Travel is one of the most popular rewards, but there are so many different kinds of travel credit cards to choose from. Here’s how to find the right one for you.
Few offers are as enticing as the prospect of an award vacation. No wonder travel credit cards are so popular. Demand for travel cards is so high card issuers offer dozens of different options. It’s easy to get confused when trying to choose. Here’s what you need to know.
What to consider when choosing travel rewards credit cards
Even if you’re new to travel rewards cards, you probably know their biggest lure is the ability to earn points or miles that can be redeemed for travel reservations. Travel rewards are offered as new account bonuses, rewards for spending and various other promotions and special offers presented to cardholders.
But beyond the chance to earn points and miles, travel rewards credit cards also offer a range of valuable benefits. These benefits can include travel insurance, waived fees and even access to airport lounges. Cards co-branded with airline or hotel loyalty programs can also offer credit toward elite status, which allows you to earn even more travel perks.
Decide between a co-branded card and a general travel card
When choosing a travel rewards card, you’re looking at two basic types. While there are many categories and subcategories, all travel cards are either general travel rewards cards or cards co-branded with a travel company such as an airline, hotel chain, online travel agency or cruise line.
Co-branded and general travel cards function differently – and often work in complementary ways. That’s why many frequent travelers opt for one (or more) of each.
Co-branded travel credit cards
Some of the first travel rewards credit cards were airline cards, known as frequent flyer miles cards. Airline credit cards are co-branded with an airline and offer both travel rewards and benefits when flying with that carrier. Standard rewards earned on airline cards can be two “miles” (rewards points) per dollar spent with the airline and in other bonus categories, and one mile per dollar spent elsewhere. Airline cards also offer perks such as priority boarding, discounts on in-flight food and beverages and a free checked bag.
Hotel credit cards work similarly: They’re co-branded with a hotel chain and are designed to reward purchases with that chain. Some hotel cards offer enticing perks and bonuses, letting you earn points toward free night stays and benefits like room upgrades, late checkouts and even free breakfast. But hotel cards differ from airline cards in that there’s no standard reward structure – 10,000 points means one thing at one chain, another at the next – so it’s trickier to compare them.
Co-branded cards sometimes offer generous sign-up bonuses. For example, the Marriott Bonvoy Boundless® Credit Card offers the chance to earn 3 Free Nights (each night valued up to 50,000 points) after spending $3,000 on purchases in your first three months. A typical airline credit card will offer new applicants a welcome bonus that can be redeemed for two or more round-trip, domestic flights in economy class.
When you’re able to redeem your airline miles for expensive awards in business or first class, you can get far more value than the typical 1 cent per mile you’d get from booking travel directly through the card issuer. The same is true when you redeem hotel points for expensive reservations during peak travel periods.
General travel credit cards
Travel rewards credit cards that aren’t co-branded with a travel provider can be considered general travel rewards cards. These cards offer points or miles in a program created by the card issuer. Credit card users who earn these rewards redeem them directly with the card issuer for travel reservations. For example, the Bank of America® Travel Rewards credit card offers points that are worth 1 cent each as statement credits toward travel purchases.
Other card issuers offer incentives if you redeem rewards for reservations booked through their travel agency. Citi offers several credit cards that earn rewards in its ThankYou points program, for instance. You can redeem them for travel reservations through Citi’s travel agency or transfer them as frequent flyer miles to use with its airline partners.
The American Express Membership Rewards program and the Chase Ultimate Rewards program work similarly, each offering its own list of travel partners. With the Capital One Venture Rewards Credit Card, you earn miles that can either be redeemed for travel statement credits or transferred to airline and hotel partners.
Flexibility is the key advantage of general travel rewards. With these cards, you can typically redeem your rewards for travel on the vast majority, if not all, airlines and hotels. This makes redeeming your rewards simple, and when traveling there are few trade-offs compared to booking your rewards with cash.
Other factors to choose the right card for you
When you’re choosing a travel rewards card – either a general travel card or a co-branded card – there are several things you should evaluate.
New account bonuses
Credit card issuers try to attract new customers by offering sign-up bonuses. You should expect to earn a valuable bonus, but most cards will require you to earn it by spending a certain amount within a specified time period.
Ongoing travel rewards
While you might earn a generous, one-time sign-up bonus, the card should always earn travel rewards for your spending. The best card for you should reward points or miles for the specific purchases you make – such as travel, dining, gas and groceries.
Foreign transaction fees
Many credit cards impose a foreign transaction fee of 3% on all charges processed outside of the U.S. But with a travel rewards card, you won’t want to pay that fee, which is usually worth more than any rewards you earn. Thankfully, most travel rewards cards no longer impose this fee. But if you travel internationally, double-check the card’s terms and conditions.
Travel redemption value
Rewards points and miles offered by different credit cards vary wildly in value. For example, one hotel program may require 50,000 points for a free night stay in a mid-priced property, while another might only charge 12,000 points for a night in a similar property in the same neighborhood. The best way to weigh the value of the rewards a card would earn is to look at a travel reservation you might redeem your points or miles for. How many points or miles would you need to cover it?
Is the annual fee worth it to you? While there are a few no-fee travel rewards credit cards, most come with an annual fee. And the cream of the crop can have very high annual fees. This isn’t necessarily a negative unless you aren’t taking advantage of their benefits enough to cover them. The more you travel and the more you use your card, the more likely the rewards and benefits you earn will be worth the fee. When considering paying an annual fee, look closely at the value of benefits such as waived checked bag fees and statement credits toward travel purchases.
There’s a whole world of travel rewards credit cards out there designed for nearly every kind of use. You might choose an airline or hotel travel card for rewards and benefits at a specific company, or a general travel rewards card for award travel with multiple airlines or hotels, at the expense of some perks. But either way, choosing the right travel credit card will allow you to earn the rewards and benefits that matter the most to you.