Travel credit cards often promise alluring benefits such as complimentary flights and hotel stays, yet may come with rigorous spending requirements and interest charges that could nullify their value.
To assist in making an informed decision about whether a card is worthwhile, take into account several key aspects.
1. They’re not for everyone
Credit card rewards can be extremely valuable, yet not everyone finds them suitable. From spending the time to accumulate points to ensure that they don’t expire prematurely, travel cards require significant attention from cardholders – not to mention they usually come with an annual fee attached.
To maximize your earning potential, select a card with an attractive rewards rate and flexible redemption options for rewards earned. Also consider any perks such as trip protections and airport lounge access that come with it.
Make sure that the annual fee justifies its costs, taking into account any initial bonus offers or other costs associated with starting up with a card. NerdWallet’s free CardMatch tool can help you find one that suits your credit history and spending habits as well as which cards could offer the greatest rewards potential.
2. They’re not ideal for infrequent travelers
Travel cards often carry an annual fee, yet can offer great returns if used consistently to earn rewards that surpass this expense. This is particularly true if the card offers valuable perks such as travel credits or access to airport lounges.
Airline and hotel credit cards may offer significant value to frequent travelers, offering generous welcome bonuses along with amenities like free checked bags and priority boarding.
General travel credit cards, on the other hand, may be ideal for frequent travelers who can take advantage of transfer partners to maximize points earned and redeem them at higher values than usual (usually around 1 cent per point redemption value offered by most travel cards). But even this doesn’t make these cards appropriate for infrequent travellers as rewards won’t accumulate as fast and they won’t be able to make full use of all card benefits available to them.
3. They charge higher interest
Travel credit cards offer many attractive perks that could easily justify their annual fee, so before applying, be sure to consider which rewards and benefits fit with your travel goals and lifestyle.
Some travel cards earn flexible points that can be redeemed for airline tickets and hotel stays through their issuer’s travel portal, or transferred to other loyalty programs – often outperforming cash-based credit card rewards. Others even provide benefits like complimentary or discounted hotel stays as well as airport lounge access.
To qualify for welcome bonuses, it’s usually necessary to spend a specific amount within a specified time after opening an account. Bear in mind that applying for credit cards triggers hard credit inquiries which can temporarily reduce your score; card issuers use this data when deciding if and how they will approve you for their cards and on what terms.
4. They’re complicated to redeem
Credit cards that offer travel rewards can be complex to use and redeem effectively, requiring tracking multiple categories of spending and benefits as well as keeping up with redemption options and restrictions, like blackout dates. Doing this efficiently may feel like an insurmountable task if you own multiple travel cards at the same time.
If you struggle to manage multiple credit cards or have poor financial habits, a travel rewards card may not be worthwhile for you. On the other hand, if you pay your balance off every month responsibly then this type of card could prove quite worthwhile.
Credit card issuers offer portals where you can redeem points or miles to book flights, hotels, car rentals and merchandise – usually statement credits, gift cards or merchandise – but the value of these redemptions varies – typically flights and hotel stays are more cost effective options than cash back or gift cards.
