Making Travel Credit Cards Work For You and How To Choose One

By Bonnie Anderson (aka the Domestic Budget Goddess), TWM Core Contributor

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These little pieces of plastic that sit in our wallet are a big deal. So big, in fact, that American consumers acquired $1 trillion in credit card debt by mid-2017! Yikes! That’s a lot of airline tickets! However, credit cards aren’t all bad if you know how to use them wisely and they can be a huge asset to travelers. They are safer than cash, translate easily in other countries, and you can acquire HUGE rewards for using them.

Who doesn’t like FREE MONEY that you can use for traveling?

I used to be credit card shy. I only used cash or debit card because I knew that was tied to my bank account and that would keep me from going into the interest pit of doom.

However, 7 years ago I was lured in by an appealing “sign up” bonus credit card offer and took the plunge.

We have accrued thousands of dollars in rewards in the past seven years and I have never looked back. We have used these rewards for more than just traveling. There was even one year where I used our rewards to pay for all of my kid’s Christmas presents!

I use my credit cards almost exclusively for everything. Groceries, utilities, clothes, home improvement, airline tickets, gas, hotel rooms, Disneyland tickets, car insurance, mobile phone bill. . .  everything. We even put the down payment of our car on the credit card recently. Honestly, if they would let me put my house payment on there I would do it in a heartbeat!

I’m sure this is against everything that you have heard about credit cards. In past years credit cards have really gotten a bad rep. However, that is because there are some that do not know how to use them wisely.

The key is to pay them off every month. IN FULL. I even have mine set on auto-pay to pay the entire balance every month so I don’t forget. When you start the cycle of credit card interest it is difficult to get out and it only becomes a downward spiral. 20%+ interest is something I just don’t want to even think about.

Of course, in order to pay them off in full, you need to make sure that you are staying within a strict budget. Just because they give you a $10,000 line of credit does not mean that you can go on an all-expense paid trip to New York City on your credit card. In the wise words of Steve Martin “don’t buy stuff you can’t afford” and you will be just fine.

If you need help starting a budget I recommend using online websites such as YNAB and MINT that will link directly to your credit card and alert you when you are getting a little bit ahead of yourself. This really is the key to using your credit cards wisely.

Tip: In YNAB the money I spend on my credit card is even automatically set aside to pay off my credit card when it comes due.

When you are using this method you are really using your credit card much like a debit card. However, instead of getting zero rewards as you would with a debit card, you are actually making money on every single purchase that you make. You have bills to pay, so why not pay yourself also in the process? This is the secret that credit card companies don’t want you do know.

I will admit that credit cards may not be for everyone and if you are not disciplined enough to pay the entire balance off every month then I recommend an alternative method to pay for those upcoming vacations. You can find some other money saving suggestions in this article.

 

Deciding on a credit card

Two years ago we moved to the Midwest away from all of our family. Although I was happy with my basic rewards credit card, I wondered about getting a new credit card that would help us to optimize our spending and actually check off some of our travel goals. I figured this would force me to spend my rewards on experiences with my family instead of just redeeming them on Amazon for things that I was going to buy anyway. Having a travel credit card rather than a basic rewards credit card has made us intentional with redeeming our rewards and fits well with our goal of having adventures on purpose as a family.

If you too are rethinking your credit card situation and considering a travel credit card, here are a couple of questions that you should ask yourself: 

 

 

  1. What are your family goals?

Do you want to fly? Are you dedicated to a specific airline? Do you stay in hotels? Which hotels are your favorite? Do you neither stay in hotels nor fly when you travel? Are you an international traveler? Which benefits are most important to you?

There are hundreds of credit cards out there dedicated to traveling, but you can quickly rule out those that aren’t going to work once you have prioritized your family goals and asked yourself a few of these important questions.

  1. Where do you spend your money?

Travel rewards cards cater to the repeat customer. They help you save money on all travel expenses such as airfare, hotel, and transportation. The more you spend, the more savings (or benefits) you receive. This is especially true when it comes to cobranded airline and hotel travel credit cards.  This is also why you should put every expense that you can on your credit card to reap the best benefits and make it worth that annual fee.

Travel credit cards generally come in 3 categories:

  1. Airlines
  2. Hotel
  3. General travel

If you only fly occasionally, then an airline credit card may not reap the best rewards for you. If you are loyal to a certain hotel chain, then you might want to look into their credit card and see if their rewards add up.

I personally have a general travel credit card as we are diverse in the way that we travel as a family. If you aren’t sure how you spend your money, this calculator by valuepenguin.com may be helpful in determining a few credit card suggestions that will give you the maximum rewards based on your regular spending.

Before you sign up for a credit card find out as much information as you can about it. Read the fine print and then continue to learn more once you have committed yourself to a card. This is the best way to make sure you are using all of the benefits that your card has to offer. Some credit cards even offer exclusive benefits such as early check-in and baggage insurance.

 

Credit cards worth looking into

Once you have determined what your goals are and where you spend your money, it is time to check out a few cards and see if they work for you. There are hundreds of travel credit cards out there to choose from and it can get confusing really fast.  We have done the research for you by analyzing cards in each category to help you get started. All of these cards are great beginners cards for the average family. Many of these cards also offer higher tier cards with more expensive annual fees (but greater benefits) for those that are big spenders or travel for work.

General travel 

These are the most versatile credit cards as they are not tied to any particular travel brand and offer the flexibility to redeem through their website for statement credit, cash back, gift cards, or transfer points to partners to redeem for rental cars, hotel packages, cruises, and airline tickets. These cards generally offer a flat reward rate and are particularly attractive to credit card users who prioritize flexibility.

1. Capital one venture

  • Unlimited 2x miles per dollar on every purchase
  • Sign up bonus- Earn 50,000 bonus miles once you spend $3,000 on purchases within the first 3 months of opening account. Equal to $500.
  • $0 annual fee for the first year, $95 after that. 

Best feature: Versatile rewards redemption using “purchase eraser” allows you to easily redeem your rewards to delete purchases for any travel related expense including flights from any airline, travel accommodations, cruises, and even public transportation costs like cabs and subways. Rewards can also be redeemed for gift cards or straight cash.

Consider: This card requires a $95 annual fee, but if you use it as your designated credit card, you will more than make up the fee in rewards.  

 

2. Chase Sapphire Preferred

Unlimited 2x points on travel and dining at restaurants. Plus, earn 1 point per dollar spent on all other purchases.

  • Sign up bonus- Earn 50,000 bonus points after spending $4,000 on purchases in the first 3 months of account opening. Equal to $500.
  • $0 annual fee for the first year, $95 after that.

Best feature: Get 25% more value when you redeem your points for airfare, hotels, car rentals, and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 towards travel instead of $500.

Consider: You only earn 2x points on travel and dining and only 1 point per dollar on everything else. Depending on where you spend your money, this could reap less rewards than other cards. However, if you are willing to use the Chase Ultimate Rewards program to book your travel you may be able to make up the difference in points with their great redemption rate.

3. Discover it Miles

  • Unlimited 1.5x miles for every dollar spent on all purchases from airfare and hotels to groceries and online shopping.
  • Redeem miles in any amount for statement credit, cash, or gift cards through their website.
  • No annual fee

Best feature: Instead of offering a sign-up bonus as most other cards do, Discover will match all the miles you’ve earned after the first year. For example, 30,000 miles turns into 60,000 equal to $300 in rewards. This could mean big bucks if you use this card exclusively for the first year.

Consider: Although you avoid the annual fee with this card, you may only receive about half of the rewards points that you would signing up for an annual fee credit card. If you are willing to give a little to your credit card it will give a LOT back.

4. Barclaycard Arrival Plus World Elite Mastercard

  • Earn 2x miles on all purchases
  • Sign up bonus- Enjoy 40,000 bonus miles after spending $3,000 on purchases in the first 3 months of account opening. Equal to $400.
  • $0 annual fee for the first year, $89 after that.

Best feature: If you are a world traveler this is an excellent choice as it does not have foreign transaction fees and also provides chip-and-pin capability which is standard in much of the world, but rare on cards issued in the United States. When traveling abroad, you’ll find that many kiosks and other automated payment systems require you to use a PIN to verify your identity rather than a signature.

Consider: Redeeming your miles can get tricky with this card as it has a minimum redemption of $100- equal to $5,000 in spending and although the annual fee might be a few dollars less than comparable cards, the sign-up bonus is also less than its competition.

Hotel 

Hotel credit cards are an obvious choice for those that love the benefits of earning free nights and special status. These cards work best for loyal guests of one particular hotel chain or group. Points have to be redeemed through that brand or its partners so you may be a bit more limited in redemption options. There is really only one hotel card worth mentioning that stands leaps and bounds above the rest.

1. Starwood Preferred Guest (AMEX)

  • Earn 30,000 starpoints when you make $3,000 in purchases within the first 3 months.
  • $0 annual fee for the first year, then $95 after that
  • Earn 2 Starpoints for each dollar of eligible purchases spent on the card at participating SPG & Marriott Rewards hotels. Earn 1 Starpoint for all other purchases.

Best Feature: Starpoints add up quick at a rate of 2.4% which is considerably higher than the average of 1.5% of most cash back credit cards. Points can also be transferred at a 1:1 ratio to most major airline loyalty programs.

Consider: The most obvious drawback of this card is the flexibility in rewards accumulation and redemption. Although it has a broad array of redemption options, you really get the best value when using your card and redeeming your Starpoints at a Starwood Property or when transferring them to an airline partner. Also, existing American Express account holders may not be eligible for the sign-up bonus offer.

Airline

Most airlines offer a co-branded rewards credit card. These cards can reap some serious rewards if you are a frequent traveler and fly a specific airline 100% of the time. Of course, making sure your hometown airport is a “hub” for the airline you choose is also important as this may determine how many options you have when it comes to flights.

These cards earn the most miles when used for flights on a specific airline and spending with affiliate partners, you can even earn double or triple the miles this way. When used for everyday expenses, these cards typically earn a much lower rate of one point per dollar. If avoiding some airline headaches such as baggage fees and boarding is important to you and you like the possibility of free tickets, airline credit cards can be your best friend as they offer many of these benefits as loyal customer.

1. Southwest Rapid Rewards Plus

  • Earn 2 points per $1 with purchases made directly with Southwest airline, earn 1 point per $1 on all other purchases.
  • $69 Annual fee which is applied on your first billing statement.
  • Earn 40,000 points when you spend $1,000 on purchases in the first 3 months.
  • Bags fly free.

Best Feature: Two words: Companion Pass. If you can earn enough points, Southwest offers an unlimited companion pass that allows you to bring your significant other with you for free for up to two years. You must reach 110K points in a year to receive this benefit, which may make this card a no-brainer if you put everything on your credit card and are loyal to Southwest airlines.

Editor’s Note:  Your companion fair is only good for one year, but if you use the points wisely you can extend it.  Check out this article for additional information on how to make this card work for you.

Consider: Although most travel cards wave foreign transaction fees, this card does not, so if you are planning on traveling abroad, make sure you have another card in your wallet to avoid unnecessary charges. Also, to get the most out of your points redemption, it is important to redeem points to book flights on non-holiday weekends rather than during the busy holidays or on last minute flights.

2. Alaska Airlines Visa Signature Card

  • Earn 3 miles for every $1 spent directly with Alaska Airlines and Virgin America purchases. Earn 1 mile for every $1 spent on all other purchases.
  • $75 annual fee applied to your first billing statement.
  • Free checked bag for you and up to six other passengers on the same reservation with Alaska and Virgin America.
  • Alaska’s Famous Companion Fare. Every year on your account anniversary redeem this benefit for a $99 ticket (plus taxes and fees from $22) on Alaska and Virgin America flights booking on alaskaair.com with no blackout dates.

Best Feature: This credit card is offering a huge sign-up bonus right now! In addition to earning 30,000 bonus miles after making $1,000 or more in purchases within the first 90 days, Alaska Airlines is also offering a limited time buy one ticket, get one for just the taxes and fees. This makes this card’s sign up bonus easily worth $1,000 or more. This card also transfers at a 1:1 ratio over to other collaborating airlines giving you more flight options.

Consider: Although the yearly companion pass is a huge perk of this card, you can only use the companion pass when you book a ticket you pay for with cash, not miles. This means that you are paying full price for a ticket you could otherwise buy with your rewards miles just to use that companion pass. This may end up costing you more if you aren’t deal savvy and these passes are also only good for one year; you can’t roll them over.

3. United MileagePlus Explorer Card

  • Earn 40,000 bonus miles after you spend $2,000 on purchases in the first 3 months as well as 10,000 bonus miles if you spend at least $25,000 in a year. Enough for a round-trip flight from L.A. to New York.
  • $0 annual fee for the first year, then $95 afterwards.
  • Earn $2 per $1 spent on tickets purchased from United, and 1 mile per $1 spent everywhere else.

Best Feature: This is a great card for those that like all of the little extras when you fly such as travel protection (you’ll get reimbursed up to $500 if your flight is delayed at least 12 hours, up to $12,000 in reimbursements if you have to cancel a non-refundable trip, and up to $3,000 in coverage for lost luggage), purchase and auto rental protection, priority boarding, and club passes just to name a few.

Consider: The free-bag allowance is only good on United or United Express flights. If you book what’s known as a “codeshare” (United flight operated by another carrier), you don’t get the free bag allowance. There are also fees for booking late so this card is not for the procrastinator.

Whether you are an occasional traveler, an avid flyer, or appreciate a nice relaxing hotel stay, there is a travel credit card that will work for you. It is worth the little bit of extra work to find out which card will work best for you. So, instead of sticking to your cash or debit card, try out a travel credit card for all of your daily purchases. I guarantee after one year you will be sold as you redeem your rewards to take an extraordinary adventure with your family at no cost to you!

Bonnie Anderson

Bonnie Anderson

Domestic Budget Goddess, Core Contributor

Bonnie loves finding a great deal that can get her closer to the next exciting adventure with her husband and 5 kids. Her degree in Family and Consumer Sciences has helped her to claim the title of the “domestic budget goddess” by neighbors and friends throughout Central Illinois and Northern Utah.