; the Chase Sapphire Preferred card is another.
8. You choose the wrong booking option.
Book through the airline or book through your card’s travel portal? It’s a tough question and one you can’t afford to get wrong.
Booking directly through the airline may be easier than using your card’s travel portal as a middleman. And, it might offer better flight options with fewer restrictions.
On the other hand, if your card offers a bonus when you book through the portal, booking with the airline would mean missing out on those extra miles or points.
Duren says to carefully consider pricing before you book through your card’s travel portal. If the pricing for flights or rooms is higher through the portal versus booking directly with the airline or hotel, that shrinks the value you get from earning a rewards bonus.
9. You don’t pay attention to rewards categories.
Some travel credit cards keep things simple by letting you earn one flat rewards rate on everything you spend. Others mix things up with different rewards categories.
The Premier Rewards Gold Card from American Express is a great example. This card offers 3x points for flights booked directly at the airlines and 2x points at U.S. restaurants, U.S. gas stations and U.S. supermarkets. All other purchases earn 1 point per dollar.
Seems simple enough, but can you go wrong if you book flights through travel sites such as Kayak or Orbitz? A flight’s a flight, right?
Video: 5 credit card questions to ask before traveling overseas
Pro tip: If you struggle to keep track of where you can earn the most rewards, stick with a travel card that pays the same generous rewards rate on everything you spend, such as the Capital One Venture Rewards card.
10. You’re a sucker for a big introductory rewards bonus.
Getting a big introductory sign-up bonus with a new travel credit card feels like hitting the jackpot, but chasing after those bonuses can be dangerous.
Duren says introductory bonuses make you focus on the short-term payoff, rather than thinking about the card from a long-term perspective. In the process, you overlook a critical part of the equation: the minimum spending requirement.
“If you’re choosing a new card based on the sign-up bonus, ask yourself if meeting the minimum spending requirement is worth it,” says Frankel.
If you have to spend $3,000, $4,000 or $5,000 to nab the bonus, how likely are you to pay it off in full right away? The more interest you pay because you’re carrying a balance, the more value is siphoned away from the rewards bonus.
Be smart and look at things objectively as you compare bonus offers, says Bakke. “Get out the calculator and see what makes the best sense.”
- How to buy a car with your credit card – Buying a car is one of your most expensive purchases, so if you can put that price on your credit card you can score a heap of points ...
- Planning a trip of a lifetime? Your 18-month card rewards game plan – If you’ve never taken advantage of travel rewards before, you’ll need to give yourself ample time to make your first rewards-funded trip a reality ...
- Guide to sharing credit card rewards with authorized users – Earning rewards as an authorized user doesn't mean you're automatically entitled to use them – but you could negotiate a plan with the primary cardholder ...