The first time that I ever looked into travel credit cards was when my wife and I were taking our daughter, Kenzie, on a 10 day trip to California. At the time, I did not know much about the travel card landscape. Okay, to be truthful, I did not know anything about the travel credit card landscape.
There were a few things that I was looking for in the cards that I was going to choose. The first thing that I wanted was cards with low or no annual fees. The second goal was to get the most bang for my buck with the sign up bonuses that the card offered.
My main goal with the cards was to book all of our stays at hotels without any out of pocket cost. We were able to stay at my wife’s cousin’s place for a few days and that helped me reach that goal.
Since that first experience, I have learned a lot more about travel credit cards and have put that knowledge into use to save money on travel that we have taken. It is one of those things that I wish I knew then what I know now.
One Size Does Not Fit All
Today the travel credit card landscape is littered with all kinds of travel cards. They all have different perks, fees, bonus points and the like. The first thing that you need to realize is that there is no perfect card out there.
It is easy to have paralysis by analysis when you are looking at so many options. What is going to work for you may not work for the next person.
It comes down to the goals that you are trying to achieve, your spending habits and budget that will determine the type of card that will work best for you.
Is elite status important to you? How about no foreign transaction fees? What about primary rental car insurance? Do you care about how much the annual fee is? How you answer these and other questions will help you narrow down what card or cards that will work best for you.
To help to decide what card works for you there are factors to consider so that you can make the best choice and get the most out of the card.
1. General travel card versus co-branded cards
One factor to consider when getting a travel card is whether to get a general travel card versus a co-branded card.
General cards let you earn points that can be used in the travel portal of the card or they can be transferred to travel partners which then can be used with the partner.
For example, the Chase Sapphire Preferred card has 11 airlines and 3 hotel transfer partners that you can transfer to at a 1:1 ratio.
Getting the general card is a good move if you are not married to a specific brand and you like flexibility.
Co-branded cards are cards that have the name of the hotel or airline. They give you less flexibility than the general cards, but they give you some perks that the general card won’t offer.
You can get perks such as room upgrades, free breakfast, upgrades on flights, and free checked bags to name a few of the perks.
If you like to stay in a particular chain of hotels or fly a certain airline, getting the co-branded card is a good move.
I believe that the general card should be the start of your travel cards because of the points that I mentioned above and then you can add co-branded cards after that.
2. Small spending minimums
Once you sign up for a travel credit card, you are going to have to spend a minimum amount of money in a given amount of time to earn the bonus.
The amounts usually range from $500 to $15,000 and on some occasions, one purchase will earn the bonus. You usually have 3 to 6 months to complete the minimum spend.
You want to be able to reach the minimum spend on your everyday spending. Things like insurance payments, groceries, gas, cable, internet, giving to church, and phone bills all can be charged on credit cards.
What you don’t want to do is start spending money you normally would not or don’t have just to earn the spending minimum. The bonus that you are trying to earn is no longer free at this point.
Plus, if you don’t make the minimum spend in the allotted time, you don’t get the bonus. Depending on the credit card company, you may not be able to ever get the same card with the bonus offer.
Annual fees on travel cards feel a lot like taxes, and I don’t know anyone that likes taxes. There are some travel cards that don’t have a fee, but the better ones do.
Fees on the low end are generally around $95. Cards on the high end can reach close to $700.
Some cards have no fee the first year, but then charge you a fee the next year. Cards that charge you a fee the first year do so on your first billing cycle.
The general rule is that the more the fee is, the more the perks are in the card. You also have more categories to earn a higher percentage on purchases that you make using the card.
3. Annual fees
No matter what the fee is for the card, the first year is almost always worth it because of the sign up bonus.
You just have to do some math with the annual fee. If you are paying north of $400 for a fee and you are getting $750 in value out of the card then that makes good financial sense to pay the fee.
On the other hand if you are getting less than the $400 in value from the card, then it is not good financial sense.
4. Sign up bonuses
Travel credit cards have sign up bonuses. You earn the bonus after you meet the minimum spend which is usually 3 to 6 months in length.
Points can range from 30,000 to 150,000 points or more. The value of the points differs from card to card. If two cards are offering 100,000 points, one card’s 100,000 points may be worth much more than another cards’ 100,000 points.
For example, I really like the World of Hyatt Credit Card. You can get rooms at a category 1 hotel during off peak times for 3,500 points. This is the lowest amount of points in any major hotel chain.
A helpful tool to take the guesswork out of determining the value of the points is from the Points Guy who puts out a table with the value of points from different cards.
The bonus points that cards offer differ over time. For example, the Chase Sapphire Preferred card has offered a sign up bonus of 100,000 and yet at other times the bonus has been only 60,000.
You will want to do some homework and see what offers the card that you are considering has had. You may find out now is the time to get the card, or it may be more beneficial to wait for the bonus to go up then get the card.
5. Earning points
The sign up bonus is nice when getting a travel card but if you want to build up points to travel you will want to look at how much is earned on the purchases that you make with the card.
Travel cards, like many other cards, allow you to earn a certain percentage on the purchases you make with the card.
You will want to look for a card that gives you the most bang for your buck when you are using the card. For example, a card may offer you 3% on online groceries, but if you don’t get your groceries online, that may not be the best card for you.
You want to find a card that gives you a higher percentage for the categories that you spend the most in.
6. Extra perks
As mentioned before, cards offer you sign up bonuses and percentages back on items that you purchase, but travel cards offer many other perks.
Some of the perks that are offered on cards include primary rental car insurance, travel credits, access to airport lounges, Uber/Lyft credits, TSA credits, DoorDash passes, travel insurance, no foreign transaction charges, and many more.
These perks are nice, but if you are not going to use most of the perks that a card is offering then the value of the card diminishes in value.
What you will want to do is look over all of the perks of a card that you are considering. You will want to try to figure out the value of the perk that is being offered.
Some are easy like a $50 travel credit. Others like airport lounge access is a little harder. You will have to do some guesstimation and then decide if the fee is worth the perks.
7. Credit score
Before you try to get a particular travel card, you will want to know what your credit score is. If you get rejected when trying to get a card, it can make your credit score go down.
When you are looking at a card, many times they will show you what credit score you need to have a chance at getting the card.
If you don’t have a good enough score to get a particular card, you can find a card that offers a lower credit score to get the card. You will want to make small purchases and pay the card off each month and on time to help start building up your score.
Final thoughts
All the factors that I mentioned are important when deciding what travel card to consider but to truly get the most out of whatever card that you choose, is to make sure that you are paying off the card in full each month.
Earning 3% on a $100 purchase, but only paying $25 on the purchase is not smart financial sense. You will be charged 15% and up for the $75 that you did not pay off. I am no rocket scientist but this is not good financial sense.
By not paying off the balance, you are getting really hit twice. You are not only paying interest, and high interest at that, but you also have an annual fee that you have to pay.
Go to my blog Travelwidstom to learn how to earn and maximize credit card points and miles, how to save on travel, ways to travel easier, and travel itineraries and destinations.