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Rewards Credit Cards

How to Make the Most of Travel Credit Cards

Travel rewards credit cards used to be simple. You spent a dollar, earned a mile, and eventually racked up enough for a free flight. Today, there are more types of travel credit cards available than ever before with rewards that include not only airline tickets, but also free nights at hotels and cash back toward general travel purchases like ride-hailing or train tickets.

So how do travel credit cards work, and how do you choose the right one for your needs? Take a look at the different types of cards available, their unique benefits, and some strategies for maximizing your rewards.

What Is a Travel Rewards Credit Card?

Although they come in many shapes and sizes, most travel credit cards fall into these three main categories.

  1. Airline miles or hotel points: These are airline or hotel co-branded cards such as the Gold Delta SkyMiles® Credit Card from American Express and the Marriott Bonvoy Boundless™ credit card from Chase.
    • How they work: These cards earn airline miles or hotel points with a specific loyalty program. Cardholders can then redeem those airline miles for award tickets and other things like gift cards and magazine subscriptions, or put hotel points toward free stays among other options.
    • Why you might want one: In addition to earning points or miles toward free flights and nights, co-branded cards also offer valuable perks with their associated airline or hotel program. For instance, the Delta Reserve® Credit Card from American Express includes access to Delta's Sky Club airport lounges when traveling plus free checked bags, priority boarding and a companion ticket to use toward one free domestic round-trip itinerary (plus taxes) each year. The Marriott Bonvoy Brilliant™ American Express® Card includes $300 in statement credits each year toward Marriott purchases and mid-tier gold elite status with perks like room upgrades and opportunities to earn bonus points.
  2. Fixed rate or cash back: The second type of travel rewards credit card is fixed-rate or cash back cards. These are products like the Capital One® Venture® Rewards Credit Card and the Bank of America® Premium Rewards® Credit Card.
    • How they work: For every dollar you spend with one of these cards, you earn a set number of miles (confusingly, they're not airline miles but simply their own proprietary points that also happen to be called miles). For example, the Capital One® Venture® Rewards Credit Card earns 2 miles per dollar spent on every purchase. Cardholders can then redeem these miles at a fixed rate—usually 1 cent apiece—toward travel purchases. Sometimes you get less value when redeeming these miles for non-travel items like groceries or a restaurant tab.
    • Why you might want one: Fixed-rate cards offer a lot of flexibility when it comes to using your miles. That's because you are basically paying for a travel purchase with your card like normal and then redeeming miles for it as cash back. Unlike redeeming airline miles for an award ticket or hotel points for a free night, you are not stuck waiting for award flights or nights to open up.
  3. Transferable points: These include products like the American Express® Gold Card and the Chase Sapphire Preferred® Card.
    • How they work: These cards earn points in the issuers' own loyalty program that you can then transfer to a number of different travel partners. For instance, American Express Membership Rewards points can be transferred to 19 airline frequent-flier programs including Delta SkyMiles and Singapore Airlines KrisFlyer. Likewise, Chase Ultimate Rewards points can transfer to 13 different airline and hotel partners, including United MileagePlus and Marriott Bonvoy.
    • Why you might want one: Transferable points are valuable because you can redeem them for travel with many airlines or hotels rather than committing to a single one. Just rack up points on everyday purchases and then transfer them to one partner or another for a specific award when you need it. You can also use these points to "top up" your regular mileage or hotel points accounts for an award booking if you do not already have enough points from flying or hotel stays. Earning transferable points is also like having an insurance policy against any negative changes, like raising award prices, one particular airline or hotel might make to its individual loyalty program.

There is some overlap between fixed-rate and transferable points as many transferable points can also be redeemed at fixed rates for travel and other purchases.

Which Benefits Do Travel Credit Cards Offer?

There are a lot of reasons you might want to apply for one type of credit card over another. Here are the benefits to consider when deciding which one might be best for you.

Sign-up bonuses: Travel credit cards often come with flashy sign-up offers that can be worth a lot of money toward free travel. Airline and hotel co-branded cards offer tens of thousands of points or miles that can put free flights or nights within easy reach. For their part, fixed-rate cards often offer bonuses totaling up to hundreds of dollars in cash back.

Day-of-travel perks: Airline credit cards come with perks like free checked bags and priority boarding that can make a big difference to your airport experience. Hotel credit cards sometimes offer on-property credits for things like restaurant bills and spa treatments during hotel stays that can make a vacation that much more enjoyable. Several high-end products that earn transferable points, like The Platinum Card® from American Express, also lure potential cardholders with benefits like airport lounge access and refunds for airline incidental fees like seating assignments as well as automatic elite status with both Hilton and Marriott.

Trip insurance: Travel rewards cards tend to include top-rate travel protections such as insurance for trip delays or cancellations as well as lost luggage. The Chase Sapphire Reserve® will reimburse you up to $500 for things like meals, toiletries and lodgings on travel delays over six hours and includes primary insurance on rental cars so you can waive the agency's coverage and not worry about dents and dings.

Credits and refunds: More and more travel credit cards are beginning to offer refunds for Global Entry or TSA PreCheck application fees of between $85 and $100, which is not only a great added value to their perks portfolios, but also a fantastic benefit that makes the airport experience much more bearable.

While many travel rewards credit cards offer similar perks, they can vary quite a lot from card to card, so be sure to read the fine print before applying.

Are Travel Credit Cards Worth It?

A few travel credit cards, like the Capital One® VentureOne® Rewards Credit Card, do not have annual fees. Many more, including the Citi Premier℠ and Chase's United Explorer Card, cost around $95 per year. Still others cost several hundred dollars per year to carry.

Deciding whether a travel credit card is worth it to you will depend on how many of its benefits you will use, and whether the benefits outweigh the annual fee.

Think about how often you travel each year. If you don't fly frequently or don't think you'd take advantage of an airline credit card's airport lounge access or free checked bag benefits, it might not be worth applying for one. In the same way, what good is elite status with a hotel chain if you don't actually spend several nights a year hanging out at their hotels and enjoying perks like room upgrades and free high-speed Wi-Fi?

One final consideration: Many higher-end travel rewards credit cards require potential applicants to have good to excellent credit. Before applying, check your credit score (which you can do for free with Experian), and see if your score is within the average range for applying for a specific card.

How to Use a Travel Credit Card to Maximize Rewards

There are several strategies you can use to squeeze as much value as possible from your travel credit cards, and much has been written on the topic. Here are a few key takeaways to make sure you're getting the most from your rewards card.

  1. Meet the bonus requirements. Your first step should be to make sure you earn the sign-up bonus. That usually involves spending a certain amount of money on purchases within a set time frame. For example, you can earn 40,000 TrueBlue points with the JetBlue Plus Card by spending $1,000 on purchases within the first 90 days of account opening. Not hitting that spending threshold is equivalent leaving hundreds of dollars of value on the table.
  2. Maximize earning categories. Many travel rewards cards earn multiple points or miles per dollar at specific merchants like gas stations or grocery stores. American Airlines' Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard®, for instance, earns 1 mile per dollar on most purchases, but 2 miles per dollar on American Airlines purchases as well as at restaurants and supermarkets. Making sure you use your card specifically on purchases that score bonuses can up your earning dramatically.
  3. Redeem for the right things. Be certain that what you spend your points or miles on is netting you a good value. If you redeem miles from the Capital One® Venture® Rewards Credit Card for travel purchases or gift cards, you get 1 cent per mile in value. But if you redeem them for other expenses, you only get a half-cent, which is not worth it.
  4. Leverage all the benefits. If you have a premium product like The Platinum Card® from American Express, take advantage of its many value-added benefits, such as $200 in airline incidental fee credits and Uber ride credits each year, a Global Entry or TSA PreCheck application reimbursement, and access to Amex Centurion Lounges, Delta Sky Clubs and Priority Pass lounge locations at airports around the world. By doing so, you can reap hundreds of dollars' worth of value each year.
  5. Know your card's comprehensive coverage: Using your travel rewards card for travel purchases also means that its travel protections and coverage will extend to your trip. For this reason, it is also important to use a credit card that includes such protections to pay for a trip. If you don't, you could end up having to pay hundreds or even thousands of dollars if things go awry.
  6. Travel credit cards can be powerful tools in any traveler's wallet. Not only do they allow consumers to earn points and miles toward free travel, they also provide valuable travel-related benefits such as trip protection.

    Because there are more travel credit cards available than ever before, consumers have some phenomenal choices. But it also means finding one that might be right for you can be complicated. Think about which type of travel credit card will earn you the type of rewards you can use the most, what travel-related benefits you are looking for, and which card has bonus earning categories you can maximize with your usual spending habits. Finally make sure its annual fee is within your budget. By thinking about those few major factors, you will home in on the right rewards card for your needs.

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