Compare credit cards for travel

Lee Huffman

BaldThoughts.com

Budget Travel Blog

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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 book approximately one year in advance of travel, I recommend applying for rewards cards approximately 18-24 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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What is a travel credit card?

A travel credit card offers higher rewards for travel purchases — typically points or miles, but sometimes cash back. It usually comes with no foreign transaction fees and travel benefits.

Points or miles can typically be redeemed for rewards such as hotel stays, airfare, car rentals and statement credit.

Travel cards offer a variety of perks, and you get what you pay for: No-annual-fee cards tend to offer fewer high-class benefits than annual-fee products.

A few travel benefits you might find with a travel card are …

• Airport lounge access.
• Fee credit for your Global Entry or TSA PreCheck application.
• Travel credits that cover your expenses for eligible purchases.
• Airline perks like priority boarding and complimentary checked baggage.
• Hotel perks like spending credits and room upgrades.
• Hotel or airline loyalty program status upgrades. Many credit cards offer upgrades to silver or gold status.
• Travel coverage: trip cancellation insurance, auto rental collision damage waiver, lost luggage reimbursement and more.
• Travel concierge service.

Cash back, points or miles: What type of rewards card is best for me?

Gold Delta SkyMiles® Credit Card from American Express vs Southwest Rapid Rewards® Premier Credit Card

How to choose a travel credit card

1. Think about whether you want to pay an annual fee.
   This is an easy starting point when choosing between travel cards. Annual-fee cards tend to have better signup bonuses and more features — but you might not like paying for them. An annual fee doesn’t have to be a dealbreaker, but it can help you narrow your options.
2. Consider where you spend the most money.
   Round up your expenses and see which categories you spend the most money in. Common categories include travel, dining, groceries and gas. If you find yourself spending heavily in certain categories, look for cards that offer elevated rewards for those categories. For more evenly distributed buying, you might get more out of a flat-rate rewards card.
3. Consider which travel perks you want.
   You’ll usually find the most perks with hotel and airline cards, as well as premium cards with high annual fees. Consider which benefits you can and can’t live without — this will help you narrow your choices further.

By following these steps, you should have a much better idea of what type of travel card you’re looking for.

Compare travel credit cards with no annual fee

Still deciding? Here are additional factors to compare

• Airline or hotel loyalty.
  If you spend heavily with a certain airline or hotel chain, consider a cobranded card. Otherwise, pick a flexible-rewards card so you can earn rewards regardless of which airline or hotel you spend with. There are even cobranded credit cards for cruise lines if you like to take to the seas.
• Signup bonus.
  Many travel cards offer a signup bonus to new cardholders who spend a certain amount on purchases within the first few months. An airline-card bonus may offer enough rewards for a flight. Hotel-card bonuses can potentially give you reward nights.
• Foreign transaction fees.
  Many credit cards charge a fee when you make purchases in currency other than US dollars — typically 3% of the transaction. These fees apply whether you’re traveling overseas or just using an online store based outside the US. To avoid them, look for a credit card with 0% foreign transaction fees.

How to maximize your travel rewards

Once you’ve been approved for the travel card of your choice, use these tips to maximize your rewards.

1. Earn the signup bonus.
   If you want more rewards, consider a card that offers a signup bonus. Then, tailor your spending so you earn the bonus. That may mean using the card for everything you possibly can during the bonus qualifying period.
2. Maximize your reward earnings.

   • Maximize your spending in elevated-rewards categories.

     If your travel card pays more rewards on certain types of purchases, use it for those purchases as much as possible. For example, if your card pays double points on restaurant purchases, use it every time you dine out. For categories that your card doesn’t offer elevated rewards for, consider using a flat-rate rewards card.

   • Check if you have to book directly with airlines and hotels to receive elevated rewards.

     You may like booking travel through websites like Expedia or Orbitz. However, some travel cards don’t offer elevated rewards for spending on these sites. Check your card’s terms to be sure, or get a credit card offered by your favorite booking site, like the Expedia® Rewards CARD from Citi or the Orbitz Rewards® Visa Card.

   • Reach elite status in your airline or hotel loyalty program.

     As you earn more miles for your airline’s frequent flyer program or points with your hotel’s loyalty program, you’ll get closer to higher elite status. With many programs, customers in higher status tiers earn mileage or point bonuses.
3. Get the highest value for your rewards.
   The credit card industry generally values a point or mile at one cent apiece, but your rewards might be worth more or less depending on what you redeem them for. To see whether you’re getting a good deal on reward redemptions, do some quick math in your card’s rewards center. Divide the value of the redemption by how many points or miles you must spend. For example:

• If you want a $25 gift card and it costs 2,500 points to get it, your points are worth $25/2,500 = 1 cent each.
• But if the same gift card costs 3,000 points, your points are worth $25/3,000 = 0.8 cents each.

The higher redemption rate you can get on your rewards, the better.

Who should use a travel credit card?

While earning travel rewards appeals to those with a bit of wanderlust, a travel credit card isn’t for everyone. Consider a travel product if:

• You have good to excellent credit.
  Credit card issuers give the best cards those with a history of paying their bills on time and managing debt responsibly. If you don’t have a great credit score, work on improving your credit before you apply for a travel card.
• You pay your balance in full each month.
  As with any rewards product, paying your balance in full is the best way to get the full benefit of your travel card. This is especially the case if the card has an annual fee. Carrying a balance means accruing interest that can offset your rewards.
• You frequent one airline or hotel chain.
  Airline and hotel cards can heavily reward you if you’re a loyal customer. Hotel cards in particular usually offer much better rewards than you’d earn with general travel cards.
• You have the patience to get the most value out of your rewards.
  With travel cards, you won’t know the true value of your points or miles until you redeem them. To get maximum value from them, you’ll need to crunch the numbers yourself or do some research into reward values.

Are travel credit cards worth it?

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 products, and you’ll likely find a card that’s perfect for you.

Frequently asked questions

• Will I earn rewards for a balance transfer to my travel card?

  No. You’ll only earn rewards for eligible purchases.

• Do all travel credit cards have annual fees?

  No. You’ll find a significant number of no-annual-fee travel cards. For the best rewards and benefits, however, you’ll need to pay an annual fee — typically $95 and up.

• Will my travel rewards expire?

  For flexible-currency cards, your rewards generally don’t expire. Rewards are more likely to expire for hotel and airline cards.