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What are travel credit cards, and how do they work?
Travel credit cards are financial products that offer various rewards and benefits geared towards frequent travelers. They typically earn you points or miles for every dollar spent on eligible purchases. These rewards can be redeemed for flights, hotel stays, car rentals, and other travel-related expenses. Travel credit cards may also include perks like travel insurance, airport lounge access, and no foreign transaction fees.
How do I choose the best travel credit card for my needs?
Choosing the best travel credit card depends on your travel habits, spending patterns, and preferences. Consider factors like the type of rewards offered (points, miles, or cash back), the card’s annual fee, sign-up bonuses, earning rates, redemption options, and additional travel perks. Analyzing these features will help you find a card that aligns with your lifestyle and offers the most value.
What are the benefits of using a travel credit card over other types of credit cards?
Travel credit cards provide unique advantages for travelers, such as earning rewards specifically tailored to travel expenses. Additionally, many travel credit cards offer travel-related perks like free checked bags, priority boarding, and travel insurance. Some cards also waive foreign transaction fees, making them ideal for international travelers.
What is a sign-up bonus, and how can I qualify for it?
A sign-up bonus is a promotional offer provided by the credit card issuer to entice new cardholders. To qualify for a sign-up bonus, you usually need to meet specific spending requirements within a certain timeframe after opening the account. The bonus can be in the form of points, miles, or cash back, and it’s a great way to jump-start your rewards earning.
Do travel credit cards charge foreign transaction fees?
Not all travel credit cards charge foreign transaction fees. Many of the top-tier travel cards waive these fees, making them ideal for international travel. However, it’s essential to read the card’s terms and conditions to confirm this before using it abroad.
How can I maximize the rewards earned with my travel credit card?
To maximize rewards, use your travel credit card for everyday expenses and large purchases. Take advantage of bonus categories and special promotions to earn more points or miles. Consider combining your travel credit card with loyalty programs to stack rewards and get even more value out of your purchases.
Despite any trepidations you may have, credit cards are amazing. There’s no other way to get as much back from your daily spending as a well-chosen card that matches your lifestyle and habits.
Of course, reaping the benefits requires responsible usage, which starts well before you open your first credit account. Choosing the best credit card for your purposes is as important as how you use it, and there are several factors to consider.
To help you with the process, let’s dive into how to pick the best travel credit card in three easy steps.
1. Check your credit score and set yourself up for success
Before you attempt to open a credit card, it’s critical to understand your financial situation. If you’re already in considerable debt, make it a priority to deal with that before allowing yourself the opportunity to take on more.
Your credit score is the most important figure to know before starting a credit card search. This figure, calculated by different credit analytics companies, is a quantifiable measure of your lending habits and debt. It’s generated using the information banks and credit companies provide, like your credit history, debt levels, late payments, number of accounts, and inquiries. The two principal scores used are FICO and VantageScore, but FICO is used in the majority of all credit card decisions.
A credit card issuer will decide to approve or deny your application based on your credit score.
It’s easy to find your score. You can buy access to your scores from one of the three main providers (Experian, Equifax, and TransUnion) or use a free online tool.
Many credit card companies provide credit scores within their portals, but you’ll need one of their cards to access them. Other online tools that don’t require a credit card include Credit Karma, AnnualCreditReport.com, or ClearScore.com.
Here’s a rough breakdown of score strengths
- 800 to 850: Excellent
- 740 to 799: Very good
- 670 to 739: Good
- 580 to 669: Fair
- 300 to 579: Poor
Those with credit scores at the higher end will likely have an easier time being approved for additional credit than those in the fair or poor range. It’s important to remember that a good score doesn’t guarantee approval. Credit card providers take many factors into account.
Once you have your score, you can narrow down the cards you are considering applying for.
Navigator Tip
Set your travel goals. Before diving into the world of travel credit cards, take a moment to dream about your travel goals. Create a bucket list of destinations you want to visit, experiences you want to have, and adventures you want to embark on. Having clear travel goals will help you choose a credit card that aligns with your dreams, whether it’s earning points for flights, hotel stays, or unique travel experiences.
2. Identify the type of credit card you need
As a travel company, we spend a lot of time focusing on travel reward credit cards. They’re a fantastic way to offset the cost of vacations and sometimes eliminate the costs of flights or hotels altogether. But rewards cards are generally for those with a decent credit score and are not the best choice for everyone.
Generally, there are three distinct types of credit cards.
- Rewards cards
- 0% APR cards
- Credit building/repairing cards
Rewards cards
Rewards cards are the most fun, for obvious reasons. These cards offer loyalty points or cash back in return for using them. High-end products come loaded with perks and benefits like lounge access in airports or statement credits for shopping. Used strategically, these cards are an unbelievable tool and can save the cardholder thousands of dollars.
With that in mind, credit card issuers only offer these cards to customers with demonstrably good spending habits, usually assessed using credit scores. If you’re not in that range, these cards should be a long-term goal as opposed to an immediate strategy. You should only be using these cards if you can pay your balance off every month.
Some notable rewards cards include:
American Express Platinum: The Godfather of luxury travel cards. The shiny and iconic Amex Platinum comes at a premium but is loaded with lounge access, hotel elite status, free stays, and a ton of statement credits.
- Best for: Luxury Perks
- Annual Fee: $695
- Pay Over Time APR
- Reward Rate: 5X
- Recommended Credit: 670-850
The Platinum Card® from American Express
80,000 Membership Rewards® Points
Offer Details:
80,000 Membership Rewards® Points after you spend $8,000 on purchases in your first 6 months of card membership
Why we like it
The Amex Platinum was once the sole dominating force in the luxury credit card space. While it now faces some stiff competition, it still offers unbeatable perks like unprecedented airport lounge access, elite status at Hilton and Marriott, and some outstanding statement credits making the mammoth $695 worth it for some.
Reward details
5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year.
5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
Pros & Cons
Pros
Earn 80,000 Membership Rewards® Points after you spend $8,000 on eligible purchases on your new Card in your first 6 months of Card Membership.
Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year and earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
$200 Hotel Credit: Get up to $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings through American Express Travel using your Platinum Card®. The Hotel Collection requires a minimum two-night stay.
$240 Digital Entertainment Credit: Get up to $20 back in statement credits each month on eligible purchases made with your Platinum Card® on one or more of the following: Disney+, a Disney Bundle, ESPN+, Hulu, The New York Times, Peacock, and The Wall Street Journal. Enrollment required.
The American Express Global Lounge Collection® can provide an escape at the airport. With complimentary access to more than 1,400 airport lounges across 140 countries and counting, you have more airport lounge options than any other credit card issuer on the market. As of 03/2023.
$155 Walmart+ Credit: Save on eligible delivery fees, shipping, and more with a Walmart+ membership. Use your Platinum Card® to pay for a monthly Walmart+ membership and get up to $12.95 plus applicable taxes back on one membership (excluding Plus Ups) each month.
$200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees are charged by the airline to your Platinum Card®.
$200 Uber Cash: Platinum Card® Members can get out and about and explore their local area with $15 in Uber Cash for US rides each month, plus a bonus $20 in December. That can be up to $200 in annual Uber savings. Simply download the Uber app and add your Platinum Card® to your Uber account to get started. Available to Basic Card Member only. Effective 11/8/2024, an Amex Card must be selected as the payment method for your Uber or Uber Eats transaction to redeem the Amex Uber Cash benefit.
$199 CLEAR® Plus Credit: CLEAR® Plus helps to get you to your gate faster at 50+ airports nationwide and get up to $199 back per calendar year on your Membership (subject to auto-renewal) when you use your Card. CLEARLanes are available at 100+ airports, stadiums, and entertainment venues.
Receive either a $120 statement credit every 4 years for a Global Entry application fee or a statement credit up to $85 every 4.5 years for a TSA PreCheck® (through a TSA official enrollment provider) application fee, when charged to your Platinum Card®. Card Members approved for Global Entry will also receive access to TSA PreCheck at no additional cost.
Shop Saks with Platinum: Get up to $100 in statement credits annually for purchases in Saks Fifth Avenue stores or at saks.com on your Platinum Card®. That’s up to $50 in statement credits semi-annually. Enrollment required.
Unlock access to exclusive reservations and special dining experiences with Global Dining Access by Resy when you add your Platinum Card® to your Resy profile.
Cons
The $695 annual fee is brutally high. Too high for many that can’t, or don’t want to take full advantage of its benefits.
Points-earning rates are low unless spending directly on flights or with the Amex Portal.
Some of the benefits, like travel credits, are more limited and are harder to use than competing cards’ offerings.
Capital One Venture: The Venture is a more affordable travel card. It doesn’t come with as many perks as the Platinum but allows the user to earn loads of rewards points that can be redeemed for free travel or exchanged for gift cards and other things.
- Best for: Travelers who want to keep it simple
- Annual Fee: $95
- Regular APR: 19.99% - 29.74% (Variable)
- Reward Rate: 2X-5X
- Recommended Credit: 660-850
Capital One Venture Rewards Credit Card
75,000 Bonus Miles
Offer Details:
75,000 bonus miles after you spend $4,000 on purchases in your first 3 months of account opening.
Why we like it
The Capital One Venture is an excellent go-to card for any traveler, thanks to its easy to navigate 2 miles per dollar on every purchase. With no bonus categories to consider, a reasonable $95 annual fee, and a strong intro offer worth at least $1,000 in travel rewards, Alec Baldwin might be onto something.
Reward details
5 Miles per dollar on hotels, vacation rentals, and rental cars booked through Capital One Travel
2 Miles per dollar on every purchase, every day
Pros & Cons
Pros
The Capital One Venture’s current intro bonus is worth $1,000 when spent on Capital One’s (recently revamped) travel portal or you can use your miles to cover your recent purchases.
A steady 2 miles per dollar on all purchases makes earning simple and lucrative. You’ll also grab 5 miles per dollar when booking through Capital One’s travel portal.
Its $95 annual fee is almost negligible, especially if the intro bonus is achieved.
Flexible miles allow for a wide array of redemption options.
You can enjoy two free visits to a Capital One Lounge each year.
Cons
Capital One lacks US-based airline and hotel transfer partners.
Not many major perks beyond its miles value.
Chase Freedom Flex: Instead of reward points, the Freedom Flex rewards the user with cashback. Cards like these set cashback rates similarly to points cards but allow holders a more flexible way to use their rewards. This card, for example, has a minimum 1.5% cashback rate on all purchases.
0% APR and low-interest cards
The 0% APR and low-interest cards are more case-specific but extremely useful for the right person. As the name suggests, 0% APR cards will have a limited time where no interest is accrued, while low-interest cards have just that—low interest.
These cards are perfect for those anticipating a large purchase and may need more time to pay it off. They’re also great as emergency cards, as customers can put sudden expenses on the card without accruing as much interest as other cards.
Some of these cards also allow balance transfers which operate as a way to get out of debt. In this situation, the cardholder would move debt from another higher-interest account to the low-interest/0% APR card. This way, it’s possible to pay off debt without incurring more debt or at least less than before.
Credit building cards
These cards are designed for those with poor, new, or no credit history. They should be the first step for anyone up the credit ladder.
Student cards are an excellent option for younger users to start building early. Secured credit cards can be the way forward for other users trying to rebuild their credit. In these situations, cardholders would deposit a predetermined amount to the credit provider or bank and receive a card with a limit equal to the deposit.
For example, you could deposit $500, and your credit limit would be $500. This means that even if your usage is irresponsible, the deposit covers the provider. If you show you can use the card and pay the balance each month, your credit score will gradually increase, opening up other types of cards.
3. Narrow down the best-value card
Once you’ve determined your credit score and required card, it’s time to narrow down the product that best suits your needs.
You can do this by analyzing your spending habits and your goals for the card itself.
For example, if you’re in the market for a travel rewards credit card, you should ask yourself questions like the following:
- Am I trying to cover a trip in the future?
- Is my monthly spending enough to cover an intro bonus spending requirement?
- Do I need perks, or are they a nice bonus?
Do the benefits of a card validate the annual fee?Just because your credit score is strong doesn’t mean you should apply for the most expensive travel card out there. If the annual fee is $695, but you can only get $300 of value from the card, it’s probably not worth it.
In much the same way, if a card advertises an intro bonus of 70,000 points after spending $4,000 in three months, but you only spend $2,500 in that time on average, you’re spending $1,500 more than you usually would to achieve it. In that situation, you’re not earning free travel.
The perfect card is different for everyone, so make sure you shop around to ensure you pick the best credit card for you.
Here are some of our favorite travel cards to get you started.
Frequently asked questions
Yes, frequent travelers can benefit from specific features that suit their lifestyle. Some considerations include:
- Global acceptance: Ensure the card is widely accepted internationally to avoid any inconveniences during your travels.
- Travel benefits: Look for cards with travel-related perks, such as airport lounge access, TSA PreCheck or Global Entry fee credits, and travel insurance coverage.
- No foreign transaction fees: Avoid cards that charge foreign transaction fees, as these can add unnecessary costs to your international purchases.
- Travel partners: If you have a preferred airline or hotel chain, consider a co-branded card that offers exclusive benefits with that brand.
Absolutely! While travel credit cards are tailored for travelers, you can still benefit from using one even if you don’t travel frequently. Many travel credit cards offer rewards on everyday expenses like dining, groceries, and gas. These rewards can often be redeemed for cash back, gift cards, or merchandise if you don’t plan to use them for travel. Additionally, some travel cards have no annual fees or offer valuable perks like extended warranty protection or purchase protection, which can be useful for non-travel-related purchases.
The main difference between travel credit cards and cashback credit cards is the type of rewards they offer. As the name suggests, cashback credit cards give you a percentage of your purchases back as cash rewards. On the other hand, travel credit cards typically offer rewards in the form of points or miles, which can be redeemed for travel-related expenses. While cashback cards are straightforward and easy to use, travel cards often provide more value for travelers, especially if you redeem points for flights or hotel stays.
Yes, you can have multiple travel credit cards at the same time, and in some cases, having multiple cards can be beneficial. Different travel cards offer varying rewards structures and perks, so having a selection of cards can allow you to maximize rewards in different spending categories. Additionally, having multiple cards can provide more flexibility and options when it comes to redeeming rewards for travel.
While travel credit cards can be highly rewarding, there are some cautions to keep in mind:
- High-interest rates: If you carry a balance on your credit card, the interest charges can quickly outweigh the value of the rewards earned. Always try to pay your balance in full each month.
- Annual fees: Some travel credit cards come with annual fees, which can be substantial. Ensure that the benefits and rewards you receive outweigh the cost of the annual fee.
- Overspending: Don’t be tempted to overspend just to earn more rewards. Stick to your budget and spend responsibly.
- Redemption restrictions: Be aware of any blackout dates or restrictions on redeeming your rewards, as they may limit your ability to use your points when you want.
Ask the Navigators: What's the best travel credit card?
by your friends at The Daily Navigator
