How To Pick The Best Rewards Travel Credit Card For You: A Beginners Guide

How To Pick The Best Rewards Travel Credit Card For You:

Whether you travel domestically, internationally, frequently or just once a year, travel reward credit cards can unlock free flights, upgrades and other perks. Here’s what you need to know about choosing the right one for you. 

You’ve heard the stories: people “travel hacking” or people using their credit cards to earn rewards, points and miles to book free flights and hotels.

It may sound too be good to be true, but you really can earn hundreds of thousands of miles and points to use towards free travel and other travel perks. The best part is, you don’t need to spend any money outside of your normal spending or step foot on an airplane. 

What are travel reward credit cards?

Travel rewards credit cards can earn points, miles or cash-back for everyday purchases. You can then use those rewards for free travel, towards a hotel stay, car rental, or to offset the cost of travel.

But which is the best one?

The best travel rewards credit card for you is the one that rewards you for spending what you already do and gives you the best value as opposed to one that increases your spending just for the sake of earning points.

For example, if you travel infrequently and your everyday spending is on groceries, gas, and restaurants, a premium or elite travel reward credit card that offers VIP airport lounge access won’t be of interest to you especially since premium travel reward cards often have a very high annual fee.

Instead, you might be better off with a flexible rewards credit card or cash-back credit card that doesn’t charge an annual fee but earns rewards which you can use on different airlines, hotels or to offset the cost of your trip.

What credit score do I need to get a travel rewards credit card?

In general, a good to excellent credit score is your passport to qualifying for some of the better travel reward credit cards. The exception is a secured credit card, which can be used to build credit while earning rewards benefits.

You can check your credit score using one of the three major credit bureaus:  Experian, Equifax, and TransUnion.  Then there’s FICO and VantageScore. All of these credit-reporting agencies use your credit history data to generate your credit score — a three-digit number that predicts a consumer’s ability to repay a debt.

The higher your credit score, the more likely you’ll repay debt.

If you’re looking to raise your score but don’t understand the scale you may be wondering, “What is the highest credit score? ” Credit scores can range from as low as 300 to 850.

Generally, credit scores are considered good when they’re above 700 and excellent when above 750.
{credit scores will vary between credit reporting agencies}

Very Poor: 300-579

Fair: 580-669

Good: 670-739

Very Good: 740-799

Excellent: 800-850

How to pick the best rewards travel credit cards

What Are The Major Types of Travel Reward Credit Cards?

There are several types of rewards credit cards. Although they all allow you to earn reward points through spending, they don’t all work the same. It’s up to you to figure out which one is best for you. 

Co-Branded, General, Flexible Or Elite Rewards Credit Card?

Most airlines have their own rewards system, also known as a  “frequent flyer” program. You earn points/miles not only when you fly with that airline but also when you use one of their approved partners such as car rental agencies, hotels or certain retailers. You can also earn frequent flyer miles by using that airlines co-branded credit card-if one exists.

Co-branded airline reward credit cards:

A co-branded airline reward credit card allows you to earn frequent flyer miles faster by giving you points for everyday purchases you make using your co-branded airline credit card.

For instance, Delta has an American Express co-branded card,  JetBlue is co-branded with Barclays and Alaska Airlines is co-branded with Bank of America. There are many more.

Once you’ve earned enough miles, you can then use them for upgrades or to book flights on that airline. Although you can’t transfer your miles to purchase tickets on another airline, you can use them with one of their partners.

For instance, if you have a co-branded American Airlines / Citibank credit card, you could use your rewards to fly with Japan Airlines, British Airways and Qantas because they are all part of “Oneworld airline alliance.”

One last thing, in addition to points, co-branded credit cards often offer perks like airport lounge access, priority boarding, free checked bags, and discounts on in-flight purchases.

Co-branded airline reward cards are best suited for individuals who are loyal to a particular airline, so choose your co-branded card wisely.

Co-branded hotel credit cards:

If you’re more of a weekend road tripper and don’t fly airlines much but like staying in hotels, a co-branded hotel credit card might be right for you.

With a co-branded hotel credit card, you can earn room upgrades and complimentary stays and bonus points for booking hotels at your favourite hotel chain.

General Reward credit cards / Flexible travel rewards card:

If travel flexibility is important, you’re not loyal to one airline or hotel chain or you don’t travel much, you might want a flexible rewards card or general rewards card. 

USAA rewards credit cards are a good example.

These flexible reward cards are not affiliated with any particular airline or hotel. Instead, you’ll be able to cash out at dozens of airlines and hotel loyalty programs. Depending on the card, you might also be able to use your rewards on cruises, for merchandise, gift cards or just cash out. 

General rewards travel credit card perks USAA

 

Elite Reward Credit Cards With Luxury Perks

Air mile cards aren’t the only type of travel reward cards available to you.

Where some credit cards allow you to redeem your points for airline tickets, hotel stays or car rentals; elite cards give you luxury travel benefits, extraordinary upgrades and travel perks.

You’ll need an excellent credit score to qualify for these cards, and the annual fees can scare some people, but if you frequently travel, enjoy the finer things in life, those fees can be worth it.

Depending on the card, elite rewards cards offer a range of luxury perks from 24/7 concierge services, free access to airport lounges, room and airline upgrades and more.  Here are a few more samplings of benefits and perks an elite rewards credit card might offer you.   

  • Large sign-on bonus
  • Earn more points per dollar spent
  • Uber credits
  • Airline fee credits
  • Reimbursement for Global Entry or TSA Pre-Check applications
  • Room upgrades
  • Hotel credits to spend on dining, spa or other activities
  • Access to VIP airport lounges around the world
  • Personal chauffeurs
  • Global luggage delivery services
  • Private jet charters
  • 24/7 access to concierge service
  • Reimburse you for airline checked luggage fees
  • Free or discounted flights, hotel rooms, and experiences
  • Give you priority access to special entertainment and sporting events
  • Cover your rental vehicle for theft and damage

General Cash Reward Cards

Cashback cards offer cash back for every dollar spent. Typically, this can mean a flat percentage of 1%, 1.5% to 2% cashback for all purchases. Some cards reward you for buying anything, and others only give you points for purchases in specific categories such as groceries, gas, restaurants, hotels or airline tickets so look for a card that matches your spending habits.

What Else You Should Consider

There’s no best credit card out there for everyone because every person’s situation and desires are different.  As you look at different reward credit cards, ask yourself how much value you can get out of it.

Here are some additional considerations:

  • Higher Interest rates: Many travel rewards cards have higher interest rates (APRs). That’s why it’s vital to pay off your cards in full each month to avoid paying interest on your purchases.
  • Is There an Annual Fee: Annual fees vary by credit card, ranging from free to several hundred dollars for elite reward cards.
  • Sign-up bonuses: Check the sign up bonus. You usually have a set amount of time to spend a set amount of dollars to earn the bonus. 
  • Additional perks: look for credit card perks such as access to airport lounges, credit for checked luggage or tickets to special events.
  • Foreign transaction fees: Some credit cards waive foreign transaction fees when you use your credit card abroad, while others do not. If you do a lot of international travel, you probably don’t want a card that charges you foreign transaction fees.
  • Amex Credit cards are not accepted everywhere: If you’re planning to travel overseas, you may want to take along a visa or master card because American Express is not accepted everywhere.

Keep in mind there might not be a credit card out there that gives you everything you want, so it may be worth getting more than one card to achieve your travel goals. The point is to always use one of your reward-earning credit cards for everyday purchases to maximize your points and miles for flights and travel every year.

It may take extra effort and planning, but if travel and saving money on flights is a priority then travel rewards credit cards might be for you.

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