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What kind of credit card user are you? | What kind of traveler are you? | Common travel credit card features | How to compare travel rewards credit cards? |
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The right travel rewards credit card can help you extend your vacation budget or perhaps even allow you to travel when you otherwise wouldn't have been able to. That's because the top travel rewards credit cards, such as the Capital One Venture Rewards Credit Card and even the no-annual-fee Capital One VentureOne Rewards Credit Card offer stellar welcome bonuses, excellent ongoing rewards earning and money-saving perks like no foreign transaction fees and more.
No one wants to spend their hard-earned vacation money on things like supplemental car insurance, extra baggage fees or trip insurance and using a travel credit card is one smart way to keep more money in your pocket for the things you love. Keep reading to learn more about how to compare travel rewards cards. Read more
When it comes to travel rewards credit cards there are two types of cards to consider: those that offer rewards in a program operated by the card issuer (program operated cards), and those that offer points or miles with a travel provider, such as airline and hotel credit cards (partner rewards cards).
Both categories of cards offer rewards that can be used toward travel or redeemed for cash or statement credits, but the perks, points, and redemption offers will vary card to card. Most often, with partner rewards cards, your points will generally be held in your frequent flyer or loyalty account. On the other hand, with program-operated cards you'll be awarded either transferable points – which are typically redeemed on a chart where points differ in value based on how/where you redeem them – and fixed valued points, which are points that are redeemed based on a fixed value.
While deciding on a travel rewards card doesn't have to be difficult, there are some steps we recommend you follow to better equip you to make your decision. While we won't be giving you a travel credit card comparison per se, the following questions and points are designed to help you compare travel rewards cards and help you better understand which travel credit card offers might be best for you.
The first step in any credit card comparison situation is to figure out exactly what kind of credit card user you are.
How is your credit? Do you want one card for all of your purchases, or are you willing to use cards strategically and rotate more than one card? Are you going to be able to offset an annual fee with the rewards your earn (and actually redeem)? Do you spend in categories that will earn you the most rewards? For example, there's no point in applying for a credit card that might earn you four points on restaurant purchases and one point on everything else, when you hardly ever dine out. High point offers always look appealing, but they're only practical if they match your spending habits. Since you're looking at information about travel rewards cards, let's assume you know that's the type of rewards card you want.
Now that you've decided a travel rewards card is what you want as compared to another kind of rewards card, you'll want to think long and hard about what kind of traveler you are. We suggest doing this before you start reading all of the enticing reward offers out there and allowing yourself to be tempted into choosing a card that doesn't actually match your travel habits just because of the allure of an intro bonus.
Do you frequently travel internationally, or do you prefer to keep your trips domestic? Are you often on the go, or do you travel just once or twice a year? Do you drive or fly? Do you consider yourself a luxury or budget traveler? These are the types of questions you need to be asking yourself when considering which travel rewards cards to put on your comparison short list.
Before we get into how to compare travel rewards credit cards, we need to break down some of the different features and perks most commonly offered with travel rewards cards so you can start considering which benefits matter to you the most.
- No foreign transaction fees - A foreign transaction fee is a fee that is charged when you make a purchase that passes through a foreign bank, or is in a currency other than the U.S. dollar (USD). Most often, this fee is a flat 3 percent. If you're only traveling abroad or making out of the country purchases a couple of times a year, this fee shouldn't be too big of a concern. However, if you're frequently using your credit card outside of the United States, you'll likely want to only consider credit cards that have no foreign transaction fees as these fees can quickly add up. Furthermore, many, if not most, of the top travel rewards credit cards come without foreign transaction fees and, no matter how little it actually matters to you, no one wants to pay money they don't have to.
- International usability - If you plan to travel internationally often, another thing you'll want to consider is how usable your card of choice is outside of the United States. For example, Mastercard and Visa cards are more widely accepted worldwide than American Express and Discover cards (though both these issuers are increasing their networks internationally). Another thing you'll need to consider is if the card is chip-and-PIN ready. These days, most credit card readers in the U.S. are chip readers, so most any card you apply for now will at least be chip-ready. However, outside of the United States some credit card readers will also require a PIN, much like you would use with a debit card. That feature has been more slowly adopted in the U.S., so you'll want to talk with your issuer about it if that's important to you.
- Luggage protection - With some credit cards, you'll automatically receive baggage delay insurance and lost luggage reimbursement plans just for being a cardholder and paying for your trip with your card. Most often, these plans look something like insurance up to $100 a day for baggage delays over six hours and reimbursement up to $3,000 per passenger for lost bags. Though we all hope to never find ourselves in such a situation, these benefits really can help to add peace of mind when traveling.
- Trip cancellation/interruption insurance - Another perk some credit cards offer just for being a cardholder and paying for your trip on the card is trip cancellation/interruption insurance. Insurance plans will vary by card, but let's look at the Chase Sapphire Preferred® Cardas an example. This card offers trip cancellation/interruption insurance up to $10,000 per trip for pre-paid, non-refundable travel expenses, and trip delay reimbursement up to $500 per ticket if you're delayed more than 12 hours or require an overnight stay. Remember, you do have to book your travel on your card to qualify and cancellations for certain reasons, like pre-existing medical conditions, will likely not be covered.
- Travel accident insurance - Did you know that some credit cards protect your health while you travel? Again, just for being a cardholder! We hope that you never have to use this benefit when you travel, but it's important to know that some cards, such as the Chase Sapphire Reserve® credit card, offer plans like emergency evacuation and transportation coverage up to $100,000, travel accident insurance up to $1,000,000, and emergency medical and dental reimbursement coverage up to $2,500 for medical expenses if you or your immediate family member becomes sick or injured more than 100 miles away from your home.
- Auto rental insurance - Are you a rewards credit card holder, yet you always purchase supplemental car insurance at the rental car counter? Chances are, you're already covered - if not by your own insurance company, then also by your credit card. Auto rental insurance is actually a common travel rewards credit card perk, yet few people realize it's a benefit they're entitled to. If you rent cars often and would like to save yourself some money each time you do, it's worth double-checking that the card you're considering has you covered.
- Premium travel benefits - With some credit cards you'll find you're entitled to a long list of premium travel benefits like airport lounge access, special car rental privileges, complimentary hotel upgrades, Global Entry or TSA Pre✓® application fee credits, annual travel reimbursement statement credits and more.
- Concierge services - Though most credit cards offer 24/7 access to a customer service specialist, you'll find that with some credit cards, you'll have access to a specialist who can assist with things like making dinner reservations or booking Broadway, concert, and sporting event tickets.
Now that you've thought about the type of traveler and credit card user you are, and have learned a bit about some of the most common credit card travel perks, you're ready to review the best practices to take when comparing travel rewards cards.
When comparing cards you'll want to start by looking at the cards' rewards, benefits and terms, and then considering the following questions and factors:
Will you realistically be able to earn the welcome bonus? One of the great perks of travel rewards credit cards is the large welcome bonus opportunity that's usually offered to new cardholders. Though the amount of the offer varies from card to card, one thing that's usually pretty consistent is the amount of time you have to earn the reward: three months. Most often, the lower the welcome bonus, the lower the threshold you have to spend to receive it. Take the Capital One Venture Rewards Credit Card, for example. Though it offers a generous welcome offer to new cardholders – – you have to hit that spending to be eligible for the bonus. If you're putting every $1 you spend on your card, chances are, you'll have no trouble reaching the threshold in time. However, if you only plan to use your credit card periodically, you might be better off with something like the Capital One VentureOne Rewards Credit Card, which offers – a much lower threshold to earn the bonus.
Large welcome bonuses might be tempting, but don't choose a card specifically for the bonus, especially if you realistically can't meet the requirements to benefit from it.
Does the rewards system make sense for your spending habits? Briefly mentioned above, high point reward offers often look appealing, but are only practical if they match your spending habits. For instance, the Marriott Rewards® Premier Plus Credit Card sounds like a great deal with its It is a good deal, but only if you frequently stay at Marriott Rewards® or SPG® hotels. Otherwise, because of its $95 annual fee, this card doesn't make sense for everyone.
Another thing to consider is whether you are okay with being strategic with your card, or if you prefer to keep things simple. For example, certain cards, like the Citi Premier® Card (Citi is a CardRatings advertiser), offer different point values for different purchase categories. Often times, people hold more than one credit card, using specific cards for specific purchases to maximize point gain; however, not everyone likes to think so much when using their cards. If that's you, you might fare better with a flat-rate rewards card such as Discover it® Miles, which earns users an unlimited 1.5 miles per $1 on every purchase made, with no categories to think about or hoops to jump through.
Consider the value of the extra perks. This is where the questions you asked yourself above really come in handy. If you don't travel out of the country often, a card with no international fees might not be necessary for you. If you hardly ever fly, a card with luggage protection will probably make no difference. If you're more of a budget traveler, premium travel benefits might not be high on your priority list, etc. Naturally, credit card companies like to flaunt the greatest perks of their cards to lure you in, but don't let frilly extras that you might not ever use distract you from what you really need from a credit card.
That said, if certain perks, like supplemental car insurance or a TSA Pre✓® application fee are things you're already paying for, these are definitely things to take into consideration during your decision process, even if the card has an annual fee, which leads us to our next point.
Is the annual fee worth it? Many credit card users will pass on a card just because it has an annual fee, but sometimes, the card benefits can far outweigh the cost of the card. Let's take a look at the Capital One Venture Rewards Credit Card again to put things into perspective. Though there's an annual fee of $95, there's a lot of rewards that come with this card. To start, there's the one-time bonus we mentioned above, which, when redeemed for travel is worth $500.
Since there's no fee the first year of card membership and you'll benefit $500 minimum if you qualify for the welcome bonus (that doesn't even take into account your everyday rewards-earning), you could offset the annual for six full years on the welcome bonus alone (the first year fee is waived and the five years after that come in under $500 total). What's more, Capital One Venture Rewards Credit Card cardholders are eligible for up to a $100 application fee credit for your Global Entry or TSA Pre✓® application fee every four years, do not get charged fees when traveling internationally, are covered at the rental car counter in most countries, and receive a number of other travel and purchase protection benefits such as travel accident insurance and extended warranty protection. Many frequent travelers, especially those often traveling internationally, will likely find that the benefits of this card outweigh the cost.
On the other hand though, if you're not going to cash in on the perks of the card, you're probably better off sticking with a card that charges a lower annual fee or none at all. Again, this is where considering the value of the extra perks really comes in handy.
Consider whether the various partners and loyalty programs associated with a card are ones you'll actually use. If you always fly with American Airlines, Chase Ultimate Rewards® points won't help you much as American Airlines isn't a Chase airline partner; if you're dreaming of using your rewards points for a trip to London, earning miles with Southwest Airlines won't do you much good; if you love Marriott hotels, a Hilton credit card probably isn't for you; etc.
For airline rewards cards, be sure to consider how often you'll use that airline and its partners. Most often, these cards offer more points for purchases made directly with the airline, or with airline partners, so it makes sense for travelers to have a card affiliated with the airlines you use the most. Also be sure to pay close attention to the partner airlines. Although American Airlines doesn't fly from, say, Boston to Athens, Greece, British Airways, an American Airlines partner, does, so you'd still be able to cash in on American Airlines rewards for your next trip to the Mediterranean coast.
It's also important to consider airline hubs. Delta, for example, is headquartered in Atlanta, Ga., meaning, those flying out of Atlanta on Delta have an abundance of routes to choose from. However, if you live nowhere near Atlanta or a Delta hub, it might not make quite as much sense to hold a Delta-branded credit card.
It's the same idea with hotel rewards cards. Economy travelers likely won't have much use for benefits offered at luxury hotel chains, and likewise, there's no point in having a credit card from a budget chain when you prefer mid-range or luxury hotels. Hotel locations are also key. If you frequently travel out of the country, it's likely not worth holding a hotel rewards card that only has hotels available in the United States.
With all of that said, if you're not loyal to one particular airline brand or hotel portfolio, you might be better off with a flexible credit card that allows you to make a booking with any airline or hotel, which leads us to our final question.
Are you the kind of person who will be comfortable redeeming rewards within a credit card travel portal, or do you want flexibility to redeem wherever you want for a statement credit instead? Most often, travel rewards credit card users redeem points one of two ways: for travel by transferring points to a loyalty program, or for a statement credit.
If you're loyal to a particular airline or hotel chain, transferring points to a loyalty program makes good sense as, most often, you'll receive the best value for your points this way. Take the Chase Sapphire Preferred® Card, for example. With this card, users receive 25% more value when redeeming travel purchases through Chase Ultimate Rewards®. For example, the signup bonus of 60,000 points (after spending $4,000 in the first three months) are worth $750 toward travel when redeemed this way, versus $800 if redeemed for cash. Otherwise, points are generally transferred 1:1 to Chase's partner airline and hotel loyalty programs.
While this option is great for those loyal to certain brands, it doesn't make sense for everyone, especially those who want more freedom with how they travel. If you like to book airline tickets through discount travel websites, or if maybe you want to redeem points for unique hotel situations like a National Park cabin rental or an Airbnb booking, a credit card that allows you to redeem travel purchases for an account credit might be more useful to you.
Let's circle back to the Capital One Venture Rewards Credit Card for an example. If you are a Capital One Venture Rewards Credit Card holder, all you have to do is click "redeem travel purchases," on your account page, which will bring you to a screen showing all of your eligible travel purchases made with the card within the past 90 days. From there, you're just two clicks away from "erasing" travel expenses from your statement using your available rewards.
Say you took a trip where you spent $600 on an Airbnb rental and $400 on a discount travel website such as Kayak.com. Since points are redeemed at a 1:1 value, as long as you have at least 100,000 miles in your account, all you have to do is click redeem next to these purchases to make them "disappear."
Another great thing about this option is you're not forced to wait until you have all of the points you need to book travel. If you are ready to book plane tickets but don't expect to have enough points to cover the trip for another month or two, you can always book now and redeem later, giving you the flexibility you need to plan your dream vacation.
While travel credit cards certainly offer some attractive rewards and benefits, it's important to also note their disadvantages.
To start, travel rewards cards are usually available only to those with good or excellent credit, so if you've had significant credit problems, you may not be eligible for the card you're after. Furthermore, rewards credit cards often charge higher interest rates than cards with no rewards, so if you tend to carry a balance on your credit card, a travel rewards credit card is likely not an ideal choice for you; your interest charges will more than eat away any rewards you earn.
Besides for these two factors, though, we think travel rewards credit cards are a great option to hold in your wallet, especially for those frequently on the go, or for those planning their next big getaway!
So, which travel credit card is best for you?
Only you can decide! We've given you our top recommendations for how to compare travel rewards credit cards and choose the right one, now, the rest is up to you. Bon voyage!