Hitting the open road or flying the friendly skies? Don't forget to pack your plastic. You’ll want to get and use the right travel credit cards before you leave. After all, accounts that are developed with travel in mind will take you near and far, safely and affordably. Depending on the card, it may have valuable perks and features that will smooth out your journey.
Here’s your tour guide to getting out of town with travel credit cards.
If your credit issuer has a travel portal, it’s usually a good idea to start planning your travel there. Just log onto your credit card account, look for the travel portal, and make your travel arrangements through it. You will have two ways to pay: charge it to your card or trade in accumulated rewards.
If you use your miles or points for travel instead of trading them in for cash or products and services, you may receive a higher redemption value. Chase Ultimate Rewards, for instance, offers 25% to 50% more value when you redeem your points for travel with a few of their cards.
Some travel portals offer valuable price protections, too. For example, Capital One Travel offers “predictive pricing” and other tools to help you get the best deals possible, such as “price drop protection” and the ability to freeze a price and hold off on booking for as long as two weeks.
Many travel credit cards also have partnerships with a portfolio of airlines and hotel brands. If yours does, you can transfer your miles or points to them using your card’s travel portal, and then use those rewards to book your flight or accommodations. For example, American Express Membership Rewards partners include Air France, British Airways, Delta Skymiles, Emirates Skywards, Singapore Airlines, Hilton Honors, Marriott Bonvoy, and more.
One of the most financially powerful things you can do is to maximize your credit card’s travel perks. Some common travel benefits include:
- Hotel credits for free nights stays
- Room upgrades
- Free checked bags at the airport for you and your travel companions (as long you bought their tickets)
- Priority boarding
- Free companion travel
- Airport lounge access
- Drink and dining credits at the airport
- Concierge services for restaurant reservations, tours, and special events
- Travel insurance
- Lost luggage insurance
Visit your issuer's website and take a look at what’s available to you. When you understand everything that is available to you with your credit card, you can avoid buying something you could get for free or at a discounted rate.
If you plan on renting a car, definitely review your credit card’s benefits first. You may be able to save money and enjoy extra protection.
If your credit card offers rental car insurance, you may want to take advantage of it when you rent a car. You can pay the entire cost of the rental with your credit card, and opt out of the coverage offered by the car rental company.
There are two basic types of collision damage coverage offered by credit card issuers:
- Primary - This (less common) insurance provides coverage without you having to file a claim with your personal auto insurance company first.
- Secondary - This (more common) insurance provides coverage but you will have to file a claim with your insurance company first. The coverage you receive from your credit card will cover what you spent. While secondary insurance tends to be more complicated than what it would to purchase supplemental insurance, it can save you a considerable amount of money.
Some card’s car insurance coverage is more extensive than others. For example, the Chase Sapphire Preferred® Card covers not only theft and damage, but towing fees, and loss of use charges that the rental company might add onto the bill. Be careful as certain plans can include exclusions, so always read the fine print first.
Want to earn rewards while you're on the open road? Great! Use a credit card that offers exceptionally high earning potential at the pump. A gas rewards credit card, for instance, can enable you to earn as many as five points on every dollar you charge at gas stations (and electric vehicle charging stations). With the cost of fuel being particularly pricy right now, this can help you keep costs down.
Booking a long distance flight? Airline miles can really add up when taking a long-haul route. In a way, an airline credit card can help you earn double: first when you swipe your card to pay for your purchase, and then you’ll earn miles again when taking your flight.
Similarly, hotel credit cards are a great way to earn rewards on new bookings, or you can use previously accumulated rewards for things like room upgrades or free night stays. Used smartly, credit card rewards can make a major impact in offsetting the cost of your next vacation.
Though it’s never a good idea to apply for a new credit card strictly for its welcome bonus, if there’s a credit card with a good welcome bonus that you’re already eying, it’s worth taking that bonus into consideration when making your final decision. Take the Capital One Venture Rewards Credit Card, for example. Not only is this a great, flexible card for travel (it earns 2X miles on all purchases which can then be redeemed to cover travel purchases), it is also currently offering a valuable welcome bonus to new cardholders. New cardholders who spend $4,000 with the card in the first three months of opening an account can earn 75,000 miles, a bonus worth as much as $750 toward travel. Depending on your travel plans, this has the potential to go a long way.
If you will be leaving the confines of the U.S., make sure that your credit card will not charge you for foreign transaction fees. If your cards don’t waive these fees, you could end up spending a lot more than you need to.
Foreign transaction fees are generally 3% of each dollar you spend in a foreign currency. This can really add up, especially if you’re paying for week at a hotel, and plan on doing a lot of tours and frequently dining out. If you were to charge $7,000 another $210 in foreign transaction fees might be added.
Be aware that foreign transaction fees can even be tacked on prior to arriving at your destination. If you book hotels and activities online while you are still in the U.S., they may be processed by a company that operates overseas. To avoid being hit with this surcharge, use a card that doesn’t charge them.
Thankfully there are many no foreign transaction fee credit cards to choose from, so if you don't already have one of these cards, consider applying for one before you leave.
It's a safe assumption that nobody wants to wait in long lines when they don't have to. That's the beauty of CLEAR, TSA PreCheck and Global Entry. Each help you enter and exit the airport efficiently, and your credit card may help you get free membership to at least one of these programs.
CLEAR is a private company that prescreens you, then stores your identification information in their system for an expedited security experience. There is an annual fee for membership which is currently $189. If you have a credit card such as The Platinum Card® from American Express or the The Business Platinum Card® from American Express though, CLEAR is included in your membership benefits so you can avoid this fee.
TSA PreCheck and Global Entry
TSA PreCheck is for domestic travel and costs $85. To get it you will have to apply online and then pass an in-person background check. Future airline tickets will then indicate that you’re a PreCheck member, but you must remember to enter your trusted traveler number when making your booking. This then allows you to go through a special security line which is often shorter, and doesn’t require you remove your shoes or laptop from your bags. Even though your ticket should indicate your TSA PreCheck membership status, don’t forget to pack your TSA PreCheck membership card when you travel to help avoid any confusion at the airport.
Global Entry also includes TSA PreCheck membership, so it offers both the same benefits of TSA PreCheck, plus an expedited U.S. customs screening experience when traveling internationally. The cost for Global Entry membership is $100. The application starts online, but you also have to arrange for an in-person interview and pass an in-depth background check. It can take weeks or longer to get an appointment and for your application to process, so be sure to give yourself plenty of time to obtain membership.
No matter where you’re going, make sure that your cards are prepared and protected along the way:
- Check your credit line. You will want to have plenty of room on your credit line with which to spend. If you already have a large balance, either pay it down before you go or plan on using a different card.
- Take photos of the front and back of your credit cards. Keep the images on your phone or print it out and tuck it in your suitcase. This way if your cards are lost or stolen, you will still be able to use them online and at the hotel.
- Alert your credit card issuers. Using your cards in a foreign destination can trigger a fraud alert and leave your card unable to charge. It’s a good practice to let your issuers in on your international plans. It’s also smart to give them a heads up if you will be charging far more than you normally do with the card.
- Download the issuer’s app. Make sure you have the app on your phone or tablet. This way you can track your spending, make payments online, and dispute any fraudulent transactions (should they happen) on the go.
In addition to your credit cards, bring some currency with you as well. Unplanned problems can occur, and having some cold hard cash to pay for something can be a lifesaver. Plus, some cafes, small retailers, and independent vendors may only take cash. You don’t want to miss out on that hand-carved vase if the craftsperson waves away your plastic. This will be especially important if you plan to head far off the beaten path.
Convert currency for less
If you’re worried about arriving in another country without having the local currency on hand, check to see if your bank offers a currency exchange to its customers. There may be a small fee for this service, but oftentimes, your bank or credit union will offer the best exchange currency rate, and if there is a fee, it’s probably a small price to pay for the convenience this service allows. There are also online currency converter websites which allow you to have cash delivered to you at home, however, rates for these services are usually less favorable.
While you can convert U.S. dollars to the local currency at the airport, the conversion rates tend to be worse and the fees higher than if you were to draw funds from an ATM.
If using an ATM, look for a local bank that partners with your home bank and use their ATM to help you avoid fees. Bank of America, for example, partners with many international banks, including Barclays in the United Kingdom; BNP Paribas in France; BNL D'Italia in Italy; Deutsche Bank in Germany and Spain; Scotiabank in Canada, Mexico, Peru, and Chile; and China Construction Bank in Mainland China. If you have a Bank of America debit card and you use one of these banks to make a withdrawal, you can avoid the $5 usage fee for each withdrawal, transfer or balance inquiry, and the ATM operator access fee. Plus, you’ll likely get the most favorable exchange rate available to you abroad.
If you have a Charles Schwab Bank debit card, you don’t have to worry about fees at all as Charles Schwab Bank doesn’t charge a fee when you use its debit card at overseas ATMs, plus they offer unlimited reimbursements for ATM fees and cash withdrawals worldwide, regardless of which bank's ATM you use.
Carry the right amount
The denomination you should carry is up to your travel style and spending needs, but a good rule of thumb is that it shouldn’t be more than you can afford to have lost or stolen. Unlike with credit cards where you can file a claim and not be out any money, once cash is gone, it’s gone for good.
Emergencies and cash advances
If you experience an emergency and don’t have much cash in your checking or savings account, you can turn to your credit card. Keep in mind though that this approach should only be taken if you truly have no better option as credit card cash advances can come with large fees - some up to 5% of the amount you withdraw (and interest starts to accrue immediately, so again, use this option only when you absolutely must). Your best bet is typically with a credit union credit card, which sometimes waive annual fees for cash advances.
The bottom line on credit cards and travel
As long as you use your cards correctly, you can get far more out of travel credit cards while you travel than what they may cost. The benefits and perks can be extraordinary when you use these cards wisely. And so you don't return to a daunting amount of debt, make sure you budget for the trip. You will want to pay off the amount you charged quickly so interest doesn't add to the amount you spent and negate any of the rewards you racked up along the way.