WIth a travel rewards card, you can be rewarded for your spending and earn points toward your travels. As well as points, some travel rewards credit cards also offer travel perks, including complimentary insurance, airport lounge access and flight vouchers. Find out how travel rewards credit cards work, the pros and cons, as well as factors you should compare when considering which travel credit card may be right for you.
American Express Cobalt Card
American Express Cobalt Card
Purchase interest rate
Eligibility criteria, terms and conditions, fees and charges apply
American Express Cobalt Card
Apply today and earn up to 5 points for every dollar you spend
Purchase interest rate: 19.99%
Cash advance rate: 22.99%
Annual fee: $120
Credit rating: Fair, Good, Excellent
Minimum age: Age of majority in province/territory of residence
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Travel rewards credit cards give you a way to earn points on your everyday spending by offering a set number of points for every dollar spent (such as 1 point for $1 spent or 1 point for $2 spent) on eligible purchases. This means the more you spend, the more points you can rack up. There are different ways to earn and redeem reward points depending on the type of credit card you choose and the rewards offered by the provider.
Some travel rewards credit cards send points directly to your account and other rewards credit cards allow you to transfer points to a variety of other eligible travel reward accounts. Your card may also have tiered earn rates – different earn rates depending on the type of purchase – and points caps that reduce or limit points earnings after you spend a certain amount each statement period. As your points are debited to your account, you can redeem them for a variety of rewards including flights, upgrades, accommodation and plenty of other perks.
When you’re chosing a travel rewards credit card, there are two different options to consider:
1. Direct earn cards. These credit cards partner with a single airline rewards program and earn points that are credited directly to your linked travel rewards account. Direct earn cards generally have a better earn rate than other options, so you could potentially get more rewards for your spending if you’re loyal to one travel rewards program.
2. Indirect earn cards. These reward credit cards earn points that can be transferred to a wide range of travel rewards programs. Unlike direct earn travel rewards credit cards, the value of the points you earn on these types of cards may differ when transferred to a travel rewards account.
How to compare travel rewards credit cards
With a large variety of travel rewards credit cards in Canada, you have plenty of options to discover a card that suits your travel goals and financial circumstances. You should compare the following key factors when choosing the best travel rewards credit card for you:
The travel rewards program. Choosing a credit card that earns points for a specific travel program you already use will help you maximize your rewards. For example, if you exclusively fly with WestJet, you wouldn’t get as much value from a card that offered British Airways points. If you don’t belong to a program yet, think about which airline(s) you travel with the most and look at their loyalty program options.
Points earning rate. Check the standard rate of points you’ll earn for each dollar spent on the card. Be aware that a different earn rate could apply for certain types of spending, such as overseas purchases. There are usually some transactions that won’t earn points – such as cash advances and gambling transactions – and there may be a limit to the points you can earn each month or year, so make sure you check restrictions for the cards you’re comparing.
Reward values. Consider the types of rewards you want to claim, the number of points you’ll need and how much you’d have to spend to redeem your preferred reward. Check how these values measure up between programs, so you can apply for the card that offers the greatest value based on your spending and reward goals.
Annual fee. Ideally, the card’s annual fee should cost less than the rewards and any complimentary extras that you intend to use. If you don’t reap these rewards, it may not be worth paying a high annual fee for the card.
Promotional rates and features. Travel rewards credit cards sometimes have promotions for new customers, such as bonus points, 0% purchase rates or no annual fee for the first year. These benefits can add value to the card that you choose, but make sure you read the terms and conditions and confirm the length of the introductory period so that these offers work for you.
Complimentary extras. Travel rewards credit cards often come with a selection of complimentary extras such as international travel insurance, extended warranties, concierge services and airline lounge access. The value of these perks can be used to offset the cost of the annual fee of the credit card, as long as you know you will actually use them.
Is a travel rewards card right for me?
If you’re interested in getting a travel rewards credit card, weigh up these pros and cons to decide if it will be worth it for you:
Redeem flights and travel upgrades faster. If you’re earning points every time you spend with your credit card, you can maximize the number of points you’re earning and reach your reward goals faster. Points can likely be used toward both domestic and international flights, as well as perks like business class upgrades, seat upgrades, dining upgrades and airport lounge access.
Sign-up bonus points. Some credit cards offer introductory bonus points as an incentive for new customers to sign up. Depending on the card, you could earn up to 100,000 bonus points (or more) when you meet the spend requirement. Not only will this give your points balance a boost, but it’s also another way you can redeem rewards more quickly.
Large range of rewards. You can use the points you earn to redeem rewards including flights with your preferred airline and its partners, hotels, online shopping and more.
Travel perks. Designed to suit frequent flyers and travellers, these cards often come with extra features such as flight vouchers, airport lounge passes and 24/7 concierge services.
Complimentary insurance. Many travel rewards credit cards come with complimentary travel insurance, which can help you save on stand-alone insurance costs when you’re travelling.
High interest rates. Travel rewards credit cards often come with less competitive interest rates than other cards and are suited to cardholders who consistently pay off their balance each month and can avoid the high interest charges.
Expensive annual fees. Travel rewards credit cards typically come with higher annual fees than standard credit card options. Make sure that the value of the points you can earn and the extra features of the card outweigh the annual fee.
Temptation to spend. If you struggle to repay your credit card on time each month or you need to consolidate debt, a travel rewards credit card might tempt you to spend for the sake of receiving points. If you are struggling to pay off existing debt, you might want to consider a card designed for balance transfers instead.
Airline and flight restrictions. If you want to use points for flights or upgrades, you will likely be limited to a specific airline or alliance of airlines. There may also be blackout dates or limited availability for reward flights and upgrades.
Offer requirements. Travel rewards credit cards that come with introductory offers or complimentary insurance may have specific spending requirements you need to meet to enjoy these benefits. Make sure that the spend requirement is realistic with your budget and monthly spending.
Once you’ve earned enough points, you can redeem them for a variety of rewards, depending on the provider. Popular rewards you could redeem with your travel rewards program include flights, gift vouchers and hotels. The number of points you need for a reward varies depending on the travel rewards program and the type of reward you choose.
While credit card and airline reward programs all have their own specific steps for redeeming or transferring points, you can use the following steps as a guide for most online reward point redemptions:
Log in to your rewards account
Check your point balance to see how many points you have to use
Select the “Redeem” option
Choose the type of redemption you want to make (e.g. “flights”)
Select the specific option you want (e.g. single flight from Toronto to Montreal)
Follow the prompts to book or secure the reward
Confirm the redemption
Some travel rewards credit cards also give you a “points plus pay” option, which means you can use a combination of points and cash to redeem your reward.
What credit card transactions don’t earn points?
The list of transactions that do and don’t earn points when you use a travel rewards credit card varies between providers and products. The following are some of the most common exclusions:
Cash advance transactions
Purchasing foreign currency
Some monthly bills
Keep in mind that not all cards have the same exclusions, so it’s important to check the terms and conditions or product disclosure statement for full details of what individual travel rewards credit cards do and don’t count as an “eligible transaction”.
How to get bonus points with a travel rewards credit card
Many travel rewards credit cards will offer introductory bonus points in order to get you to sign-up for the card. Some cards will offer 50,000 or even 100,000 bonus points as an introductory bonus, which can sometimes be enough to get you to another continent by only using your points. While this may sound like a great offer, you typically have to spend a certain amount of money within a given time period in order to qualify for the full set of points.
For example, if you read the fine print of the offer, you may discover that you must spend $5,000 in one month in order to qualify for the points. Although you may manage to spend this in one month, you may also discover that only “eligible purchases” qualify for the points. So while everyday purchases like groceries, gas and clothes may count towards the $5,000 total, other purchases like cash advances or payments for certain bills via your credit card may not count.
The details of bonus points offers available on travel rewards credit cards vary, depending on the specific promotion. However, some of the most common requirements include the following:
New customers. Most offers of bonus points apply to people who don’t have existing credit cards with the provider. Some providers also specify that you must not have had an active account with them in the past 12 months to be classified as a “new customer” who is eligible for a bonus points offer.
Promotional period. You usually have to apply for the card by an offer end date in order to be eligible for bonus points.
Spending requirement. If you’re approved for a card with a bonus point offer, you may be required to spend a certain amount on the card within a given period of time. For example, $5,000 of purchases within three months of card approval.
Always be aware of the terms and conditions of a credit card before you commit to a new card.
Frequently asked questions about travel rewards credit cards
If you want to know more about travel rewards credit cards, check out these answers to the most popular questions we’re asked about them – including how to earn and redeem points. If you still have a question, get in touch with us using the “Ask a Question” box below and we will respond to your query.
Some cards come with spend caps, meaning you might be able to only earn a certain number of points per statement period. For example, you may only be able to earn up to 7,500 points per statement period. After you have reached this cap, you’ll either continue to earn points at a reduced earn rate or will be unable to earn points until the next statement period.
Check your credit card’s terms and conditions for details of points caps and consider whether it could impact your points earning potential. For example, if you have a card that earns 1 point per $1 up to 7,500 points per month, you would only be affected by the cap if you spend over $7,500 each month.
In most cases, you can cancel the credit card with no additional fees or charges after receiving your bonus points so long as you have paid off your balance in full. However, you may be charged the annual fee or a percentage of that fee based on how long the account has been active. If your credit card has $0 annual fee for the first year and you cancel within the first 12 months, you may be able to avoid this. Check with your provider to find out if fees will apply.
This is possible with a credit card reward program that allows you to transfer reward points into travel rewards points. Make sure you check the transfer rate for these cards though as you may “lose” points when exchanging them to different travel rewards programs. Alternatively, if you have a direct earn travel rewards card, the associated airline partners and alliances let you use your points to travel with other airline partners.
As a general rule, most travel reward points cannot be redeemed after they have expired. Some will expire after a certain amount of time, whereas others will expire if your rewards account has remained inactive (meaning you haven’t earned or redeemed any points) over a particular period of time. Check with the travel rewards program to confirm when and how your points expire so you can use them while they’re still valid.
A selection of premium credit cards offer access to airport lounges, including most travel rewards credit cards.
Sally McMullen is Finder's credit cards and frequent flyer editor by day and a music maven by night. She's also one half of the Pocket Money podcast. Her byline can be spotted on Yahoo Finance, Dynamic Business, Financy and Mamamia as well as Music Feeds and Rolling Stone. Sally has a first-class Honours degree in Communications and Media Studies (majoring in Journalism and Professional Writing) from the University of Wollongong.
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