How to Shop for Travel, Airline & Hotel Credit Cards
It can be very exhilarating to earn free travel through your credit card rewards. After all, who doesn’t want a credit card that promises to help make all your traveling dreams come true? However, there are many credit cards on the market, and it’s always advisable not to apply for the first offer you get.
Depending on how frequent you travel, a travel reward card can be worth it. A travel credit card’s worthiness will depend on whether you can meet the expense of charging off the amount needed to qualify for the rewards and whether you can repay your monthly balances. With the many travel reward cards on the market, you might be overwhelmed by all the flashy bonuses, loyalty programs, offers, perks, hidden fees, and the hidden rules. To choose the best travel reward cards, compare bonus incentives to decide whether the rewards cards are worth it.
Travel credit cards offer you a great opportunity to earn free points that you can redeem for cash, hotel, or air tickets.
10 Key Features to Shop for in a Travel Credit Card
Before shopping for a credit card, make sure you know what your goals are. What are you looking to accomplish with the travel rewards card? Travel rewards cards are suitable for people who travel frequently. Here are some features to look for in a travel reward card:
A Huge Sign-Up Bonus
Credit card issuers offer sign-up bonuses to lure in new customers. In fact, travel rewards credit cards usually offer some of the best sign-up bonuses in the industry. These sign-up bonuses can jump-start your mileage, getting you closer to a free flight or even hotel stay. Many credit cards will offer bonus points when you sign up. The earning and requirements for sign-up bonuses vary from one credit card company to the other. Always look for a travel reward card that offers a high sign-up bonus.
What You Can Do
To get a huge bonus, you will need to make a purchase or meet the minimum spending limit during a specified period of time. Normally, a regular travel credit card bonus ranges from 25,000 to 50,000 points. However, some can even go as high as 100,000. The higher the annual fee, the higher the bonus should be.
Points Per Dollar
With most reward programs, you can earn points for every dollar you spend. You can also earn bonus miles for spending in a specific category. Point-based rewards usually offer various ways to redeem points. Not all travel reward cards have the best redemption values. However, good travel reward cards should earn well for your usual spending and have value redemption you can actually make use of. Generally, one point equals one cent. However, for some credit card issuers, the value of your points will be determined by your choice of redemption, for instance, cash backs, travel, gift cards, or merchandise.
What You Can Do
Travel reward cards redeem points at a rate of one cent per point. However, some credit card issuers offer better redemption value. The credit card issuer should explain the number of points you can earn when making certain purchases as well as the redemption charges. There are numerous ways that you can use to earn extra points, like getting the right travel reward cards.
Low Spending Minimum
Every travel credit card has a sign-up bonus, which requires you to meet the minimum spending requirement. If you are applying for just one travel credit card, your usual spending will be enough. However, you can sometimes be approved for multiple travel credit cards; in this case, you will be worried about being able to fulfill the thousands of dollars in minimum spending required to get the bonuses.
Travel credit cards that have a huge welcome bonus usually need a huge amount in spending in a specified timeframe to get the bonus. However, don’t just spend money buying things you don’t need in order to get points.
What You Can Do
Carefully make plans to meet the minimum spending requirements on your travel credit card. Always optimize your spending and plan your expenses to increase your rewards. To meet your minimum spending requirements, select some everyday expenses that you can change on your credit card. It is also good to start small with the credit cards to avoid having many travel cards that you cannot afford to pay the minimum spends. The best travel credit cards are the ones that need you to make just one purchase to unlock a bonus. Only spend what you usually do.
An annual fee is what you will have to pay every year to remain a cardholder and enjoy the credit card’s benefits and rewards. The travel rewards cards with the biggest sign-up bonuses normally charge an annual fee. Many people get excited to sign-up for reward credit cards, only to change their minds after they see the annual fee.
Some people don’t want to pay the annual fee for the pleasure of having a rewards card. On the other hand, some reward lovers don’t mind paying the annual fee. Most annual fees range from $59 to $95, but some premium reward cards can charge an annual fee as high as $450 or even more.
What You Can Do
Paying an annual fee is worth it only if you are getting more than you are paying. A card with an annual fee can be of more value than a no-fee credit card. During the first year, most credit card issuers charge an annual fee on the last day of the month when you are approved, however, some might charge as soon as the account is opened. If you are a person that flies a lot and travel a lot, an annual fee can be worth it. Credit card issuers can waive the annual fee if it is the first year. You can call them and see if they can waive the annual fee.
Ongoing Interest Rate
An ongoing interest, also known as APR, is an annualized demonstration of your interest rate. You should consider the ongoing interest seriously when applying for any type of credit card. That way, you can compare how expensive a contract may be. You can get a good credit card with a good APR if you have good credit. Some credit cards have an ongoing interest rate that ranges from 13% to 23%. This will also be determined by the type of credit card you have and your creditworthiness. Some reward cards tend to have a high APR. Reward cards can be very attractive; however, they might not be right for you, especially when you carry a balance every month since the interest can whittle away at the bonuses.
What You Can Do
An APR may not be significant if you pay for your travel cards in full every month. However, if you carry a balance from one month to another, your APR should be a point of concern. Try looking for travel cards that have a low ongoing interest rate to reduce your debt. Choose a travel credit card that has an introductory interest – free period of more than 12 months. You can talk to your credit card issuer to lower your APR or take some steps to help you apply for a lower APR. Shop around for travel credit cards with a lower ongoing interest rate.
Currency Conversion and Foreign Transaction Fees
There is a lot of planning that is involved when you travel abroad, and you will be booking air tickets, hotels while figuring out what locations to visit. What you might not be calculating is the cost you will incur to make those purchases in a foreign country using your credit card. Travel credit cards are great to use when you are overseas since you can get the best exchange rate from them. A foreign transaction fee is what your credit card issuers charge when your card passes through a foreign bank. Foreign transaction fee usually applies to travel card purchases that have been made in a foreign country. Foreign transaction fees are usually 3% of every transaction in US dollars.
Currency conversion rates are the impacts of a Dynamic Currency Conversion and are normally charged by a foreign merchant to convert transactions to U.S dollars. The merchant should contact you before using DCC. If you agree, they will apply the conversion rate, if you object, your credit card issuer will do the conversion, and the fee will show up on your statement as a separate charge in dollars. This fee also applies to purchases made online from a foreign retailer.
What You Can Do
To avoid incurring both the currency conversion fee and foreign transaction fees, try to look for a credit card that has no foreign transaction fee and say to Dynamic Currency Conversion. When making purchases abroad, it is always best to inquire that you pay for the purchases using your local currency because the exchange rate provided by your credit card issuer is better and you won’t incur any Dynamic Currency Conversion fee.
There are different ways of generating rewards; however, the most common and consistent way is by spending on your credit card to earn points, miles, or cash back. Travel is a common category for credit card issuers because people who travel frequently spend money while traveling and are perfect customers for banks. Travel reward credit cards offer rewards that can be redeemed for travel while some cards can offer points that can be redeemed on non-travel merchandise and services. Miles and points from different credit card issuers differ in value, and sometimes the difference can be substantial.
What You Can Do
Credit card companies have their rules on what may or may not count towards bonus spending. Make sure to read the fine print of the travel credit card before signing up for one. You can also call customers service and inquire about their terms and conditions in the bonus category section. Go through the fine print and analyze your reward redemption options.
Travel credit cards can be a great way to earn free trips. However, most of them come with complicated restrictions on how you can earn and redeem your rewards. Reward redemption options can vary from one credit card issuer to the other. Some credit cards make it easier to redeem miles for a specific hotel or even airline. Others might come with restrictions like blackout dates and limited redemption options.
What You Can Do
Credit card rewards give you numerous ways to save money on everyday items as well as ticket-purchases. Redemption flexibility allows you to redeem your rewards through ways like applying for travel, donating to charity, buying gift cards, and paying for purchases with points and rewards. However, the best way to redeem your rewards is for cash or statement credit. Choose a travel credit card that allows you to transfer your points and permits you to redeem for statement credits. Statement credit can be used to pay your bills or even to pay down debt.
Some purchases are difficult to make using a debit card, especially when you are traveling to a foreign country. Merchants don’t accept debit cards even if it is from a well-known bank. Some credit cards are accepted in many places than others. The major credit cards popular in the U.S. are MasterCard and Visa.
What You Can Do
A credit card that is not accepted anywhere is bad news for frequent travelers. When choosing a travel credit card. Choose one that is accepted globally. Before planning your next destination, make sure to do your research. Also, just in case, have some secondary form of payment on hand (for instance, cash).
It has been several years now since you started gathering credit card reward points, and you have ended up saving up hundreds of thousands in the form of points. What options do you have in redeeming them? Hanging on the reward points isn’t a good idea since they can be less valuable over time. Points can also lose value when your credit card issuer makes negative changes to the reward programs.
What You Can Do
It is always important to consider your spending habits to find a reward card that suits you best. Choose the right card for every purchase you make to earn more points. For instance, when at a grocery store, use the card that rewards grocery purchases the most. The same goes when making purchases in a mall or restaurant and at gas stations.
Top 7 Gotchas of Travel Cards
The idea of earning free trips through your credit card rewards is exciting. However, all travel credit cards have their terms and conditions on when you can redeem your points. Below are some of the common restrictions:
1. Blackout Dates
You have most likely seen advertisements and commercials for travel credit cards and heard about blackout dates. But do you really know what they are? Blackout dates are periods when rewards, travel deals, and promotions are unavailable. These are often dates that fall on holidays. For instance, an airline may bar you from purchasing flights or using your reward points around Christmas. Therefore, blackout dates will limit how you use your rewards. While you may consider travel credit cards that don’t have blackout dates, airlines will still limit your ability to redeem your rewards by restricting the number of seats that can be claimed.
2. Minimum Purchases
Now that your travel credit card has been approved, it’s time to do some math. You have to determine whether the welcome bonus is worth it. You will also have to decide whether you can meet and pay off the thousands of dollars that you are required to spend within three months after your travel credit card has been approved. Keep in mind that you can only take advantage of your travel credit card if you hit the required minimum expenditure.
3. Points or Rewards Expiration
Apart from earning rewards, the other good thing about travel credit cards is redeeming your rewards. However, sometimes, your rewards program may have a policy like “use it or lose it,” which can affect your ability to redeem the points and miles that you have earned. In most cases, miles and points that you may have can expire if you’re inactive in redeeming them for a period of between 12 to 24 months. But, this will mostly depend on the terms of your loyalty program. Noting the rules and expiration dates for your rewards can help prevent missed opportunities.
4. Annual Card Fees
While most travel reward cards with annual fees offer attractive introductory bonuses (signup bonuses), you will end up paying more for the card. Although these cards may have more points per dollar, it doesn’t mean that they will always be rewarding. When you tally the total rewards for a given year, you should subtract the annual fee. You will find that the annual fee can put a big dent in your profits.
5. Existing Customer Disqualification
Nobody likes rejection, especially when it comes to earning sign-up bonuses on a travel reward card. There are several reasons as to why your credit card application may be denied. However, a low credit score isn’t the only reason why your credit card application may be declined. It could also be declined due to high credit utilization rates, specific bank restrictions, too much credit, and low income, among other reasons.
6. Purchase Restrictions
Generally, whenever you make a purchase, you receive some points. However, the points will mainly depend on the card and the category of the purchase, for instance, grocery store and gas stations. While the definition of purchase may seem uncomplicated, not all transactions can earn rewards. According to Capital One Venture Rewards, as a credit cardholder, you can earn 2 miles per dollar only on the net purchases. This means that balance transfers, cash advances, and checks that you may use to access your account aren’t considered as purchases.
7. Redemption Fees
Contrary to common belief, awards aren’t always free. However, most airlines may allow you to avoid a rewards redemption fee if you book for your trip online. They only charge you a fee if you redeem your points at a ticket counter or over the phone. You can also avoid the redemption fee if you have several flier miles with a specific airline and they waive the fee as a perk.
5 Steps to Choosing the Best Travel Credit Card
Americans love their credit cards. In fact, you may have seen several ads and commercials for signup bonuses. However, with so many travel credit cards to choose from, it’s hard to pick the best for travel. It gets even more confusing if you try to navigate the sign-up processes, perks, loyalty programs, terms and conditions, and hidden fees. The process is so complex that most consumers give up and result in using their debit card. But don’t give up and leave money on the table. Travel credit cards aren’t just about spending money that you don’t have; rather, they reward you for what you already spend your money on.
Below are five steps that can help you use your travel credit card wisely:
Look Hard at Your Spending Habits
Even before you choose your travel credit card, you should first ask yourself how you’re going to use it. Are you going to pay off your credit card every month without fail, or are you the type of person that is going to carry the balance forward? Additionally, you should get a travel credit card that matches your spending personality. Otherwise, you will get rewards that aren’t aligned to your actual purchase habits. According to a Credit Card Satisfaction study, one in every five Americans has rewards or fees that aren’t associated with their spending habits. Keep in mind that a credit card that was once associated with your purchase habits may no longer be the best travel credit card today. First, identify your spending personality before you can choose a travel credit card.
Look at Your Goals
Without a goal, you won’t plan on how to get there. And, without a plan, you will be collecting an asset that will be devalued at any time. If you pile miles and points in any program, there is a high likelihood that your rewards may devalue overtime. If you don’t plan to use your rewards, you should consider a cashback travel credit card that will place the accrued funds into your savings account.
Before you choose a specific travel credit card, it’s also important that you have an idea on what you would want to get out of it. Are you loyal to a specific brand or want free rewards? Do you want points that can be transferred? If you’re dedicated to a particular brand, for instance, American Airlines, then consider travel credit cards that offer free miles with that particular airline. If you want to pile up points and have the freedom to use them wherever you want, then consider a travel credit card that allows you to transfer your reward points to other hotels and airlines.
Pick a Card That Aligns With Your Goals
Before you apply for a travel credit card, consider the following options:
These are cards that bear the name of a hotel chain or airline. In most cases, rewards offered on these cards can only be redeemed with that specific hotel or airline. This means that you have limited options. However, these types of travel credit cards will give you exclusive perks such as priority boarding for airlines, free checked bags, bonus amenities, and free upgrades. If you regularly travel with a specific airline or favor a certain hotel chain, a co-branded travel credit card can help you cover some of your costs.
Card With Redemption Flexibility
Also referred to as general travel rewards cards, cards with redemption flexibility can earn rewards that you can use for other travel expenses. For instance, you can use your points to book travels directly, or you can choose to redeem your points for credit on your account.
Cash-Back Card or Gas Card
While travel rewards cards have impressive benefits, they’re not for everyone. Depending on your spending behavior and how you travel, a cashback credit card may offer you more value even when traveling. If you often travel by road, a travel credit card can offer between 1 and 2 percent cash back on all your purchases. Cashback and gas cards also offer high rewards for specific categories, including groceries and service station purchases.
The interest rate on your credit card will appear as the annual percentage rate, and it can either be fixed or have a variable rate. Credit cards with low-interest rate can help you increase your purchasing power while saving money.
Are you wondering how many credit cards you should have? T Some people say that you should have more than one in your wallet, while others say that you only need one credit card. However, whether you should have one or more credit cards will mainly depend on what you want from them.
There’s nothing wrong with having a single credit card for occasional use when getting into a hotel room. But if you intend to boost your credit score and maximize your rewards, then you should have multiple credit cards.
Multiple Payment Network Cards
When it comes to credit cards, you have several options – big brands, bank cards, rewards, and miles. However, do you know who issues these cards? Networks determine where credit cards are used while the issuer distributes their branded cards. The main networks include Visa, American Express, Mastercard, and Discover.
While you may only consider the card issuer, the card network is also important. Credit card networks set the fees retailers pay every time you swipe your card when making purchases. These costs are known as interchange fees, and they vary by brand, location, and transaction type. Credit card networks also approve and process transactions, decide where credit cards are accepted, and they facilitate payments.
Use the Card For Qualified Purchases
Are you planning to use your travel credit card to rake up more credit card rewards? Ensure that you first know what is considered as a purchase that is eligible for points. While the definition of purchase may be straightforward, credit card issuers may specify what they consider as a purchase in order to award you with points.
Be Savvy When Redeeming Points
Whenever you’re redeeming your travel credit card points, you should try to maximize their value. Below are some tips on how to maximize the value of your credit card points:
Shun Catalog Purchases
If you have piled up credit card miles, you may be considering redeeming them for merchandise. Most card issuers will want you to shop with your miles so that they can mention that when marketing their business. However, redeeming your points for merchandise will give you poor value for your credit card miles.
Choose Cash Over Gift Cards
If you want to redeem your points for gift cards, this won’t work. Just like catalog purchases, redemption values for gift cards aren’t greater. Instead, you may want to consider cash if you don’t intend to travel any time soon.
Pool Points With Someone Else
One of the main benefits of using credit cards is that some allow you to share the points you earn among friends and families. Whether you’re a solo traveler or you’re planning for a large family trip, you can benefit from such credit cards. Some programs make sharing points easy, while others have some restrictions.
Move Points to One Account
If you have multiple rewards earning credit cards, combining the points earned on each card into one account can help maximize the value you receive from all your rewards. The main reason why you should consider combining your points is that the credit card limits the value of a single point and the available redemption options.
Double-Dip, Triple-Dip, Even Quadruple-Dip
Did you know that you can collect two or more rewards for a single activity? Taking advantage of double-dips is a good way to increase your earnings. However, you can also earn more rewards from a single purchase by leveraging different loyalty discount programs. For example:
- Retail royalty program plus an online shopping portal plus the credit cards rewards
- OpenTable plus Groupon, restaurant or other discounts plus dining rewards plus credit card rewards
Use Your Points
A recent Consumer Spending Index report released by TD Bank revealed that one in every five credit card holders allows their credit card rewards (points) to expire. The study suggests that 82 percent of credit cardholders redeem their credit card points.
Travel Credit Cards vs. Loyalty Programs
Travel rewards card may be worth it if you travel frequently, and if you can afford the amount your card requires for you to qualify for rewards. Additionally, you have to pay your credit card balances every month. However, you can also get rewards independent of your card issuer, from various loyalty programs – airlines and hotels. In fact, loyalty programs have been in existence for over a century.
Examples if airline and hotel loyalty programs
- Choice Privileges
- American Airlines AAdvantage
- Delta Sky Miles
- Emirates Skywards
- United MileagePlus
- Hilton HHonors
- Marriott Rewards
- Club Carlson
If you’re new to miles and points, the idea of different loyalty programs and travel credit card options can feel overwhelming. Every hotel and airline chain has its own program and unique rules, which may be subject to change. Always remember that most rewards expire. For this reason, you shouldn’t spread your points closely across various reward programs that you won’t be able to maintain.
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