Should You Get a Travel Credit Card?
At a Glance
Travel credit cards enable cardholders to earn points or miles as they spend that can be applied to travel-related purchases, such as flights, rental cars, and hotels. There are many different travel credit cards available, including general travel credit cards, which reward users for all travel-related spending, and co-branded credit cards, such as hotel and airline cards, which reward users for traveling with a specific hotel chain or airline.
Depending on the card, cardholders may be eligible for additional perks and benefits, such as travel insurance, airport lounge access, free upgrades, free checked bags, etc. However, as with any credit card, there are important considerations to take before deciding to open a travel credit card.
This article will go look at:
Pros and cons of travel credit cards
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How to decide if a travel credit card is worth it for you
You may want to consider getting a travel rewards card if you meet the following criteria. You:
- Want to redeem rewards you earn for travel rather than cash back.
- Plan to pay off your credit card balance in full each month.
- Plan to take full advantage of the perks and benefits that come with being a cardholder, especially to offset any annual fee.
- Already spend money on travel-related purchases.
- Are enrolled in a hotel or airline loyalty program.
It’s also important to consider your travel style and goals. For example, if you prefer to drive rather than fly, and stay in AirBnbs over hotels, a travel credit card may not be very beneficial as most of the perks and rewards are built for flights and hotel stays. And if you redeem points or miles for cash back or statement credits, you may actually lose value (depending on the program).
If you don’t travel much, you may benefit more from a card that earns cash back instead of miles.
When should you get a travel rewards card?
If you decide a travel credit card is right for you, there are preferable times to apply. For example, you might want to get a travel rewards card when:
1. You can pair a sign-up bonus offer with an upcoming trip or purchase. Most travel credit cards come with a sign-up bonus for spending a certain amount of money within the first few months of opening the account. For example, you may earn 50,000 points if you spend $4,000 in the first three months.
If you’re planning a large purchase that can help you meet the minimum spend, or planning a trip where you can take advantage of those bonus rewards, this could be a good time to apply. Keep in mind, you won’t receive your welcome bonus until you have met the minimum spending requirement and paid it off, so give yourself plenty of time before needing to book the trip to have the card.
2. You can justify the annual fee. Many travel credit cards come with an annual fee, which can range from $95 to $650 for top-tier cards. While the annual fee can be substantial on some cards, these cards typically come with credits that are as good as cash if you can use them. For instance, a card may offer credits for purchases made with streaming services, Uber, restaurants, and more.However much the annual fee is, the important part is that you can justify the cost of the card with the benefits it gives you that you will actually use.
3. You can use the additional perks on future travel. Most travel credit cards come with additional perks such as upgrades, airport lounge access, free checked bags, priority boarding, and more. Some may even include travel protections such as trip cancellation/interruption insurance, lost baggage insurance, and cell-phone protection. While these perks are nice, they are only valuable to you if you will personally benefit from them.
4. When your credit allows. In general, travel rewards cards have higher standards than other credit cards. This means you typically need excellent credit in order to qualify. Additionally, some banks have strict rules around how many cards you can apply for in a given time period and how often you can receive a sign-up bonus. So, before applying for a travel credit card, make sure you are eligible for the card and its welcome offer.
Compare: Best Travel Credit Cards
In summary, getting a travel credit card makes sense if you’re a frequent traveler who spends a lot of money on traveling, meaning you’re most likely to reap all of the benefits of these cards (especially if you maximize all the perks and benefits that come with these cards). It also is helpful if you have good to excellent credit and can pay off your bill in full each month.
On the other hand, if you don’t travel (or don’t plan to much in the future), getting a travel credit card may not make sense. Not only will you not be able to take advantage of the points/miles redemption, but you also likely won’t use the additional benefits. Instead, you may want to consider a different type of rewards card (such as cash back).
FAQs
When comparing travel credit cards, pay particular attention to the sign-up bonus, earning potential, additional perks and benefits, APR, fees and other charges. You should also consider your unique travel preferences. For example, if you frequently fly Southwest, then a Southwest card might be a better option for you than a general travel card. That said, if you’re not loyal to one particular airline or hotel chain, a general travel card would probably serve you better.
The top ways to get the most from a travel rewards card include: Take advantage of sign-up bonuses, be aware of all fees (and if there is an annual fee, take advantage of the benefits to outweigh the fee), use your card often especially for spending in higher rewards categories, and shop through the rewards portals to earn additional points and mileage.
Most cards that have annual fees come with perks and benefits that help offset the cost of the card. For an airline card, this might include free checked bags, priority boarding, and upgrades, and for a hotel card, this might include a free night certificate and complimentary breakfast during your stay. Taking advantage of these benefits and perks can outweigh the cost of the annual fee. However, the fee is annual, so it’s important to reevaluate the card every year and make sure you are still using the benefits it provides. If you find that the card is no longer providing enough value to you, you can typically downgrade it to a no-annual-fee option.
Unlike with a debit card, using a credit card for travel lets you earn points or miles on your spending, which you can then put toward more travel-related purchases. Plus, you may get additional perks and benefits for using the card. Because a debit card just draws directly from your bank account, you won’t be earning any rewards or get any additional perks to take advantage of.
However, that isn’t the only benefit a credit card has over a debit card. Travel credit cards often have 0% foreign transaction fees, while debit cards do not, meaning it could be costing you to use a debit card in another country. Also, it’s much safer to use a credit card abroad than a debit card, as you have an additional layer of security between the card and your bank account. Plus, you have more purchase protection with a credit card in case you need to dispute a charge or have your card stolen.
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