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If you can handle using a credit card responsibly and enjoy traveling, a travel credit card could be the ideal product for you.
Travel credit cards are a form of rewards credit card that allows you to accumulate points or miles that you can redeem for travel, including flights, hotels, rental cars, and vacation packages.
Since travel credit cards are geared towards travelers, they may also offer some nice travel perks such as cards with rental car insurance, baggage insurance, and airport lounge access.
However, the benefits package can vary from card to card and typically depends on the card’s annual fee, with higher annual fees usually indicating a more comprehensive perks package.
How Do You Earn Travel Points and Miles?
If you have a travel credit card, you can earn travel points or miles in a number of ways. These include:
- Spending in Selected Categories: Many travel credit cards have a tiered reward structure, which means that you earn more miles or points when you spend in particular categories. Spending in the top tier categories is one of the best ways to earn rewards. Since these cards are travel credit cards, the top tiers tend to relate to travel purchases, but some cards also offer top level rewards for gas station, grocery and restaurant purchases.
- Everyday Spending: While spending in the designated categories is the quickest way to earn miles or points, many cards also offer a base rewards rate for all of your spending.
- Welcome Bonus: Many credit card companies offer a welcome bonus for their new cardholders. You’ll need to meet the promotional requirements, which usually includes a minimum spend within a set period. However, this can be a great way to boost your points or miles balance.
Anniversary Bonuses: Some credit card companies also offer a miles or point bonus on your account anniversary. This will be automatically applied to your account on each anniversary providing that your account remains in good standing.
Co-Branded vs Non-Branded Cards
When you’re looking at travel credit cards, you may notice that some cards are associated with particular airlines or hotel chains, while others are not.
When a card features a travel brand, it is referred to as a co-branded card and there are some key differences between these cards and non-branded cards.
- Specific Loyalty Program Rewards: Co-branded cards are offered as a partnership between the credit card issuer and the airline or hotel. For example, the Citi AAdvantage, which is a co-branded card with American Airlines or the Delta SkyMiles American Express cards. These cards are linked to a specific loyalty program, but it may be possible to use your points or miles with another brand via a partnership agreement.
- Weighted Towards the Brand: As part of the co-branding, these cards tend to have rewards weighted towards the brand. This means you can expect to earn top tier rewards when you purchase fares with the airline or hotel stays with the chain.
- Limited Redemptions: When a card is co-branded, typically there are limited redemptions. While you may be able to use your accumulated rewards for other things, the redemptions are usually heavily weighted toward the brand.
- Additional Perks: While travel cards tend to offer travel-specific travel perks, co-branded cards do tend to offer additional perks tailored towards the brand. For example, you may get free checked bags, priority boarding, and priority pass airport lounge access when you fly with the co-branded airline.
United Explorer Card
1X – 2X 2x per $1 spent on United purchases, hotel accommodations, restaurants & eligible delivery services and 1x per $1 spent on all other purchases
$95 ($0 first year)
Delta SkyMiles® Gold American Express Card
1X – 2X 2X miles on delta purchases, at restaurants worldwide (including take-out and delivery in the U.S) and at U.S. supermarkets, and 1x miles on all other eligible purchases
$99, $0 intro first year (
Marriott Bonvoy Boundless® Credit Card
1x – 17X up to 17X total Bonvoy points per $1 spent at over 7,000 hotels participating in Marriott Bonvoy® with the Marriott Bonvoy Boundless® Card, 3X on the first $6,000 spent in combined purchases each year on grocery stores, gas stations, and dining and 2X Bonvoy points for every $1 spent on all other purchases
The Platinum Card® from American Express
1X – 5X 5X points on up to $500,000 spent on directly-booked airfare and flights and prepaid hotels booked through American Express Travel (per calendar year), 2X points on prepaid car rentals through American Express Travel and 1X points on all other purchases
Chase Sapphire Preferred® Card
2X – 5X 5x total points on travel purchased through Chase Ultimate Rewards, 3x points on dining and online grocery purchases and 2x on other travel purchases. Plus, earn 1 point per dollar spent on all other purchases
Citi Premier® Card
1X – 3X 3X points per dollar on restaurant, supermarket, gas station, hotel and air travel purchases, and 1X points per dollar on all other purchases
Travel Rewards Credit Cards Pros and Cons
Of course, no credit card or financial product is perfect and there are positives and negatives associated with travel rewards credit cards.
It is important to be aware of both the pros and cons before deciding which card if travel card is best for you.
High Annual Fees
Travel Specific Perks
High Credit Score Requirements
Authorized User Perks
Reward Value Fluctuations
Access to Travel Portals
You Need to Travel Regularly
The main benefit of travel rewards credit cards is that they offer an easy way to enjoy travel rewards.
This means that you can access free or discounted flights or hotel stays, whether you are planning a special trip or travel regularly, this can save you a great deal of money.
Many travel credit cards offer some great travel-specific perks, such as rental car insurance, trip delay insurance, or baggage insurance.
If you have a co-branded card, you can even enjoy airline or hotel-specific perks.
In addition to authorized users earning rewards on your account, there could be other perks.
With many travel credit cards, you will often find that your authorized users can also access your card perks and benefits.
Many credit card issuers operate travel portals where you can shop for deals on flights on Amex membership clubs, get tickets to events and concerts, or order hotel stays through the Citi ThankYou portal.
You can also transfer your points to airline or hotel loyalty programs. For example, you can transfer Chase Ultimate Rewards points to +40 airline partners such as Alaska, Delta, United, and more.
You can then book your travel using your rewards, cash, or a combination of the two.
Unfortunately, all the perks of travel credit cards don’t come for free and often these cards carry a high annual fee.
This means that you need to be confident that you will earn a higher reward value than the cost of the annual fee or the card is not worth your while. However, you can still find a travel card with no annual fee.
Due to their impressive benefits package, travel credit cards tend to require good to excellent credit.
So, if you have average or fair credit, you are likely to struggle to qualify.
Unlike cash-back cards, both miles and points tend to have fluctuating values, which can make it a little more tricky to find the best redemption deals. In recent years, many customers complained when the value of their accumulated miles suddenly dropped.
Additionally, you have to be very careful about your redemption methods as some work out to a very low value.
If you want to get the most benefit from a travel credit card, you need to travel regularly.
Although you may aspire to have a trip of a lifetime, since most card rewards are weighted towards travel, you are likely to struggle to accumulate a decent rewards balance unless you are regularly booking fares and paying for them with your card.
How Do You Redeem Travel Points and Miles?
Although the specific procedure to redeem points or miles can vary from card to card, there are some steps that are common regardless of your card.
- Log Into Your Account: The first step for redemption is usually to log into your account. This will provide access to the search facilities to look for and book award flights or other travel purchases. Some platforms allow you to browse the latest deals without logging in, but you’ll need to log in to complete the transaction, so it is a good idea to log in initially.
- Search: Whether you have a co-branded airline card or a more general travel card, you should have some form of search facility to look for award travel deals. You’ll need to enter your travel dates, destination, origin and passenger details. You may also be able to narrow down the search results with filters such as fare class.
- Check Pricing: When you find a flight or hotel stay that is of interest to you, it is a good idea to check the pricing. Most sites show a cash and a miles or points price. This allows you to calculate what value you are getting for each mile or point. The average value of points and miles does vary according to the specific program, but generally, you want to be getting at least 0.5 cents per point or mile, the higher the rate, the better the deal.
- Complete the Booking: When you’ve decided that a particular flight, hotel stay or other travel purchase is a good deal, you can click through to complete your booking. This is very similar to using online travel portals, as you’ll need to provide the passenger details and select any extras before paying. Many platforms allow you to choose to pay by cash, rewards or a combination of the two.
How to Make the Most of Travel Rewards Credit Cards
If you have a travel rewards credit card, there are some tips that can help you to get the most from it. These include:
If your card has a tiered reward structure, try to plan your purchases according to getting the most rewards.
If your card has revolving reward categories or you can nominate categories each quarter to get a higher rewards rate, think about where you will be spending your money in the coming months.
Although your card may offer other redemption methods, you’re likely to get the best redemption rates if you use your rewards for travel purchases. If you have a co-branded card, you’ll need to prioritize using your rewards for that brand.
If your card is a general travel credit card, be sure to use your card issuer’s travel portal, as you’ll get the best value for your points.
For example, redeeming Hilton points for Amazon shopping provides a value of 0.2 cents per point, while redeeming Chase points for Amazon gets 0.8 cents.
Many people overlook their credit card perks, as they are distracted by earning rewards. However, these perks can often be used to offset the card’s annual fee.
If you’re traveling regularly, free first-checked bags or free travel insurance can quickly add up to great savings. You can also enjoy a more luxurious travel experience with perks such as airport lounge access.
If possible, try to clear your credit card balance every month. Travel credit cards tend to have similar or higher interest rates compared to regular credit cards.
This means that if you’re carrying a balance, you can quickly offset any of the benefits of your card in interest charges.
Travel Rewards Card Limitations
As we touched on earlier, travel reward cards are not perfect and there are some limitations that you should be aware of before signing up for one.
- Limited Reward Categories: Most travel rewards cards tend to offer the best rewards for travel purchases, with limited other reward categories. This means that unless you use your card regularly for travel purchases, you may struggle to accumulate massive rewards.
- Spending Caps: If your card does have additional higher reward categories, you may have spending caps. This means that while you may earn top tier rewards for a particular category, once you hit the quarterly or annual spending cap, any further purchases will only attract the base rate of rewards.
The Bottom Line
Travel credit cards can be a great tool if you tend to travel regularly. You can earn high rates of rewards for your travel purchases and enjoy some great travel-related perks.
If you have a co-branded card, it can even help you to achieve elite status in your airline or hotel loyalty program. If you're more sure whether cash back or a travel card is better, understand how much you suppose to get on each card.
However, it is important to be aware of the limitations and potential downsides, and if you don’t travel regularly you may need to consider other credit card options.
Can I get free flights with credit cards?
Yes, once you accumulate sufficient rewards, or in some cases, you may be able to pay for your flights with a combination of cash and your miles or points.
Are travel credit cards good for students?
Yes, in fact, there are some dedicated student travel cards. These are a particularly good choice for students who tend to travel during breaks or take semesters abroad.
Can I get a travel credit card with fair credit?
Most travel credit cards tend to be available for those with excellent credit, but there are some that are available for people with good or fair credit.
Can you use airline credit cards anywhere?
Yes, you can use your airline card anywhere that accepts your card network, such as Visa, Mastercard, or American Express. However, you may not get the most rewards for non-travel-related purchases.
Can you use hotel credit cards anywhere?
Yes, as with airline credit cards, you can use your card with any retailer that accepts your card network, but you may not get the best rewards rate for your purchases.
Can I get a concierge services?
Some travel card offers concierge services. If you're considering Amex or Chase cards, it's good to understand what Amex and Chase concierge offers.