As frequent flier and hotel loyalty programs have become increasingly more restrictive and even, well, unrewarding, credit card companies have responded with more flexible and versatile travel reward cards for travelers. Figuring out the best travel credit card for you in this booming crowd can be daunting, however; to help you pick the right card, here are the most important things to know and to beware of, as well as some recommended cards. Happy points compiling!
Types of Travel Credit Cards
Airline, hotel or car rental company branded cards: These are cards that have affiliations with a specific travel company rewards program and will allow you to redeem points with all of their program partners, which can sometimes be a limited list.
One important potential upside of airline-branded cards is the perks they offer at the airport, as many include priority boarding, expedited security, free checked bags and lounge access. If you fly one airline almost exclusively, an airline credit card can be a really good bet; otherwise you may find your redemption options somewhat limited.
General travel credit cards: These allow you to accumulate points and transfer them to card company partners; the upside here is that the partner lists tend to include a longer list of options, such as multiple and even competing airlines. The best cards offer one-for-one points on multiple airlines, matching even those airlines’ own cobranded offers.
What to Consider When Choosing a Travel Credit Card
You might think that finding a card with the lowest interest rate, no (or low) annual fees, biggest sign-up bonus and best rewards would be relatively straightforward; unfortunately, this isn’t the case. Every card has a different mix of benefits and costs, and reconciling them all to land on the card that works best for you is a true chore. Here are a few things to consider.
Interest rates: This is an obvious one, although if you are able to pay off your charges in full each month, the interest rates are not really a concern, as they apply only to balances carried beyond each monthly due date. Some experts say that if you are not planning to pay off your balance each month, you should worry far less about benefits than about finding the lowest APR.
Annual fees: These fees are a nuisance that you can often avoid. Some cards waive them for the first year and continue to do so if your charges remain above a certain amount; you will want to research this directly and compare each card’s terms to your buying habits.
Expiring points: Some cards have your points expire regularly, others not at all.
Points loss at redemption: When transferring points from your card to a travel partner, for example, sometimes you lose some points in the offing.
Foreign transaction fees: Many standard cards charge you for overseas transactions, typically at a rate of 3 percent. Most travel-specific cards waive this fee, but you’ll want to check before signing up, as 3 percent surcharges on every purchase during a trip can pile up fast.
“Cash back” deflation: Many cards that offer a “cash back” option do so at a fraction of the amount they will give you compared to other benefits; for example, some will give you 50 cents cash back on every dollar they would otherwise give you to cover past travel purchases, to get gift cards, etc.
Reward program revisions: It’s an unfortunate fact that travel companies such as airlines and hotels are constantly revising their program structure and rules — usually to reduce the value of your points. This is a potential reason to get a general travel credit card vs. an airline card; with a travel card, if one airline devalues its points, you can redeem your miles on another airline.
Sign-up bonuses: Many cards offer bonus miles when you sign up, but these offers can vary significantly, even for the same card. Online sign-ups may give bigger bonuses than phone sign-ups, for example. Once you have chosen a card, look for deals before you sign up.
Tax considerations: Credit card rewards may qualify as taxable income. We don’t claim to be tax accountants, but here is a primer on the topic from Investopedia.
Understand Your Cash Back and Other Non-Travel Options
Even if you intend to rely on your card for miles or points, it’s worth checking whether it also has a cash-back option. This way you can still get some benefit from your points even if you’re faced with a travel dry spell or a temporary lack of cash flow.
The Best Travel Credit Cards
After clicking through pages of card benefits and pitches, and then consulting a heap of “money hacks” websites, I found a few travel credit cards floating to the top of the pile.
– The Chase Sapphire Preferred card is on almost every list out there; it has a big signing bonus, 2x points on travel and dining, no foreign transaction fees, primary car rental insurance and more.
– The BankAmericard Travel Rewards card, cited as the best travel card with no annual fee by several sites, grants 1.5 points for every dollar spent on all purchases. Points don’t expire, and there’s no foreign transaction fee.
– Capital One Venture Rewards Card offers 2x points on all purchases (not just travel) — a sweet perk. The lack of expiration dates is another nice feature.
– Barclaycard Arrival Plus World MasterCard is similar to the Capital One card above, with a slightly higher miles bonus upon redemption, but also a slightly higher annual fee (which is waived for the first year).
– Discover it Miles offers 1.5x points on all purchases and then matches the points at the end of your first year for an effective 3x points tally. It also has no foreign transaction fees and no annual fee. The downside: Discover cards are not widely accepted, especially overseas.
– The Platinum Card from American Express is an old faithful card that counters high annual fees with some powerful benefits that others don’t have, including TSA PreCheck and Global Entry fee refunds, a $200 annual airline rebate, and airport lounge access. Like Discover, AmEx is not always accepted overseas.
To learn more about travel credit cards, check out sites such as NerdWallet.com, WiseBread.com and ThePointsGuy.com.
Do you have a travel credit card? How do you like it? Let us know in the comments.
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