Are Travel Credit Cards Worth It?
A travel credit card can help bring down the cost of your next trip, but it can come with potential pitfalls too.
Travel credit cards let you earn points or miles that you can then redeem for travel-based rewards such as flight tickets and hotel stays. An easy way to determine if a travel card is worth it is to look at the value of the rewards and benefits you stand to enjoy compared to the annual fee you need to pay.
You may want to consider getting a travel credit card if you’re a frequent traveler or if you want to capitalize on your everyday spending and earn travel rewards.
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Travel credit cards let you earn rewards such as free flight tickets and hotel nights.
Annual fees of travel credit cards typically vary from $95 to upward of $500.
You can choose from co-branded and non-co-branded travel credit cards.
Quick Pros & Cons for Travel Cards
Travel credit cards are not suited for everyone. While these cards offer multiple advantages, they come with their share of possible drawbacks too.
Pros & Cons
- High reward rates on travel-based spending
- Sizable spend-based welcome offers
- Airline/airport/hotel-specific benefits such as companion flight tickets, airport lounge access and free nights
- Complimentary loyalty program status upgrades
- Complimentary travel insurance coverage
- Ability to transfer points/miles to different loyalty programs with general travel cards
- Annual fees can be rather high
- Airline and hotel rewards might come with blackout dates
- Devaluation of reward points and miles remains a possibility
- Value of points/miles may vary based on different factors
- Inability to transfer points/miles to different loyalty programs with co-branded cards
- Need good to excellent credit to apply
- Higher APR than cards with no rewards
What Is a Travel Card?
The basic premise of travel credit cards is that they let you earn points or miles that you can redeem for travel-based rewards. This holds true for consumer and business travel credit cards alike. However, while some travel cards give you considerable freedom in redeeming rewards, this is not the case with all such cards. There are other differences as well.
Hotel Credit Cards
Hotel credit cards are linked to specific groups of hotels such as Marriott, Hilton and IHG. When you use these cards at properties that are part of the chosen group, you stand to earn reward points faster. For example, the Hilton Honors American Express Surpass® Card lets you earn 12x points per dollar at properties within the Hilton portfolio. Some such cards offer free account anniversary nights when you renew the card or by spending a certain amount each year. Other benefits might come in the form of elite status, hotel night credits, free on-property Wi-Fi, late check-outs and complimentary breakfast.
Airline Credit Cards
Airline credit cards are linked to loyalty programs of specific airlines such as United, Delta and Southwest. These cards typically offer reward miles instead of points. When you use these cards to pay for airline tickets through their issuers' travel portals or directly through airlines, you stand to earn high reward rates. Card-specific benefits might come in the form of free companion certificates, complimentary seat upgrades, discounts on in-flight purchases, access to airport lounges, priority boarding, free checked bags and TSA PreCheck/Global Entry fee credit.
General Travel Cards
General travel credit cards are not linked to any particular group or hotels or airlines. However, they still let you redeem your points/miles for travel rewards. The Citi Premier® Card, for instance, lets you earn 3x points per dollar on travel purchases as well as on other bonus categories. It gives you the ability to transfer your reward points to popular loyalty programs without needing to pay an additional fee. Depending on the card you get, you may also expect benefits such as travel protections, airport lounge access and statement credits for payments made toward eligible service providers.
Are Travel Credit Cards Worth It?
If you plan to pay off your credit card balance in full each month and avoid interest charges, the rewards you earn through travel credit cards, along with the benefits you stand to enjoy, might be worth the annual fee you need to pay.
While many travel credit cards charge annual fees that are under $100, premium credit cards charge up to $695. However, travel cards with high annual fees typically come with a range of benefits that often justify the higher annual fee.
For instance, the American Express Platinum Card, which comes with a $695 annual fee, gives you a $200 hotel credit, a $240 digital entertainment credit, a $155 Walmart+ credit, $200 in Uber Cash and a $200 airline fee credit each year. Cardholders get access to the American Express Global Lounge Collection at airports the world over, Marriott Bonvoy Gold Elite Status, Hilton Honors Gold Status and travel insurance coverage. In addition, this card comes with a sizable welcome offer and lets you earn up to 5x points on certain travel purchases.
Travel credit cards can work well when it comes to earning rewards such as free nights or flight tickets. For instance, a number of hotel credit cards offer free night certificates after each account anniversary. Often, just a single free night is enough to offset the cost of the annual fee. This is also the case if you get a free flight for yourself or a companion. Getting an airline card might be worth it if you take two to three domestic flights or at least one international flight every year.
Some credit card users make the most of travel cards by following a few simple hacking techniques. For one, you may earn a significant number of bonus reward points/miles by meeting a new card’s spend-based requirement.
Compare the value of the rewards and benefits of a travel card with its annual fee to determine if it’s a good fit for you. We have reviewed and compared over 2,000 consumer and business credit cards combined so that you can select one easily.
Should You Get a Travel Credit Card?
You may want to consider getting a travel credit card if you wish to redeem the rewards you earn for travel. Start by considering if you might benefit more by earning points or miles and how you plan to redeem them. For instance, if you are a frequent flyer with Delta, a card linked to the Delta SkyMiles loyalty program could serve you well. On the other hand, if you don’t favor any particular airline, you may want to consider a general travel card instead.
If you don’t travel much and wish to keep your rewards earning simple, you may benefit more by getting a card that offers cash back instead of miles. This might also be the case when you compare cash back with reward points.
High Reward Rates
It is common for travel credit cards to offer higher reward rates when you spend on travel. For example, the World of Hyatt Credit Card offers up to 9x total points per dollar on purchases at all Hyatt hotels. You also get 2x points on flights purchased directly from airlines and on a few other bonus categories.
Depending on the card you get, these may come in the form of free companion flight tickets, airport lounge access, priority boarding, free checked bags, free nights, complimentary breakfast, late check-out, airline fee credits and travel insurance coverage.
Several travel credit cards come with sizable spend-based welcome offers. For example, you could earn an early spend bonus of 100,000 miles by spending $10,000 on purchases within the first six months of account opening if you get the Capital One Venture X Rewards Credit Card.
Even if you only fly once or twice a year, the cost-savings from an airline credit card is definitely worth it. With airlines charging up to $35 per checked bag each way, a family of four can save up to $280 on a round-trip flight with free checked bags from your airline credit card. — Lee Huffman, credit card expert at BaldThoughts.com
Other Questions You May Have About Travel Cards
Getting to know the answers to other common questions about how travel credit cards work will hold you in good stead when making a selection.
Now that you know how travel rewards credit cards work, determine if you might benefit by getting one. If you decide to move forward, compare your options based on factors such as welcome offers, annual fees, reward rates, added perks and foreign transaction fees.
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