Travel credit cards

How do travel credit cards work?

A travel credit card offers rewards for travel purchases — typically in the form of points or miles. Redeem these points or miles for specific travel goods or services, including hotel stays, flights or other travel expenses.

Travel cards also offer a variety of travel perks, such as airport lounge access or travel credits. And you tend to get what you pay for: No-annual-fee cards usually offer fewer high-class benefits than annual-fee products.

• Compare and apply for a card. Find a card that best suits your travel and flight preferences. Once you choose a card, you can apply for any standard credit card.
• Earn miles. Now that you have a card, use it to make purchases that best help you earn miles toward your account. For a cobranded card, this typically includes purchases through the travel company.
• Redeem miles. With enough miles in your account, you’re ready to cash in on a travel reward. Book a flight, hotel stay or other reward through your credit card online account.

3 types of travel credit cards

While “travel credit card” is a catch-all term for any kind of credit card that earns rewards on travel, there are generally three major types of travel cards. Here’s a quick breakdown of how they differ and who should get each type of card.

1. Airline credit cards for frequent flyers

An airline credit card typically earns additional miles on purchases for a specific airline rewards program. Depending on the card and annual fee, you can also expect airline-specific perks as well, including priority boarding or free checked bags.

Get an airline credit card if you:

• Have a preferred airline.
• Like the card’s perks.
• Only plan on redeeming your card rewards back into travel with that airline.

2. Hotel credit cards for those dedicated to a particular hotel brand

A hotel credit card typically earns additional points on purchases for a dedicated hotel rewards program. Like an airline card, it also offers additional hotel-related perks depending on the card, such as anniversary points, free fourth nights or early check-in and late checkout.

Get a hotel credit card if you:

• Have a preferred hotel brand you enjoy.
• Plan on mostly redeeming your credit card rewards on hotel stays.
• Want the card’s additional hotel perks.

3. General travel cards for travel perks and more

General travel cards aren’t tied to a specific airline or hotel. Instead, they may earn points on any type of travel purchase. You can redeem the points you earn on any redemption option offered through the card, though your points might be worth more when redeemed on travel. These cards usually earn fewer points compared to a hotel or airline card but make up for that in earning and redeeming flexibility. General travel cards are also more likely to come with more general travel perks, such as airline lounge access or travel insurance.

Get a general travel card if you:

• Tend to travel with a variety of airlines and hotels.
• Don’t always want to redeem on travel.
• Enjoy more general travel perks.

5 ways to narrow down your travel card options

You want to look at the nitty-gritty features of two or more credit cards when comparing which one best fits your needs. Here are a few perks you can compare and what you can look for.

1. Annual fee. Generally speaking, the more you pay for a travel card each year, the more features or benefits it offers. But to make that annual fee worth it, you need to make sure the included benefits are something you will use.
2. Earning rates and reward program value. The more points you earn per dollar spent, the better. But reward programs can value those points differently, so you’ll want to research each card’s rewards program closely before you make your decision.
3. Travel credits. Does one of the two cards come with a larger travel credit than the other? Is one card’s travel credits easier to use? Or does it have fewer restrictions?
4. Travel insurance. Travel card travel insurance coverage tends to vary wildly from one card to the next. See which of the cards you’re comparing offers wider coverage or covers a larger amount.
5. Companion passes. An airline companion pass allows you to bring a partner with you on a scheduled flight for little to no cost. These are insanely valuable and can easily sway a decision between two cards.

Travel credit cards pros and cons

How do travel credit cards with no foreign transaction fees work?

These credit cards let you avoid extra charges when you make purchases in a country outside of the US. They also typically offer points or miles, as well as bonus rewards in select categories.

In comparison, most travel credit cards charge foreign transaction fees of around 3% of each purchase made overseas or online at an international store. While you’ll still earn rewards, foreign transaction fees can eat into their value.

Travel credit cards with no foreign transaction fees: Common mistakes

Watch out for these pitfalls so you make the most of your credit card:

• Withdrawing cash. Even if a card offers no foreign transaction fees, you’ll still pay cash advance fees when you withdraw money. Each transaction will accrue interest at the cash advance APR, which is typically higher than the purchase APR.
• Forgetting to factor in currency conversion. Typically, transactions you make in a foreign currency are converted to US dollars at the applicable currency exchange rate. This could mean you won’t know exactly how much a transaction costs in US dollars before it shows up on your account. Make sure you consider this to avoid exceeding your credit limit.
• Not paying off your balance in full. If you carry a balance on your credit card beyond your grace period, you’ll accrue interest on your purchases.

It’s a good time to open a travel credit card

After COVID hit in 2020, most of us withheld from traveling for most of the year. But once vaccines became more widespread and the pandemic was contained a bit more in 2021, 2022 is looking like a better for travel credit cards.

Airlines, in particular, are eager for cardholders to get back to the skies, and many travel cards are sporting big incentives for new cardholders to do just that. These include big new signup bonuses to get you in the air even faster or additional reward categories to help you build even more miles.

Depending on the airline, you may even find the costs of award flights lower than average as well. It’s tough to say if this bigger value will continue beyond 2022, so now is a perfect time to pick up a travel card if you’ve been on the fence.

Alex Miller, founder and CEO of UpgradedPoints.com agrees. “Right now, travel credit card bonuses are at quite a high, in an attempt to woo travelers back into the industry and to fly with a particular airline or stay with a particular hotel brand,” says Miller. “The travel industry is recovering quickly, and while COVID still lingers, most schools of thought currently don’t see a need for further lockdowns, so travel is likely to pick up and continue on an upward trajectory, making for increased usefulness for travel credit cards.”

Jeffrey Zhou, CEO of Fig Loans, tells Finder that right now is the perfect time to get a travel credit card. “Credit card rewards take a while to accrue, and it is reasonable to assume that by the time you will have saved up the required points to take a trip, there will be plenty of places to travel without having to worry about the pandemic.”

Compare credit cards by credit score and card type

Compare travel credit cards for fair credit

The best airline and travel credit cards for bad credit

Best Airline Credit Cards of 2022

Best hotel credit cards of 2022

Common perks of travel credit cards

Going on a trip? See guides on using a credit card abroad.

What is lost luggage reimbursement?

Lost luggage reimbursement compensates you if your baggage and its contents are lost, stolen or damaged permanently.

It’s different from baggage delay reimbursement, which compensates you for essential purchases while a carrier has temporarily lost your luggage.

What expenses does lost luggage reimbursement cover?

This insurance covers your checked and carry-on baggage, as well as the personal property within.

Here are common items lost luggage reimbursement might compensate you for. Expense eligibility may vary by provider. If you’re not sure, check your card’s guide to benefits or call your provider.

Which cards offer lost luggage reimbursement?

Many credit cards offer lost luggage reimbursement. The following are a few popular travel products with the benefit.

Ask the experts

• Dorothy Harpool
• Director of Student and Community Initiatives and Senior Marketing Lecture
• Wichita State University

When are travel rewards cards worth it?
Travel reward cards are worth it for a small percentage of consumers who prioritize travel when making financial decisions. The problem with a pure travel reward card is its single payout.

The outcome of using the card will only allow the cardholder to receive travel-related products such as flights and hotels. If a consumer does not prioritize travel due to whatever reason, that consumer receives no return on the use of the card.

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• Lexi Hutto
• Associate Professor of Marketing
• Millersville University of Pennsylvania

How much are miles generally worth?
While the value of each mile ranges from just over a penny to as much as 10 or 15 cents, there is a lot of variation in the value when you redeem miles. Most airlines restrict how many seats can be redeemed with rewards miles, have black-out dates, and charge more miles for more desirable dates and destinations.

You may need to plan with a long lead time to visit your preferred destination—or pay with more miles and/or fees. It’s not uncommon to book 11 months in advance for a desirable port of call, such as Athens, Greece, in the summertime if you want to pay with fewer air miles.

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• Eliot Buchanan
• Co-Founder and CEO
• Plastiq.com

When is it worth it to pay an annual fee on a travel card?
Paying an annual fee on a travel card is worth it only if you can reasonably make back the fee through its benefits and rewards or if it provides desirable optionality for redemption. Statement credits, discounts at retailers, and other card benefits can get you back to par. But the most important consideration is whether the card affords you the option to redeem for rewards that you can use.

Before applying, count how many ways you can redeem your miles or points with the airline or the credit card issuer itself. And pay attention to the quantity and quality of travel partners that are a part of the redemption network.

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• Lee Huffman
• Budget Travel Blog
• BaldThoughts.com

Generally, how early do you have to open a travel credit card if you’re planning on using the welcome bonus to book a vacation?
Because most airlines and hotels allow you to book approximately one year in advance of travel, I recommend applying for rewards cards approximately 18 to 24 months ahead of your vacation. This will give you enough time to receive the card, receive the bonus, and earn additional rewards through daily purchases.

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• Richard McGrath
• Professor of Economics
• Georgia Southern University

Should I pay off one credit card or reduce the balances on all debt?
Make minimum payments for cards with lower interest rates and pay as much as possible against the card with the highest interest rate until that balance is gone. Then move on to the card with the next highest interest rate. Put new purchases on a card with a zero balance and pay it off every month, or put purchases on the card with the lowest interest rate and pay down high-interest cards faster.

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• Alexa Fox
• Assistant Professor of Marketing
• The University of Akron

When is a travel rewards card better than a cashback card?

As part of their consideration of various rewards programs, consumers should think about how often they engage in particular activities and the types of products/services they consume regularly. For example, someone who travels frequently may be able to earn more from a travel rewards card than a card that offers cash back on all purchases, even if the travel rewards card does not offer a higher percentage than the cashback card each time it is used.

However, even a frequent traveler should think about factors such as transportation to and from their destination as well as during their stay, accommodations, and other related expenses that are directly related to travel, in addition to how many people they tend to travel with. If many of the typical service providers, vendors, and retailers are not covered by the travel rewards card, a cashback card may make more sense.

Regardless of the options they are choosing among, consumers should be sure to read all details related to benefits, criteria, and rules — including any fine print — before making a final decision.

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• Joseph R. Stasio Jr.
• Associate Professor
• Merrimack College

Do credit card rewards encourage consumers to spend more than they would otherwise?
Research confirms that credit cards encourage greater spending than if cash were used The average household with credit cards has $8,398 of credit card debt. Sometimes this is out of necessity due to illness or emergencies. But more often, it allows individuals to concede rational choice to satisfy the need for instant gratification.

Our economy has $50 trillion of credit versus $3 trillion of cash, so it’s partly a function of our system. It encourages credit card usage. But the choices are still ours to make.

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Finder’s points and miles valuations

If you want a rough idea of how much each travel program’s rewards points are worth, check out our points and miles valuations. These are a rough average of the value of each program’s points. Naturally, you may find more or less value depending on how you redeem them.

Bottom line

If you consider yourself a jet-setter, you could get a lot from a travel card. There are a variety of options for whatever you’re looking for.

Before you start your search, consider whether you want to pay an annual fee, what you typically spend on and which travel benefits you’re looking for. Take your time to compare different credit cards, and you’ll likely find a card that’s perfect for you.