Travel rewards credit cards—you get advertisements for them all the time. Those ads aren’t only from your bank, but from airlines, hotel companies, and cruise lines. If you use them right, these credit cards can be super lucrative. They can earn you diverse rewards. Hotel perks, flight upgrades, free trips for you and your family, you name it! But as a business or leisure traveler, how do you choose? This guide reviews the main types of travel rewards credit cards and some things to consider.
Types of travel rewards credit cards
There are two major types of travel rewards credit cards:
1. Branded credit cards from airlines, hotel companies, cruise lines, etc.
These are cards associated with travel companies. Some examples are Southwest Airlines Rapid Rewards Visa and Starwood Preferred Guest American Express. If you belong to a travel loyalty program, these cards can give you more bang for your buck. They often entitle you to various perks and some allow you to earn loyalty points at an accelerated rate. The disadvantage of these cards is that your redemption options are usually limited to the travel company. Also, some companies have blackout dates or other restrictions on points redemptions.
2. Flexible rewards credit cards
These are travel rewards credit cards not associated with any specific travel company. For example, the Capital One VentureOne Visa and the U.S. Bank FlexPerks Travel Rewards Visa. The main advantage of these cards is that you earn points. You can put earned points toward a flight on any airline, a room at any hotel, or sometimes even redeem for cash. Many of these cards also offer extra travel benefits. These may include rental car insurance or airport lounge access. The disadvantages are that they can have (sometimes very high) annual fees. Also, it often requires a lot of points to earn even basic rewards.
How To Pick a Travel Rewards Credit Card
So, what plastic payment method is best for you? Here are six things to consider when choosing a travel rewards credit card.
Your spending habits. As Tim Winship of FrequentFlier.com puts it: Are you a frequent flier or a frequent buyer? If you fly often with a specific airline or stay at a certain hotel chain, then a branded credit card is best. Having a branded credit card will provide the most rewards! On the flip side, if most of your credit card spending is not travel-related, then a flexible rewards card will likely serve you better.
Brand partnerships. Many airline-branded credit cards offer perks at hotels and vice versa. For example, the United MileagePlus Visa entitles holders to room upgrades, complimentary breakfast, and other amenities at hundreds of hotels worldwide. Partnerships also take place at the loyalty club level—with the IHG Rewards program, you can choose to earn miles on several airlines, including Delta and United.
Earning structure. Branded credit cards usually offer more points per dollar you spend on their brand, whereas flexible rewards cards usually reward you based on a fixed percentage of total spending.
Signup bonuses and other perks. Signup bonuses can be significant. The Marriott Rewards Premier Visa gives you 50,000 bonus points (enough for a free night) if you spend $1000 in the first three months. Similarly, many cards get you free upgrades, baggage fee waivers, rental car insurance, elite status in loyalty programs, and more.
Flexible redemptions. The best cards allow you to redeem your points for different travel services (i.e., flights, hotels, car rentals, etc.) and don’t impose blackout dates or other restrictions.
Annual and transaction fees. Flexible rewards cards usually have higher annual fees than branded credit cards. Some cards, like the Chase Sapphire Preferred card, have no foreign transaction fees, which is essential for overseas travelers.
Of course, you aren’t limited to just one credit card, and if you travel frequently for business, you might do well to have an airline-branded card, a hotel-branded card, and a flexible rewards card. Here are two comparison tools that can help you find the best card or cards to keep in your wallet:
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