Travel credit cards can be very convenient and valuable when you travel. You can book business and first class tickets when you fly for much less than the cash price of the flight. You can pay for items overseas and not pay transaction fees.
As with anything in life, there are mistakes that you can make when it comes to travel credit cards. If you keep away from these mistakes, you can maximize your points and you can enjoy the trips that you take with them.
12 Mistakes to Avoid with Travel Credit Cards
1. Not paying off the balance each month
This mistake doesn’t just apply for travel credit cards. Since travel credit cards usually have higher interest rates than other credit cards it is especially true for them.
It doesn’t make sense to make purchases on a travel card to earn points but then not paying off your card in full each month. The points that you are earning are going to be wiped out by the interest you are paying and then some.
If this is the case, you need to get your financial house in order before making any other purchases or do some plastic surgery by cutting up your card.
2. Paying a high annual fee and not using the perks that come with the card
There are travel cards that come with no annual fee but most of the best travel credit cards come with some kind of an annual fee. Fees can be as low as $75 or high as $695. No matter what the amount of the fee is, you want to make sure that you are getting value for the fee that you are paying.
The Chase Sapphire Preferred and the World of Hyatt credit cards come with a $95 annual fee. The Sapphire Preferred comes with a $50 annual hotel credit and the World of Hyatt comes with a Category 1-4 free night certificate. These two perks can make the card worth it but if you aren’t using the perks it may not be worth having the card.
The American Express Platinum card comes with a $695 annual fee. It also comes with a bunch of perks like a $200 hotel credit and a TSA Precheck/Global Entry credit worth $100 that can more than make up for the cost of the fee. But if you aren’t using these and other perks of the card then it may be time to get rid of the card.
3. Allowing points and miles to expire
Some credit card programs don’t have expiring points while other programs do. You just need to make sure that you know the rules of the program that you are dealing with.
For example, American Express Hilton Hotel points will expire after no activity in the account after 24 months. You can reset the clock on the points by staying at a Hilton Hotel or making a purchase with the card.
If you have a card and you want to close it is another way to lose miles or points. For example, if you have credit cards that earn Citi ThankYou Rewards Points and you close the card(s). You have 60 days to transfer the points or you will lose them.
4. Redeeming points for low value awards
Most travel cards allow you to use your credit card points in a number of ways. Two of the worst things that you can do is use your points for cash back or gift cards. You are only getting the face value or even less than face value with some programs when you do this.
You can get more value from your points by transferring the points to partner programs or using them in the travel portal if the card has one. For example, $400 worth of points would be worth $500 if you book travel through the Chase Travel Portal because you get a 25% bonus when booking through the portal.
You could even get more value by transferring points to a travel partner like Hyatt. You could use those points to book the Hyatt Place San Diego/Vista Carlsbad for 5 nights. The cash value of those points is $1,265.
5. Not earning the signup bonus
Everytime that you sign up for a travel credit card, you should have a game plan on how you are going to meet the minimum spend for the signup bonus. Cards will have you spend $3,000 up to $15,000 in a given time frame for you to earn the signup bonus.
For some people that isn’t going to be an issue but for other people it may be a struggle. You don’t want to overspend to meet the minimum spend. That defeats the whole purpose in trying to earn the signup bonus.
Just keep in mind that you can use the card to pay for everyday expenses like gas, groceries and eating out. You can also use it to pay for insurance, pet bills, and even taxes.
6. Not taking advantage of bonus spending categories
Most travel credit cards come with bonus categories where you earn more when you buy something that fits into that category. Some of the more common bonus categories include: gas, groceries, dining and travel. Instead of earning one point for each dollar spent you can earn 2 to 5 points for each dollar spent.
If you have a co-branded card, you can earn bonus points or miles when using the card for flights or hotel stays. Two such cards are the Delta SkyMiles Gold American Express card and the World of Hyatt card.
It can be tricky to keep track of what card has what bonus categories when you have multiple cards. But no matter what you should be earning over a point for every purchase you are making.
7. Paying transaction fees
If you travel overseas or even buy items online from overseas the last thing you want to do is pay transaction fees when you use your credit card. Transaction fees range from 1% to 3% on purchases.
A good travel card will help you from having to incur any type of fee. Some cards that come with no transaction fees include the Capital One VentureOne Rewards Credit Card and the Chase Sapphire Preferred.
8. Choosing the wrong booking option
If you have a general travel card like the Chase Sapphire Reserve, Capital One Venture X or the American Express Gold cards you have options on how you book your travel. You can book travel through the credit cards travel portal or you can transfer points to one of the card’s travel partners.
Most of the time it is going to be better for you to transfer points to a travel partner and then book the travel. As with most things in life, this isn’t a 100% of the time thing. You just have to check both ways and see which one is better.
9. Missing out on transfer bonuses
Credit card companies will sometimes offer transfer bonuses when you transfer your points to one of their travel partners. These bonuses can range from 15% to 40%. The bonuses can help you stretch your miles and points even more.
The issue with bonuses are they come and go and you can’t predict when they will show up.
10. Believing that all credit card points are of equal value
Just because a card is offering a high sign up bonus doesn’t mean that it is a good offer. For example, a 120,000 Hilton Hotel points aren’t going to be near as valuable as 80,000 American Express points.
The Points Guy and other sites regularly give the value of points for different programs each month. The current value of the Hilton points is 0.6 per point. So, 120,000 points would be worth $720.
American Express points are worth .02 per point. So, 80,000 American Express points would be worth $1,600.
Don’t fall for the high sign up bonus. It may or may not be a great deal. You just need to know what the points are worth before signing up for a card.
11. Not using your travel credit card
You don’t have to have a high annual fee card to get some great perks that can save you money when you travel. Make sure that you know what the card offers and use the perks that the has.
The Chase Sapphire Preferred has a $95 annual fee. It comes with primary rental car insurance. This can save you hundreds of dollars since you won’t need to purchase the rental car company’s insurance.
We recently used the travel cancellation/interruption insurance perk that comes with the card. We were looking at purchasing an insurance policy for the summer rental that we were getting. It was going to cost us over $250 for a policy. We made one payment with the Sapphire card and so we have great coverage at no cost to us.
12. Picking the wrong cards
Where do you like to stay? What airline do you usually fly? Do you like discount airlines or do you mind not splurging on flights? Answering these and other questions can help you choose cards that fit your travel needs.
It doesn’t make sense to get a Marriott card or American Airlines card if you stay at Hiltons all the time and you fly United.
Final Thoughts
Travel credit cards can help you travel cheaper and easier. They can be very helpful no matter how little or much you like to hit the road. You want to make sure that you are getting value from the cards that you have in your wallet or purse.
Make sure to take advantage of spending categories, transfer bonuses, and using your card for perks that will help you save money when you travel.
If you want to know how to pick the best travel credit cards, you can read my blog post titled “Picking the Best Travel Card.”
