The best travel rewards credit cards let you save big bucks on travel costs, especially if you know how to put them to work. With the right rewards card, you can earn free flights and hotel stays every year; factor in the sign-up bonus, and some cards let you rack up hundreds or even thousands in rewards the first year alone.
What’s a Travel Rewards Credit Card?
A travel rewards credit card is an unbranded card that lets you earn travel perks you can use with a variety of accommodate businesses.
For example, American Express offers a number of travel rewards credit cards. As you use the cards, you build up points or miles that can be used to book travel via Amex’s own web portal. Options might include using points to cover the cost of hotel stays, flights, car rentals, upgrades or even cruises.
Here are just some of the reasons we love travel rewards cards:
- They often come with a sign-up bonus that makes it easy to rack up enough points the first year to fund vacation flights or get a couple nights (often more) in free hotel stays.
- They’re offered by major players such as Amex and Chase, so they can come with a variety of money management and protection perks that add to the value.
- If you know how to use them, you can earn money simply by using the cards to pay for things you’re already going to buy.
Travel Rewards Cards versus Airline or Hotel Cards
There’s a difference between true travel rewards cards and co-branded airline or hotel cards.
- True travel rewards cards let you earn points and redeem them to cover travel expenses with a variety of providers.
- Co-branded airline or hotel cards usually save the best redemptions for when you’re using points to cover costs with the brand. For example, points with a Hilton-branded card may only be redeemable with Hilton brand hotels. In some cases, you might be able to transfer points to another program, but they’d likely be worth less than if you redeemed with Hilton.
- True travel rewards cards usually let you earn points on every purchase, though spending in certain categories may earn more points per dollar.
- The better co-branded cards let you earn points on every dollar, but they tend to award higher points amounts when you spend on travel or with the brand itself.
So, which type of travel credit card is right for you?
If you’re a brand loyalist — meaning you prefer to always stay with a certain hotel chain or fly on a specific airline — and you do a lot of traveling where those preferences can be accommodated, a co-branded card might be right for you. Similarly, if you live near a hub airport, such as Atlanta’s Hartsfield-Jackson International Airport, which offers flights with specific airlines, you might want a co-branded card from that airline.
Otherwise, a regular travel rewards card may be a better option because it leaves your travel arrangements more open.
Earning and Redeeming With Travel Rewards Cards
With rewards cards, it’s all about maximizing what you get out of the deal. And the best travel rewards cards offer some of the most spectacular perks in the business.
While every card offer is different, travel rewards cards do tend to have some common ground. Here’s a look at what you need to know to get the most out of a top travel rewards credit card.
All About Sign-Up Bonuses
The sign-up bonus can make or break a travel credit card for us. Yes, we want a card with great customer service and ongoing annual perks, but sign-up bonuses can be worth hundreds of dollars.
Imaging: scoring free flights for your next vacation just because you used a certain card to cover the monthly grocery bill. Yes, it’s possible!
Here’s what you need to know about sign-up bonuses.
- Travel rewards cards with sign-up bonuses typically provide you with a certain number of rewards points if you meet the bonus requirements. Sign-up bonuses range from 10,000 to 75,000 bonus points.
- Redemption values on rewards points tend to range from one penny per point to 1.5 cents per point, making sign-up bonus values as low as $100 and as high as $1,125. Most of the time, the sign-up bonus is at least enough to cover a free flight or a couple nights in a hotel.
- To earn the bonus, you typically have to spend a certain amount of money on the card within the first few months of opening your account. Common sign-up bonus requirements include things like:
- Spending $1,000 the first three months
- Spending $3,000 the first three months
- Spending $5,000 the first four months
If you hit the spending requirement within the time frame, you’re awarded all the bonus points in the offer and can redeem them for travel or other perks, depending on the type of card and program you signed up for.
But, how easy is it to earn a sign-up bonus?
When you first look at the sign-up bonus requirements for a travel rewards card offer, you might think it sounds too hard to achieve. Let’s do some math on a common sign-up offer to see how it’s actually really easy to score these extra points.
Some cards offer a sign-up bonus if you spend $3,000 in the first 90 days. That’s just $233.33 a week. Use the card to pay for groceries, eating out and fuel purchases you were already planning to make, and chances are, you’ll hit the sign-up bonus even before the 90 days is over.
Even if you need to spend $5,000 in the first 90 days, that’s only $388.89 a week. Cover all your normal purchases with the card, and you’ll find the bonus is easier to achieve than you think.
Another way we like to score a sign-up bonus is by using a travel rewards card to make a large purchase we were already planning, such as computer equipment or furniture. Plus, a few travel rewards cards have 0 percent APR interest offers, so you might even get to pay on that large purchase for a few months without paying interest. We love when perks stack like that!
Earning Points on Regular Spending
Even before you hit the sign-up bonus (and long after), you can earn points with travel rewards cards. Most cards offer a standard one point per dollar in rewards earnings. If you spend $100 a week on groceries with your card, for example, you’ll spend $5,200 in a year. That would equal 5,200 points.
Some cards include special rewards categories. You might earn more points when you use your card to dine out or pay for fuel, for example.
Because travel cards often cater to people who fly or stay in hotels, they often offer the best rewards on those types of spending. Some travel rewards cards might offer three points per dollar spent on airfare, hotel expenses and car rentals, for example, and one point per dollar on everything else.
Understanding the rewards structure is key to maximizing how many points you can earn.
Rotating Categorical Rewards
Some cards offer rotating rewards structures. Although this is more common with cash back rewards cards, a couple travel cards may have this type of program. Rotating rewards means that you earn more on certain types of purchases, but the details change every so often (typically, every quarter).
You might earn five points per dollar on grocery spending in the first quarter and one point per dollar on everything else. During the second quarter, the offer might change to five points per dollar on travel, with the category for the high point earnings changing throughout the year.
These types of cards can help you rack up rewards quickly if you can plan a lot of your spending so you’re maximizing each category.
Rewards Redemption Options
However you earn travel rewards on your credit card, you usually have a few options when it comes to redeeming them.
- Travel redemptions. As we said before, the target audience for travel rewards cards are people who travel fairly frequently or would like to. That means most of the best rewards redemptions are in the travel category. Usually, an overarching travel rewards card comes with a web portal — either through the bank or credit card company itself or via a corporate partner. You usually get the best value for your points when you book travel through those web portals.
- Transfer points. Some travel rewards cards let you transfer your points to many other travel rewards points. You might be able to transfer your credit card rewards to your Delta SkyMiles or Hilton Honors account, for example. The upside to this redemption choice is that you might have built up to gold or other elite status with an existing membership program, and transferring your points lets you take advantage of more of those perks. The downside is that transferred points are often not quite as valuable as those you redeem directly through the card program.
- Upgrade travel. You can often use points to upgrade flights or hotel stays you’ve already paid for or purchase entrance to experiences that may not be available without points.
- Gift cards or merchandise. Some travel rewards cards programs let you redeem rewards for select merchandise or gift cards with major retailers. This can be a great perk if your rewards expire and you want to use them before you plan on traveling again.
Other Perks Common to Travel Rewards Cards
Card perks differ for every offer, but some of the best travel rewards credit cards come with elite-level perks that we really like. Some common perks to look for include:
- Travel insurance offers, including baggage delay or loss insurance, cancelled trip insurance or car rental insurance. Many credit card companies include them on any card marketed to travelers, and such perks really add peace of mind to personal or business travel.
- Purchase protection. A lot of cards offer purchase protections that credit you if an item you purchase goes on sale in the next few weeks. Another common perk is an extended warranty that applies to select purchases and can increase warranty coverage on items you purchase with your card for up to a year.
- Fraud protection. We don’t think consumers should apply to any card that doesn’t come with some fraud protection. Look for cards that allow customized alerts, cover you in case fraudulent purchases are made and let you manage your account online and via text for convenience.
What the Banks Don’t Tell You About Travel Rewards Cards
Credit card companies and banks are required to disclose or publish a lot of details about any credit card offer, but digging through the fine print can be a bit cumbersome. Banks are quick to tout a big sign-up bonus and other marketable perks — and they should be; we think those perks are pretty awesome ourselves.
But we also think, as a consumer, you need to be armed with all the knowledge so you can make the most of those perks. Here are just some important things banks won’t jump through hoops to make sure you know about travel rewards cards.
- Rewards may expire. Check the fine print on your offer to see exactly how long you have to use your rewards. The best travel rewards cards come with points that remain viable as long as you keep the card open. In most cases, if you close the account with active points, you lose those points.
- Transferring points may be a way to save them. If your travel rewards credit card allows transfer of points to another program (such as an airline’s frequent flyer program), you may be able to transfer all remaining points the statement cycle before you close the card.
- Late payments can negatively impact your account. Specifically, late payments can cause fees and a bump in your interest rate. If you lucked into a travel rewards card with a great 0 percent APR offer, a late payment can wipe out those benefits.
- Rewards don’t typically hit right away. Usually, you have to wait at least one statement cycle for your account to be credited with appropriate rewards, so don’t spend this week and expect to cover hotel costs next week with the relevant points.
- Some fees may apply to redemptions. Depending on the program or vendor, you may not be able to cover certain fees or taxes with points. While flight fare might be covered (and thus free) with your points, you might have to pay the associated taxes. You can still save a great deal of money with rewards points, but understanding the fine print leaves you with less surprises during redemption checkout.
A travel rewards credit card is a great way to turn your everyday spending into huge travel savings. Opt for a general travel rewards card if you’re not tied to a certain hotel or airline brand and travel at least once a year.
