Before signing up for a travel rewards credit card, make sure to assess whether you:
- Travel frequently. If you don’t consistently spend on airfare, hotels or other travel expenses, consider a cash back credit card instead. These cards have easy redemption options, and some of them don’t even have annual fees.
- Have a good credit score. You have the best chances of being approved for a travel credit card if you have a FICO score of at least 670, which is at the bottom of the good FICO score range. The higher your score, the better your chances to get approved for the elite travel cards.
- Pay off your balance each month. Because travel credit cards have higher-than-average APRs, you should only get a travel card if you can pay off your balance each month.
To find a travel card that meets your needs, evaluate each card using the following criteria:
- Pick the right rewards program for you.
- Calculate earning potential.
- Factor in sign-up bonuses.
- Calculate redemption value.
- Subtract annual fees.
- Understand travel benefits.
- Avoid foreign transaction fees.
1. Pick the right rewards program for you.
Your travel credit card will work either in conjunction with the loyalty program of an airline or hotel chain or with the issuer’s rewards program. Each program has unique terms and conditions for earning, redeeming and transferring points.
Loyalty airline programs
For some travelers, loyalty to any particular airline lasts only as long as that airline offers the cheapest flights. But frequent flyers might be willing to forgo initial cost savings in exchange for benefits later. Which airline program works best for you depends on how frequently you fly with the airline and how much value you can get from your rewards.
Popular airline programs:
Loyalty hotel programs
As with airline cards, choosing a credit card from a hotel group you regularly patronize is likely to offer the best value for earning and redeeming rewards.
Popular hotel rewards programs:
General travel rewards programs
Using a general travel credit card earns rewards that can be redeemed for a statement credit or through the issuer’s travel portal, or transferred to partners. Many of these programs also have redemption options for gift cards, experiences and more.
Which is the right choice?
If you’re loyal to a particular travel brand and want to earn rewards and take advantage of benefits with the brand, an airline or hotel card is the way to go.
But if you travel infrequently or with many different brands, or simply want more flexibility, a general travel card may be a better choice.
2. Calculate earning potential.
Travel cards earn rewards at different rates for spending in different categories, so you have to analyze your spending habits to determine which card will help you maximize your rewards value. A good travel card will have a range of purchases that qualify as travel spending, which may include flights, hotels and car rentals.
Depending on the type of card, these purchases can earn two points per dollar or more. Other purchases may earn one point per dollar or more.
3. Factor in sign-up bonuses.
The most lucrative travel cards offer consumers bonus points for meeting a spending threshold within a few months of opening an account. These bonuses can be worth hundreds of dollars.
4. Calculate redemption value.
Every travel card has a rate at which points or miles are awarded. However, what those points are worth to you depends on redemption value as well as your preferences and priorities.
For general travel cards, point valuation may be as simple as the number of points multiplied by the redemption rate, often a rate of 1 cent per point.
Awards travel with airlines or hotels is more complicated. The number of points or miles needed to book a flight or hotel room may fluctuate from card to card.
But airlines and hotels frequently adjust the price of award travel based on award level, award availability, time, destination, fare or hotel class, demand, and other factors. And rewards values aren’t consistent across all programs: You might be able to redeem a point or mile for a value of 3 cents with one program or less than 1 cent with another.
5. Subtract annual fees.
The average annual fee for travel credit cards is about $139, according to U.S. News research. Credit card companies sometimes entice new users by waiving the annual fee for the first year.
Once the fee kicks in, be sure you’re earning enough rewards or enjoying the other card benefits to compensate for it. Also, about a third of travel cards don’t carry an annual fee.
6. Understand travel benefits.
Travel benefits can be practical tools, discounted pricing or luxe perks. Common benefits include no foreign transaction fees, access to 24/7 concierge or customer service assistance, a free checked bag – and sometimes a free checked bag for a travel companion – and travel insurance.
The Chase Sapphire Preferred Card, for example, comes with trip cancellation and interruption insurance, auto rental collision damage waiver, baggage delay insurance, trip delay reimbursement, 24/7 customer service and more.
7. Avoid foreign transaction fees.
Many travel cards don’t charge a foreign transaction fee, which is typically 3% on every purchase in a foreign currency or country. Because these fees can be greater than any rewards you earn, frequent international travelers will want to make this card feature a top priority.