Credit cards have become the most common method of payment today. With a credit card, you don’t need to worry about carrying a lot of money with you. Instead, your card will do all the work for you.
With the number of credit card companies on the market, providers are consistently offering rewards to encourage choosing their credit cards. Like general credit cards, there are also tons of travel credit cards specifically aimed at frequent travelers.
A good travel credit card will not only make paying more convenient, it can also help you save money. They offer points per dollar spent on costs such as flights, hotels, and other expenses. At the end of the day, you will often find yourself able to take advantage of perks such as free fights, complimentary hotel stays, and more.
However, the large variety also means choosing the right travel credit card for your needs can be complicated. You will not only need to consider the rewards that they offer, but you will also have to take into account any annual fees that you will need to pay on your travel credit card. This guide will help you understand how to choose the right travel credit card for your needs.
Types of Credit Card
You will have to choose between two major categories of travel credit cards: co-branded credit cards and general travel credit cards.
- Co-Branded Travel Credit Cards: These cards are affiliated with an airline, hotel chain, or other business. Rewards earned with these cards can usually only be redeemed at the affiliated business or a limited list of other businesses.
However, perks earned on these cards tend to be very useful. For example, airline-branded cards offer rewards like lounge access, free check bags, priority boarding, and more. Hotel branded cards can offer free room upgrades, free bonus amenities, and more.
- General Travel Credit Cards: These cards accumulate points when used, which can then be exchanged for travel perks. The advantage of general travel cards over co-branded travel cards is that they offer a longer list of options at which the points can be exchanged. Furthermore, some general travel cards offer one-for-one points on flight expenses, which match even offers from airline co-branded cards.
Things to Consider When Choosing a Travel Credit Card
There are several factors that you should consider when you choose your travel credit card. Some of these include:
- Interest rates: If you pay off your costs in full each month, this may not be a concern for you. However, if you do not pay off the monthly balance each month, a low-interest rate may be more advantageous than the rewards offered.
- Annual fees: Many travel credit cards have annual fees, and these fees can be as high as $500. You should compare annual fees (if any) to rewards offered, and also consider how often you will be using your card in order to justify having to pay the annual fees.
- Expiring points: Points earned may expire depending on the credit card. Make sure you are aware of the policies before deciding on a card.
- Sign-up bonuses: Many travel cards will offer you extra reward points if you spend to a pre-set threshold within a few months of joining.
- Point value: The value of your reward points will vary depending on how you redeem them. Make sure you know where your card will let you redeem your points and how many points you will earn for each dollar spent.
- Foreign transaction fees: Some travel credit cards charge foreign transaction fees. Make sure to check whether the card you are choosing charges these fees, as the extra change on every transaction can add up. However, if you only plan on using your card for in-country travel, this may not be a concern for you.
- Tax considerations: Some credit card rewards may be considered taxable income. Make sure to research for your card rewards can affect your taxes. You can refer to this primer to get started.
Best Travel Credit Cards
The card you select should address your needs and the benefits that you are looking for. However, if you’re unsure of where to start your search, consider these cards:
- Chase Sapphire Preferred Card
This card offers 60,000 points as a welcome bonus if you spend $4000 on purchases within 3 months of opening your account. It also offers 2 points per dollar spent on travel and dining at restaurants worldwide, as well as 1 point per dollar on all other purchases.
It allows you to transfer points to travel partners at a 1:1 rate. However, it does have a small, $95 annual fee. Overall, this card is great for both frequent travelers, as well as for people who love eating out.
- Discover it Miles
This straightforward card has no annual travel fee and offers 1.5 miles per dollar spent on purchases. For the first year after opening your account, you get double rewards (3 miles per dollar spent). You will always receive 1 mile per dollar, regardless of how you choose to redeem your rewards.
- Southwest Rapid Rewards Priority Credit Card
This card offers up 80,000 points as a welcome reward. You can earn 50,000 points after you spend at least $2000 within the first 3 months of opening your account. You can earn an additional 30,000 if you spend at least $10,000 within the first 9 months of opening an account.
Aside from a good travel credit card, you should also ensure that you are using an effective travel and expense software. Such software will help you keep track of your purchases and spending, so you don’t have to worry about unknowingly going over budget.