If you're a frequent flyer or road warrior, an airline or travel card will help you earn perks faster. These cards are generally recommended only if you pay off your balance in full every month. They tend to have a higher interest rate, which means you could end up paying many times over in interest for the airline miles you accumulate. Keep in mind that these cards generally require a good to excellent credit rating for approval.
Earning rewards: how many points or miles you’ll get, and for what kinds of purchases
Redeeming rewards: how you can redeem points to pay for travel expenses (and how much value you get per point for different redemption methods)
Here are the most important things to consider in any general travel, airline, or hotel card:
Point Value – Travel, airline, and hotel cards earn points. These are usually called “miles” on airline cards. The value of your points can vary a lot depending on how you redeem them. Before you apply for a card, learn how to redeem rewards points for the greatest value.
Sign-up Bonus – Most travel cards award bonus miles or points if you spend a certain amount within a few months of opening the card. For example, you might get 50,000 extra points if you spend $3,000 in the first 3 months of opening a card. These sign-up bonuses can sometimes earn you enough for more than one free flight or hotel stay. But make sure you’re not getting yourself into credit card debt to earn a bonus. You’ll end up paying more in interest than the value of the sign-up bonus.
Earning Points – Some cards earn more points for spending in specific categories. If you spend a lot at restaurants, for example, you could choose a card that earns 2x or 3x points on dining.
Annual Fee – Many travel cards have an annual fee, which could range anywhere from $50 to over $500. Generally, cards with an annual fee will earn you more points and offer more benefits. Before you apply for a card, consider the benefits and rewards value compared to the annual fee. Make sure you’ll get more value in benefits and rewards than you’ll pay in fees. It’s common for travel cards to waive the annual fee the first year to entice you to sign up and try it.
Foreign Transaction Fees – When you buy something in a foreign currency, your card issuer may charge a fee. On cards that have one, it’s usually around 3%. Many travel-oriented cards don’t have a foreign transaction fee, but some do. If you plan to travel abroad it’s best to have at least one card without a foreign transaction fee. If you plan to stay in the country, though, this is less important.
Benefits – Many travel cards have travel-related benefits. On most cards you’ll get rental car collision insurance, for example. Some cards have automatic trip cancellation insurance if you buy a plane ticket on the card. Airline cards might give you priority boarding or free checked bags. You might get free room upgrades during hotel stays with certain hotel cards. There are usually better benefits on cards with higher annual fees. For example, you’ll find airport lounge access on most cards with an annual fee over $300. You may also get a statement credit for travel purchases. When deciding whether a card is a good fit for you, it’s important to weigh the benefits against the annual fee.
Restrictions & Blackout Dates – Some travel card rewards programs have restrictions on how or when you can use rewards. For example, you may not be able to book flights with points on peak travel days. Make sure you understand restrictions on a card’s rewards program before you apply to make the most of it.
EMV Technology – There are two major kinds of EMV (or “chip”) technology: Chip-and-PIN and Chip-and-Signature. Most credit cards issued in the U.S. only support Chip-and-Signature. Some places in Europe only accept Chip-and-PIN cards. If you’re planning to use your card abroad, pick a card that supports Chip-and-PIN. Otherwise, you may be stuck and unable to use your card in certain situations.
Your Credit History – Most banks design their travel cards for people with excellent credit. If you’re credit is less than excellent, you may want to build up your credit with other cards first. But remember, credit card approvals are based on more than a credit score.
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