Whether you’re seeking R&R at a luxurious wellness-focused resort or a more active urban adventure, leveraging the right travel credit card can help reduce your travel expenses while elevating your overall experience. Yet, few travelers are using travel rewards credit card points to offset the cost.
So how do you know which cards are best to help you earn rewards that align with your travel aspirations? Use these five questions to help you navigate the maze of travel credit card options to find the one that matches your personal travel style.
Am I a travel brand loyalist or do I prefer flexibility?
There are two broad categories of travel rewards credit cards: general rewards cards and co-branded cards.
General Travel Rewards Credit Cards
General travel rewards allow you to earn points or miles when you make purchases on the card that can then be redeemed in a number of ways, including on travel bookings. For many of these cards, travel bookings often offer the best redemption value, especially if you are able to transfer points into travel partner loyalty programs.
Higher-tier general travel credit cards come with perks and benefits for travelers, too, like trip insurance, statement credits for certain travel expenses like TSA PreCheck, and access to upgraded experiences like airport lounges.
Co-Branded Travel Credit Cards
Co-branded travel cards are affiliated with a particular airline, hotel chain, or cruise line — and they’re very popular. In fact, data from Airlines for America, a trade organization for U.S. airlines, estimates that 1 in 4 U.S. households has an airline credit card.
These cards let you earn points or miles that are directly tied to the brand’s loyalty program. In most cases, you’ll be redeeming your earnings toward bookings with that brand, though a few of these cards sometimes allow for other redemption choices. Besides earning free flights or free nights, hotel and airline credit cards also provide perks for loyal customers, such as expedited check-in, in-flight or on-property discounts, free upgrades, or free checked bags, in addition to other travel benefits.
Finally, co-branded cards are often a fast track way to climb to a higher status within a brand’s loyalty program. Some cards offer automatic higher status, or a head start up to the next level, for example.
Am I an avid traveler or an occasional vacationer?
The amount you spend on travel throughout the year can also help you decide on the level of credit card you should pursue. Travel rewards cards can be broken into three tiers, and these are usually available for both general and co-branded cards:
No annual fee cards: These are entry-level rewards cards that let you earn rewards and offer basic benefits and perks.
Mid-tier cards: For an annual fee of around $95, cardholders can earn higher rates of rewards and some higher-value benefits such as partner discounts and fee credits.
Premium cards: These cards are aimed at high travel spenders and charge fees of around $300 and up. However, with enough spending and travel, the value of the VIP-level benefits (like airport lounge access) may be worth it for some.
If you’re new to travel cards or travel less frequently, you might want to begin with a no-annual-fee travel card to start. But if you are going on multiple trips per year or doing international travel, it could be worth the fee to go for a mid-level or top-tier card.
Which types of benefits and perks are most important to me?
Do some research on common travel credit card benefits and perks and then make a list of which ones you’re most likely to utilize. As an example, if you plan to travel outside of the U.S., choosing a card that has no foreign transaction fee may be more important to you than someone traveling domestically. Or, if you travel by plane frequently, it might make sense to see if there’s a card from your favorite airline that offers a free checked bag.
For some travelers, saving the most money possible on their trips is the top reason to get a travel rewards credit card. Others might be looking for higher levels of trip insurance coverage, enhancements to their travel itineraries, or stockpiling enough rewards to go on a dream trip for free.
What are my top spending categories?
Pay attention to the bonus categories on various travel rewards credit cards. If you only get the top rate on travel bookings, but you don’t travel often, you might get more earning power from a rewards card that offers bonus points in everyday spending categories like groceries or dining out.
General travel cards tend to have more bonus categories, but specific rewards rates vary by issuer and card.
Will I be able to earn the welcome bonus?
One of the main attractions of getting a new travel credit card is the sign-up bonus or welcome offer. These usually award a large amount of points or miles upfront after you meet a minimum spending requirement, and can be worth hundreds of dollars. For example, you may be able to earn 50,000 bonus points if you spend $3,000 in the first three months of opening the card.
The key is to earn as many points as you can without spending more than your budget will allow.
The bottom line: Spend wisely and get rewarded.
In general, overspending and carrying a balance on travel rewards cards is counterintuitive, since the interest you pay takes away from the rewards you earn. As a Consumer Protection Financial Bureau report revealed, consumers who carry balances earn just 27% of rewards at major credit card companies, while paying 94% of the interest and fees that those companies charge.
If you spend responsibly and you’re planning a trip in the near future, however, it could benefit you to seek out a travel rewards credit card to help cover your travel costs. By earning a strong sign-up bonus, accumulating rewards on purchases you’re making anyway, and taking advantage of additional benefits and perks, a travel rewards card that aligns with your spending and travel style can become your go-to payment method.