Selecting an ideal travel credit card can have far-reaching financial ramifications. There are various factors to keep in mind, including annual fees, rewards rates and any associated perks such as lounge access.
Co-branded travel cards may offer attractive perks like free checked bags and priority boarding as well as mileage or point redemption for statement credits, gift cards and merchandise; but their advantages may not outweigh costs associated with international transactions such as non-sterling transaction fees, cash withdrawal charges and currency markups.
1. You’ll earn rewards
Credit card purchases provide numerous opportunities to accumulate points and miles, with some cards offering special bonus categories that enable you to do just that. Travel is generally the best use for redemption of these rewards; therefore, making travel the ultimate goal when redeeming them.
Finding the appropriate credit card for travel depends on your spending habits and goals. Begin by looking for one with a sign-up bonus you can meet within months; make sure it fits with your buying patterns, too. Most travel cards do charge an annual fee but often the rewards more than offset its cost.
Many travel cards are co-branded, meaning their issuer has joined forces with an airline or hotel loyalty program, to give you maximum value when used for purchases at those specific categories, like airlines and hotels. Other cards may offer point multipliers or bonuses across broader categories like restaurants and grocery stores.
2. You’ll save money
Travel credit cards can save you money, especially when used to book airfare, hotels and car rentals. But any savings will only become apparent if you spend enough to earn rewards worth the annual fee; and can responsibly manage expenses to avoid carrying a balance each month.
As with travel rewards cards, dining, grocery and gas credit cards may offer additional savings potential by offering rewards in specific spending categories like dining, groceries and gas purchases. With greater redemption values than travel reward cards these credit cards allow foodies, meal-preppers and commuters to reap the benefits.
Consider how you’ll redeem your earned rewards. Some travel credit cards allow users to redeem points or miles for cash back, gift cards or charitable donations while others provide higher redemption value such as airfare, hotel stays or rental cars. To make sure your card saves money use NerdWallet’s free tools to gain insight into your spending patterns and get personalized recommendations of cards that could help expand your horizons.
3. You’ll be prepared for emergencies
While it’s always wise to establish an emergency savings fund – typically three to six months of expenses – having credit card travel can help prepare for anything unexpected that arises. For example, during natural disasters, businesses may go cash only due to unavailability of credit card machines (Families Can Prepare 2016). When traveling through such areas having these situations may become cash only businesses and having one on hand could save the day; keeping it safely stored away won’t make your wallet or purse an easy target for thieves (Sisolak 2014).
Always review your card activity while on holiday to make sure all purchases were indeed made by yourself.
4. You’ll be prepared for unexpected expenses
Even when planning ahead, unexpected expenses often pop up while traveling. Credit cards offer an effective solution for accommodating these unexpected costs without blowing your travel budget.
Credit card issuers frequently offer travel portals where you can book hotels, flights and other travel services at discounted rates, helping reduce overall trip costs. Some also provide travel insurance plans which cover cancelled flights or lost luggage.
Travel credit cards provide peace of mind while traveling, but before applying for one make sure your financial house is in order. Carrying an outstanding balance or being late with payments could make qualifying difficult; check your Experian credit score free today to see where you stand – travel rewards cards require excellent or good scores so save up early for travel rewards cards to maximize savings potential!
