So should you get a travel card, and if so, how do you decide which one to get? Before you start your search, weigh the pros and cons.
Pros and Cons of Travel Cards
There are several reasons to consider a travel card:
Many travel cards offer points or miles on everyday spending as well as travel purchases, making it easy to rack up rewards even if you don’t fly that frequently. Points or miles can often be redeemed as a statement credit (maybe you charged your last trip), or to save money on future travel. Some travel cards come with valuable perks, such as complimentary airport lounge access, hotel-room upgrades, discounts on dining and entertainment and travel insurance. Co-branded hotel and airline credit cards can help you earn free nights or flights faster than other travel cards because your spending may count toward rewards with the hotel or airline’s loyalty program as well. Some travel cards allow you to transfer points or miles to other partnered airline or hotel travel programs, giving you more ways to redeem. Just make sure it’s a decent transfer ratio. In addition to travel, you may also be able to redeem points or miles for gift cards, merchandise, or cash back. Many top-tier travel rewards cards offer big introductory bonuses as an incentive to sign up.
In terms of downsides, here are the main things to consider:
Many travel cards charge an annual fee, with premium travel cards topping out at more than $500 per year. Some travel cards charge foreign transaction fees, which apply to purchases made overseas. This fee is typically 2%-3% of the purchase amount, so if you plan to use your card abroad regularly—or just buy a lot online from an overseas vendor—it may cancel out the rewards. Some travel cards impose blackout dates or other restrictions on when and how you can redeem your rewards. Redeeming travel miles or points for anything other than travel (i.e., gift cards, statement credit, or cash back) typically diminishes the value of your rewards. This is something to carefully consider, especially if you’ve invested in a card with a sizeable annual fee.
What To Consider Before Opening a Travel Card
If you’re on the fence about whether to get a travel reward card, ask yourself some key questions:
How often do you travel and how much do you spend on travel annually? Generally speaking, if the annual fee on a travel card is more than 2% or 3% of that figure, you’d want to make sure the signup bonus or other rewards make the investment worthwhile. (Some card issuers have a rewards calculator, but remember to consider the value of travel perks like free checked bags.)Do you travel at peak times or are you flexible with your travel dates?What would you most need a travel card to do (i.e., get discounts on flights, unlock extras such as hotel upgrades)?
What To Consider When Choosing a Travel Card
If you’ve determined that opening a travel credit card is the right choice, ask these questions when choosing which one is right for you:
Aside from travel, what else will you charge to the card, and how often? Do you eat out a lot or have bigger grocery bills? Do you use mass transit or want a card that gives big bonuses at the gas pump? Do you plan to use your card a lot abroad? If so, look for a card without a foreign transaction fee, to avoid extra charges. How much will you need to spend to snag the signup bonus if there is one? What’s the annual percentage rate on the card? Interest can nibble away at the value of your rewards if you carry a balance. What extras does the card come with? And which of those perks do you think you’ll actually use?
The more research you do, the more likely you are to find a card that matches your spending habits and needs. Once you’ve opened an account, remember to review the card’s terms, features, and benefits annually to make sure it’s still the best card to have in your wallet.
