Choosing the right travel credit card can be the difference between substantially reducing the cost of a holiday trip or not.
If you’ve ever traveled far, then you know that there are perks of traveling with a travel credit card. You’ve probably seen people around you get free upgrades, access to the first class lounge at the airport or even great deals on hotel rooms by flashing a piece of plastic. Seeing all this, you know that getting a decent travel credit card is probably a good idea, and you’d be right.
When you travel, it’s necessary to have a credit card on you that can help during emergencies and give your perks for all your travel related expenses. Simply having traveler’s cheques or cash isn’t going to help you in that department, though they can be helpful in some situations. Whenever you travel, especially internationally, using a credit card for the majority of your transactions can often be very wise.
The best part about travel credit cards, however, is that not only will they give your perks while traveling, they help you prepare for travel as well. If you use certain cards to make everyday purchases, you could end up accruing a lot of rewards points or miles that will come in handy at some point, maybe when you surprise someone with a trip to Fiji, or decide to send your parents on a second honeymoon to Turkey.
More than anything else, travel credit cards allow you to regularly plan travel into your life. Sometimes, getaways aren’t just luxuries, but necessities, and these credit cards can help you build up a financial way for you to take that vacation you need to take. In fact, with the amounts of tie-ups and subsidized travel options that these cards offer, it might just be crazy to travel without one.
So, let’s get you settled with good travel credit card options, because you really should get them. The first thing you need to know? The different types of rewards that different cards can give you.
The Mile Card, the Point Card, and the Generalist
Before you pick a travel credit card, you need to know the kinds of cards out there. No two people travel in the same way or have similar travel preferences, so the product offerings in travel credit cards have diversified to suit various needs. While this is a good thing, it might leave you a little confused as to which card best suits your needs, so let’s break it down into three categories.
The Mile Travel Credit Card
The Mile Card is the type of card that has a rewards structure primarily built around miles. Now, when you travel, accruing huge rewards in miles can mean many upgrades and plane tickets, so these cards are very, very useful. As with anything, there are a couple of pro’s and con’s with this card.
The pros first:
- You get to earn miles when you use the card on general spending and when you fly with that card’s co-branded airline partner. So every time you book a ticket with this card, you’ll really be racking up the miles
- The card can get you privilege services at your airline. This can mean free luggage allowances, lounge access, rental discounts, and subsidized upgrades. If you’re someone who travels frequently for work, these privileges could make a tangible difference to your travel.
- These cards usually come with either hotel or dining privileges, which also help you rack up miles even though you’re not travelling. Also, you may get discounts at certain chains depending on who the credit card partners with.
- You usually only get miles with one airline, or an alliance like the Star Alliance if your card’s co-branded airline is a part of an alliance. In order to reap all the advantages of the Mile card, you’d have to be loyal to one airline, and one airline alone.
- The miles have completely variable value, and change with each airline. So, 10,000 miles in one airline could mean drastically different things on another.
- Lately, with the aviation industry taking hits sometimes domestically and sometimes internationally, the value of your miles could depreciate seemingly overnight. This is not to say that your rewards structure will not have any value, but that it may not have as much value as you had anticipated going in.
The Point Travel Credit Card
This type of credit card allows you to accrue points in the rewards currency of the provider. This basically means that your credit card providers get to set a predetermined value for the points you earn for every currency unit you spend. Usually, the points are accrued on a 1:1 ratio, but if you pick the right card, it could be a 1:2 or even 1:3 on some transactions.
- This type of card gives you a bunch of flexibility! The points that you accrue on these cards can often be used to redeem many discounts, and even have ties to frequent flyer programs. With the right card, you could exchange your points for miles on a variety of airlines, which will give you significant discounts on your tickets
- These cards usually offer double points for dining, flying and potentially hotel stays, so most travel related expenses.
- You won’t be tied to one airline if you trade for miles. This means that not only will you have the flexibility to choose the best ticket deal every time, you’ll also be able to choose the airline that gives you the best deal on your rewards miles. This way, you remain protected in case an airline devalues its miles.
- You don’t get as many airport privileges. You will probably have to pay for checked, and even carry-on baggage, and your upgrades will not be as cheap.
- You won’t get as many miles as the mile cards, which may not work for you in the long run depending on your travel needs.
- There are generally some restrictions on the brands that these cards tie up with, though they are still more than the mile card.
The Generalist Travel Credit Card
The generalist is the generalist. It favors neither the miles nor the points rewards system and offers a balance of sorts instead. The biggest difference between these types of cards and the others is that you are essentially applying reward point to travel purchases you’ve already made.
- Your reward points can be applied to pretty much any travel related expense. Seriously.
- You’re reward points don’t get devalued due to fluctuations with airline companies or hotel chains and their reward schemes or structures.
- You’ll be able to redeem points at all times of the year, unlike the Mile or the Point cards that sometimes don’t allow the rewards to be used during off season travel.
- You won’t have as many airport privileges, which can be painful if you’re a frequent flyer.
- You won’t accrue as many miles as you would, but it works out when you look at the flexibility afforded to you in terms of you choosing the lowest price from multiple airlines instead of being loyal to just one.
What Travel Credit Card Will Work For You?
Now that you know these travel credit cards, you’ll need to pick the right one for you. A Mile type card will work for you if you are any of these.
- a) a frequent traveler who knows the ins and outs of rewards charts and likes airport privileges
- b) are loyal to a single airline and/or hotel chain
- c) can fly at a moment’s notice to get the best deal on travel.
A point type card is for you if
- a) you like being able to choose the best ticket deals from multiple providers
- b) you’re skeptical of airlines and their frequent flyer programs or rewards schemes
- c) You only make a few types of travel expenses, and are fine with making choices based on discounts your card might dictate
The generalist type card will work best for you if
- a) You want complete freedom over all your travel purchases and want your rewards to apply to them regardless of the provider
- b) You don’t travel often so airport privileges aren’t a big deal
- c) You take holidays, and ones that cost a lot, during peak times when it is expensive and need your reward points to subsidize this.
Or you could be like the zany folks who have one of each type, or two types, and use them carefully to get a lot of benefits. If you take this route, make sure that you don’t cancel them too soon, or default on payments, because that could affect your credit card. If you are careful, two of each type of card could help you earn some amazing rewards that could potentially get you an entirely free holiday if planned properly. Still unsure? Check out this handy flowchart for some help!
You Figured Out the Type of Card you Need, What Now?
Now, you need to figure out which card in your chosen category works best. We’ll mention a few things you’ll need to look out for, and so long as you do, you’ll be fine.
An initial sign up reward is essential when looking at a card. In order to earn a lot of rewards, you’ll probably have to spend a lot of money in a short period of time. Some folks may be able to, but some might. So, to ensure that you’ll still get a sizable reward for signing up in the first place, make sure that the card you pick has a good signing up bonus, be it miles, points or a cash-back type reward.
Annual Fees can often be the hidden part of a credit card that you don’t anticipate, but could exist. So check out your cards to make sure that there isn’t an annual fee. That said, some cards with annual fees have amazing benefits that are worth it, so if there is a fee, calculate the value of the benefits to the fee and see if it makes sense to get the card. Compare the benefits to a card with no annual fees to see what the fees actually pay for, and whether those services or products are of any value to you or your travel habits.
Pick cards based on your travel preferences. This cannot be stressed enough. Pick an airline card if you only fly by that airline, or a hotel card if you only stay at one hotel. These cards not only subsidize your purchase of services from these providers, they also provide additional perks and bonuses, often through tie ups with other providers.
Check out the brands that your card works with. If your card gives you significant rewards for shopping at stores you generally shop at, or eating at your favorite dinner joint, then get that card. This way, you’ll earn rewards points during your everyday life without changing your preferences. You’ll also get bonuses or special discounts at the stores or restaurants sometimes, which cannot hurt.
A low spending minimum is necessary. So, most credit cards have spending minimums, and they have to in order for them to be financially viable. When getting a card, seriously consider the spending minimum. Will you be able to fit that into your budget? If not, then it might be worth looking at a card with a lower minimum. Never stretch yourself to meet the spending needs of a credit card unless you travel more than 5-6 times a year.
This is going to matter to all you international travelers: foreign transaction fees. While credit cards give you great deals on foreign exchange, they do charge a service fee for each transaction. To circumvent this, make sure you get a card with either no fee, or the lowest fee you can. Of course, of your travel is primarily domestic, this will not matter much.
So there! Now you have a comprehensive look at the types of travel credit cards out there. Make your choice of card/s, and get started on that dream vacation. Remember, when traveling with a travel credit card, you’ll actually save a lot of money on travel by getting perks and benefits, so take advantage of this and make everything count.