A Travel Reward Credit Card can be a game changer for saving money and earning free flights, hotel stays and more. But I’ll be the first to admit that the credit card market is flooded with all types of cards. And not all cards are created equal. Pick the wrong one and you can be saddled with fees and stress that you definitely don’t need to add to your travel adventures. Nevertheless if you are looking to travel more often and save some money while doing it, a travel reward credit card might be the most important thing to add to your wallet this year.
What if I told you that your dream vacation to Paris or Tokyo could cost almost nothing? The secret lies in choosing the right travel reward credit card—and avoiding common mistakes that leave points unused and fees piling up. You’d be surprised how easy it is to earn a free trip just by doing what you do everyday.
Many people don’t know what how much money they could save on travel just by having a travel reward card. Some folks have them and don’t understand how to use it which means they are missing out on the benefits the cards have to offer. The worst ones are people that have them but are forfeiting rewards because they didn’t read the fine print. A travel reward card should give you a sense of accomplishment not stress. So how do you identify the right one and make it work to your advantage?
Choosing a Travel Reward Card
Travel reward cards were introduced in 1934 when American Airlines and the Air Transport Association introduced the Air Travel Card. Back then, it was a way to offer discounts to loyal travelers. Subsequently the entire travel industry started to focus on loyalty, as a way to entice travelers to select their brand over others. Companies began offering additional discounts to loyal customers as the hook that encouraged consumers to choose them again when making a buying choice. And since air travel was and still is expensive, having the opportunity to pay over time was quite attractive. So logically, the partnership between travel brands and credit cards was a natural solution that created value and loyalty at the same time.
If you do have a favorite airline, an airline-branded card might be just what you need. Same goes for hotels. And then there are the ones that are not attached to any particular brand but offer amazing perks. But where to do start?
Before you select a card to take space in your wallet and on your credit report, you want to get real about your travel habits. In this guide, I’ll cover the most important things to consider before you apply for a travel reward card. This blog will not cover the basics, like credit score and your finance. You’ll need to figure that out separately. Let’s get into it.
1. Identify Your Travel Goals
There are so many types of travel reward cards available today. You can get anything from cards connected to hotels, to airlines, and even some retail stores. And that’s just the start. If you are just entertaining the thought of applying for one of these financial tools for adventures, you need to first identify your goals. Do you want discounted flights, hotel stays or perhaps a card that offers cash-back rewards would be more valuable to you?
Are you looking for more international travel? If so, look at reward cards with providers that have a global footprint or partners that operate internationally. A card with a domestic carrier is of no use if you are living in the US and trying to travel more to Europe. Prioritize cards that offer flexible points or miles with major airlines and hotel partners.
Are you dreaming of Europe? Cards partnered with airlines like Delta or American Airlines can maximize miles for transatlantic flights and you can earn miles while traveling in the US.
2. Know Your Spending Habits
Your normal spending habits are important. You don’t want to get a card that forces you to do all of your shopping in one establishment, especially if that establishment isn’t a part of your regular routine. Choose a card that rewards you for categories where you were already spending money (e.g dining, groceries, gas, etc).
Some cards offer higher points for travel purchases while others focus on everyday spending. Cards like American Express Gold give 4x points on restaurants. If you are already traveling (or are planning on it), you may as well get a card that offers 5x points for flights and hotels.
During different times of the year, some cards even offer special bonuses for certain charges like tax preparation services early in the year. If you are earning miles on everyday spending, be prepared to shift all of your spending to one particular card to maximize your earning potential.
3. Compare Sign-Up Bonuses
Sign up bonuses are the fastest way to earn enough points for a free flight or hotel stay. I’ve seen cards offer up to 50,000 points as a sign up bonus. If you play your cards right, that could be enough points for a roundtrip flight to Jamaica.
But beware, there are typically some spending thresholds requirements to actually cash in on those sign up bonuses. With some, you may even have to spend a certain dollar amount in a designated period of time. If you’ve not planned well, you can miss out on the bonus.
As you narrow down your options, look for cards with reasonable spending thresholds within the first 3-6 months. $3,000 in 3 months might be reasonable but $10,000 out of the question. While I know we hate reading the fine print, this is a time that it will be well worth your time.
4. Understand Fees and Interest Rates
As stated earlier, not all cards are created equal. Even with all of the travel perks and rewards the card offers, they are worth nothing if the annual fee and the interest charges wipe out their value. Premium cards with the most perks like the American Express Platinum or the Capital One Venture X Rewards Cards come with hefty annual fees.
Balance the perks of the card with your budget and spending habits. If you are new to the rewards card game, start with a no-annual fee option like the Chase Freedom Unlimited. It may have less perks but will be a great way for you to test if you’ll get the value from a travel rewards card.
5. Check for Travel-Friendly Perks
There are more ways to benefit from a travel rewards card that go much farther than simply earning points. Look for perks like no foreign transaction fees, airport lounge access or travel insurance. Some cards offer complimentary status with hotel or car rental partners. Status equals more perks. If you get complimentary gold status with Hilton Honors, you may automatically get free breakfast or wifi.
The more premium cards offer additional benefits like free Global Entry or TSA Pre-check. I’ve seen some that offer car rental loss and damage insurance or lost baggage insurance. These perks alone can balance out the annual fee of the card but only if you use the perks. The extras add value, especially for international travelers.
6. Know the Reward Card Redemption Rules
I can’t stress this point enough. Points mean nothing if you can’t use them. Cards that allow you to redeem points with their travel service and/or transfer points to a multitude of partners are the best. As much as you may love a particular airline, it is unlikely that they will offer the best price for every flight.
You want to have the ability to transfer points to a variety of airline or hotel partners. You can use sites like seats.aero to see which credit cards partners allow you to redeem points with different airlines. It also tells you how many points you need for free flights if you already know your route.
Most importantly review the redemption rules of the card and the travel partner as not all have a 1:1 conversion. Additionally, some have longer waiting periods for the transfer to be effective. This is certainly not ideal if you find a great fare that you want to take advantage of before it goes away.
My Perspective
Travel reward cards are great. I’ve had one for years and absolutely do the most to maximize all of the perks. Each year when the annual fee is due, I do a full analysis to ensure it is still a good investment. For me, it still is.
If traveling more is on the agenda for you, a travel reward card should sit right on the list of must have resources. Just make sure you have done your homework first. Then choose a card that works with your spending and travel habits. Don’t miss out on sign up bonus to get to free flights or hotel stays quickly but read the fine print. Just because everyone else has a Platinum card does not make it right for you.
Once you have the card, make sure you are taking full advantage of the perks/benefits. Swipe that card without worrying about foreign transaction fees, use that incentive and sign up for Global Entry, and use the lounges proudly every chance you get.
Travel reward cards will have you traveling like royalty before you know it!
Ready to start turning your everyday spending into flights and hotel stays? Read my blog on How to find Cheap Fares for international travel to save a few dollars. Subscribe to get exclusive travel tips and tools that will help you make your dream trip a reality!
FAQs About Choosing a Travel Reward Card
1. What is the best travel reward credit card for beginners?
The best travel reward credit card for beginners is typically one with no annual fee, a straightforward rewards program, and flexible redemption options like cash back or travel statement credits.
2. Are travel reward credit cards worth it for Black travelers?
Yes, travel reward credit cards are worth it for Black travelers looking to explore international destinations. These cards help lower travel costs and unlock access to premium perks like lounge access, which can make long-haul trips more enjoyable.
Disclaimer: The information provided is NOT financial advice. I am not a financial adviser, accountant or the like. This information is purely from my own due diligence and an expression of my thoughts, my opinions based on my personal experiences.
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