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10 common travel credit card mistakes you need to avoid

Make the most of your travel awards by using your card to its full potential

Summary

Redeeming points for cash back or letting your miles expire are two of 10 common mistakes you should avoid.

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A travel credit card can be the ticket to big savings on flights, hotels, rental cars and other travel expenses. And with the pandemic finally getting under control, people are getting ready to travel again, according to an April 2021 travel rewards survey from U.S. News & World Report.

But how do you know if you’re using your travel card to its full potential?

For example, are you taking advantage of card features and benefits such as priority boarding, airport lounge access or free checked bags when flying? A 2021 Bankrate survey found that 31% of credit card users – that’s nearly one in three – didn’t redeem any rewards in 2020.

Avoiding missteps like these is key for wringing the most mileage possible out of travel credit cards.

Here are 10 other common travel card mistakes to steer clear of as you navigate your way to maximum savings:

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,” said J.R. Duren, personal finance expert at Highya.

Duren pointed to 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 said. But redeeming for travel through Chase Ultimate Rewards earns you a 25% 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 said 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, said Natasha-Rachel Smith, a personal finance expert at TopCashback.

Know how much value you’re getting upfront 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,” Smith said.

“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.”

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, credit card and personal finance writer, said you should know the rules for rewards expiration inside and out.

Smith said 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,” Frankel said.

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® credit card*, for instance, you can buy miles at a discount through Alaska Air’s Mileage Plan.

But, Duren said, 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.

“Rule of thumb when acquiring miles and points is, if it’s not free or cheap, then it’s not worth it,” Smith said.

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, Duren said.

And 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,” Duren said. “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.

Bottom line: You have to know how a card fits your specific situation, Duren pointed out.

“Rule of thumb when acquiring miles and points is, if it’s not free or cheap, then it’s not worth it.”

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 said 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.

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.

For instance, if you sign up for The Platinum Card® from American Express or the Chase Sapphire Reserve card, you’ll pay an annual fee of $550.

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,” Smith suggested.

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%-3% surcharge on anything you buy outside the U.S. – as well as for online purchases made from the U.S. on foreign websites.

That’s money wasted unnecessarily. “Any good travel card will forgo foreign transaction fees,” Frankel said.

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 said 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.

“This is a hidden cost that most people don’t talk about but should be talked about,” Duren said.

“Any good travel card will forgo foreign transaction fees.”

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 American Express® Gold Card is a great example. This card offers 3X points for flights booked directly with airlines or at AmexTravel.com and 4X points at U.S. supermarkets (on up to $25,000 in spending per calendar year, then it’s 1 point per dollar) and restaurants. 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?

Not exactly. In that scenario, you’d only earn 1 point per dollar on your booking.

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 Credit 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 said 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,” Frankel cautioned.

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, Bakke said. “Get out the calculator and see what makes the best sense.”

See related: When should I redeem my credit card rewards?

All information about theAlaska Airlines Visa Signature credit card and the Chase Sapphire Preferred Card has been collected independently by CreditCards.com and has not been reviewed or approved by the issuer.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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