Don't Overlook These 6 Factors When Choosing a Travel Rewards Credit Card

Updated July 26, 2021

We've all seen the photos and videos on social media of influencers traveling the world, staying at lavish resorts, flying first class, and enjoying the finer things in life. What most people don't realize is that there are ways to experience those things yourself without the hefty price tag. 

Earning travel rewards is an easy way to scratch your travel itch, especially if you choose the right travel rewards credit card. This guide illustrates how travel credit cards work, how you can leverage spending to earn points and miles, and how to choose the best travel card for you. 

How Travel Cards Work

Travel credit cards earn rewards, usually in the form of points or miles, that you can use to fund travel. 

As you make purchases using your credit card, you'll earn rewards, which are typically managed through the credit card company's loyalty rewards program. Depending on the card, you may earn specific rewards rates based on spending categories, like grocery stores, dining out, or Amazon.com purchases. 

Some cards have rotating spending categories that change each quarter. Co-branded travel cards, like a hotel or airline credit card, may earn higher rates for in-brand purchases. 

Rewards carry a value set by the card issuer or rewards program. As you earn rewards, you can redeem them through your card's loyalty program for a host of redemption options, including: 

  • Flights

  • Airline upgrades

  • Hotel accommodations

  • Car rentals

  • Cruises

  • Vacation packages

  • Points transfer to travel partners

Think of points and miles as types of currency used to pay for travel purchases without using cash. 

Six Factors to Consider When Choosing a Travel Rewards Card

The goal of travel rewards is to fund free (or almost free) travel. When choosing a travel rewards card, you should consider your travel goals and how you plan to use your rewards. 

For example, If you only fly American Airlines, it wouldn't make sense to get a Delta Airlines credit card. 

Below are other factors to consider when choosing a travel rewards credit card. 

1. Sign Up Bonus

Sign up bonuses are a great way to boost your rewards balance quickly. 

Typically, to earn a sign up bonus you need to spend a certain amount of money on the card within a short window. For example, you may need to spend $4,000 within the first three months of having the card.  

The sign up bonuses on the best travel rewards credit cards are sometimes enough to book a hotel room for several nights or pay for a couple of round trip flights.  

2. Earn Rates

Earn rates are how many points or miles you can earn for your normal spending. 

Earn rates vary depending on the card as well as the categories offered. Choosing a card that earns bonus points or miles in categories that align with your spending will help you maximize your rewards earning. 

It doesn't do you any good to get a card that earns high rates for dining if you never eat out or order takeout. Choose a card that matches your spending habits. 

3. Annual Fees

If you've spent any time learning about travel rewards, you're probably familiar with annual fees. Many travel rewards credit cards carry annual fees. Some cards, like Chase Sapphire Preferred Card, waive the annual fee the first year. 

An annual fee can really cut into the value of a card, especially if you don't take full advantage of all of the card's perks. 

For example, the Chase Sapphire Reserve Credit Card has a hefty annual fee of $550 but includes a $300 annual travel credit plus other premium benefits. However, this card may not make sense for those who don't travel frequently.

Premium travel rewards cards usually have expensive annual fees because of all the extra benefits included with the card. But not all travel credit cards carry an annual fee. 

Some of the most popular travel rewards cards without an annual fee include: 

Always compare the card's annual fee against its perks and other benefits to ensure it's worth the added cost. 

4. Ease of Redemption of Rewards

Some rewards programs, like Chase Ultimate Rewards, are more versatile and let you use your points multiple ways. Others are more restrictive, allowing you to only use your points or miles for bookings at specific hotels or flights on a particular airline. 

Not all travel rewards programs are created equal or make it easy to use your rewards any time you want. So make sure you'll be able to use the rewards you're earning on trips you actually want to take. 

5. Foreign Transaction Fees

Outside of the card's rewards ecosystem, you still want to choose a card that offers benefits that make sense. 

If you travel outside the U.S. often, your best bet is to select a card that doesn't carry any foreign transaction fees. These are fees charged by the card issuer on any purchases made outside of America. 

6. Extra Perks

Once you get past the rewards earned and any fees, you also need to consider other perks offered by travel credit cards. 

It's common for airline or hotel credit cards to provide extra benefits related to their services, like free checked bags, early check-in, and status upgrades. Here's a look at two popular travel rewards credit cards to give you an idea of some of the extra perks being offered by some cards. 

Capital One Venture Rewards Credit Card: Capital One's most popular rewards card comes with perks like Global Entry or TSA Precheck fee credits, car rental damage insurance, travel accident insurance, extended warranty protection, and free access to your credit score. 

Learn more about Captial One Venture Rewards Credit Card here

The Platinum Card from American Express: The Amex Platinum Card is considered a premium travel rewards card because of its $550 annual fee. It comes with benefits like monthly Uber credits for rides and food orders, airport lounge access, Global Entry or TSA Precheck fee credits, status upgrades in Hilton Honors and Marriott Bonvoy programs, car rental loss and damage insurance, trip delay insurance, and trip cancellation insurance. 

Earning and redeeming rewards is great, but other card benefits can be extremely useful and help cover the cost of the annual fee. 

Learn more about the Platinum Card from American Express here

Are Travel Rewards Cards Worth It?

Whether travel rewards cards are worth it depends on how you use the cards and what you expect to get out of them. There's always the risk of spending outside of your everyday habits just to earn more points. It's also another monthly bill to worry about and potentially an annual fee to pay. 

Ultimately, a travel rewards card is worth it if it meets your expectations and offers you rewards and perks that are valuable to you. If you use the card enough to earn free travel and take advantage of other perks, having travel rewards cards is a great option. 

If you don't travel much you may want to consider a cash back card instead. Do your homework to find the best credit card offers for you.

Our Top Picks for Travel Rewards Cards

There are plenty of valuable travel rewards cards out there to choose from. Here are some of our favorite cards for travel rewards. 

Chase Sapphire Preferred Credit Card

Chase Sapphire Preferred Card currently comes with one of the biggest sign up bonuses available at 100,000 bonus points after spending $4,000 on your card in the first three months. The signup bonus alone is worth $1,250 towards travel when redeemed through Chase. 

The card earns 2X points per dollar spent on travel and dining and 1X points on all other purchases. Sapphire Preferred also gives you access to Chase Ultimate Rewards, one of the world's most versatile travel rewards programs. Redemption options abound with Ultimate rewards, including the opportunity to transfer your points to ten airlines and three hotel partner programs. 

Chase Sapphire Preferred Card also comes with several travel and purchase protections, no foreign transaction fees, and partner benefits through DoorDash, Peloton, and Lyft. 

Learn more about the Chase Sapphire Preferred Card here

Delta SkyMiles® Gold American Express Card

The co-branded Delta SkyMiles Gold American Express Card comes with a sign up bonus of 40,000 miles after you spend $1,000 on your card within the first three months. The card earns 2X miles on dining, grocery, and Delta purchases and 1X miles on everything else. 

The card's $99 annual fee is waived the first year, and the card carries no foreign transaction fees. Other card perks include a $100 Delta flight credit, first checked bag free on Delta flights, and 20% back on inflight purchases. 

Learn more about the Delta SkyMiles Gold American Express Card here

Hilton Honors American Express Aspire Card

Hilton offers several co-branded rewards credit cards. The Hilton Honors American Express Aspire Card might be the most impressive one. It's certainly the most expensive one with a $450 annual fee, but the card offers enough value to cover the cost.

With the Hilton Honors American Express Aspire Card comes with automatic Hilton Honors Diamond status and one weekend night reward each year that you own the card. The Aspire card earns an astounding 14X points on eligible Hilton purchases. 

You also earn 7X points on flights booked directly through the airlines or on AmexTravel.com, select car rental bookings, and dining. All other purchases earn 3X points. 

Other card perks include a $250 airline credit fee, $100 Hilton on-property credit, airport lounge access, car rental loss and damage insurance, baggage insurance, and much more. 

Learn more about the Hilton Honors American Express Aspire Card here

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All of our content is verified for accuracy by Mark Herman, CFP and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Don't Overlook These 6 Factors When Choosing a Travel Rewards Credit Card.

Can I Earn Even More Points by Applying for Multiple Credit Card Offers?

Absolutely, but of course, the more credit cards you have the more difficult it is to keep track of all the programs, payments, points, etc. Plus if you have several annual fees you may end up paying for benefits you can't use. 

If you have a system to keep track of your credit cards there is no reason not to have many cards, but if you find yourself losing track it may be best to find two or three cards that best meet your needs and keep it simple. 

Mark Herman has been helping friends with financial questions since serving as an Army helicopter pilot. Since then, he’s gained valuable experience in the corporate world before moving on to become a Certified Financial Planner™.

If you have a question about Don't Overlook These 6 Factors When Choosing a Travel Rewards Credit Card, then please ask Mark.

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