What if I told you that you could travel for free? Would you be interested?
Well, travel rewards credit cards have helped me travel for little to nothing and I want you to achieve the same. Just last year I used the points associated with my American Express Everyday Rewards credit card to pay for my flight to celebrate my birthday in the Dominican Republic. Although the flight was a little more than I originally budgeted for, I didn’t have to come out of pocket for the flight. Yes, a travel rewards credit card paid for my flight!
Since my flight was covered through points, I was able to spend more money on excursions. The friends that ventured to the Dominican Republic with me were jealous of my deal. On that trip they decided it was time for them to rack up free flights as well. And with the right travel rewards credit card you’ll be racking up free flights in no time.
When I first opened that credit card, I didn’t understand all of the perks and benefits associated with the best travel rewards credit cards. Therefore, I didn’t receive the best benefits. You are in luck though. This post will outline 5 things to look for in a travel rewards credit card. In addition, you will find information regarding the top 3 travel rewards credit cards on the market right now.
What Should You Look for in a Travel Rewards Credit Card?
1) Sign-on Bonus
The first thing to look for when choosing a travel rewards credit card is the sign-on bonus.
The initial sign-on bonus is how travel credit cards are able to get your attention. From free flights to tens of thousands of points, there are a ton of sign-on bonuses associated with travel rewards credit cards.
Although there are some awesome sign-on bonuses out there, make sure you pay attention to the fine print. For example, for the Chase Sapphire Preferred and Chase Sapphire Reserve credit cards you must spend $4,000 within the first three months to receive the sign-on bonus.
You must meet the requirements of the spending bonus!
Depending on your spending habits, you may need to focus on using your travel rewards credit card heavily for the first three months to ensure you meet the spending requirements. If you know there is no way that you can spend that much, then consider opening the card when you know your spending will be higher like during the holidays. Sign-on bonuses are the quickest way to accumulate travel rewards, so ensure you don’t miss out.
2) Earning Potential After the Sign-on Bonus
Typically, the initial sign-on bonus will catch your eye; however, it is important to note the earning potential after the sign-on bonus has been completed. The best travel rewards credit cards will allow you to earn a significant amount of points even after the initial sign-on bonus has been rewarded.
For example, The Platinum Card from American Express allows you to earn 5 points on every dollar spent on airfare. If you are a frequent flyer, then that card may be for you because you can earn so many points at once.
3) Special Travel Benefits
Besides the initial sign-on bonus associated with travel rewards credit cards, the special benefits are my second favorite thing. Some special benefits associated with the best travel rewards credit cards include:
- Free hotel upgrades
- Priority boarding
- Free Global Entry
- Free TSA PreCheck
- Access to airport private lounges
- Free checked baggage
- Concierge services (event booking, finding restaurants, etc.)
- Travel protection and assistance
Special benefits can be extremely beneficial. Global Entry is a U.S. Customs and Border Patrol Protection program that expedites clearance for low-risk international travelers upon arrival into the U.S. Typically, global entry comes with a $100 application fee. Once approved for global entry, you also get TSA PreCheck on most flights so you are expedited through the security line. Free global entry is a benefit with the Platinum Card from American Express and the Chase Sapphire Reserve. This one benefit saves you time and $100!
4) No Foreign Transaction Fees
Do you carry cash or plastic when you travel internationally?
Personally, I carry both so that I am not walking around with a ton of cash. If you carry a credit card, it is super important to be aware of foreign transaction fees. Foreign transaction fees occur when your credit card company charges you for swiping your card outside of the United States. Foreign transaction fees are typically charged as a percentage of your purchase. The average foreign transaction fee is 3%.
3% may not seem like much, but if you are spending $10,000 on your trip that is an additional $300 in fees. The good news is that most travel rewards credit cards waive foreign transaction fees. If you are a frequent international traveler, definitely keep in mind the foreign transaction fees associated with the card you choose.
5) Justifiable (Not just $0) Annual Fees
Now that we have gotten all the free benefits out of the way when looking for a travel rewards credit card, it is important to discuss the cost. The best travel rewards credit cards have annual fees that range anywhere from $95 to $450. Typically with a higher annual fee also comes additional special benefits. For example, the Chase Sapphire Reserve has an annual fee of $450; however, the credit card comes with a plethora of special benefits.
Personally, I hate annual fees. I don’t want to be charged to use a credit card. However, there are a few travel rewards credit cards out there that can be worth the fees because of the benefits.
For example, the sign-on bonus of 50,000 points for the Chase Sapphire Reserve, after spending $4,000, is worth $625 in travel when you redeem through Chase Ultimate Rewards. They also waive the $450 annual fee the first year. In addition, other benefits like $300 in airline credit each year and free global entry make the hefty annual fee worth it in the eyes of frequent travelers.
The most important thing is that you understand the annual fees associated with the travel rewards credit card that you choose. The worst feeling is seeing a hefty annual fee on your credit card bill that you didn’t know about because you didn’t read the initial terms and conditions with the card.
Now that we have reviewed 5 things to look for when choosing a travel rewards credit card, let’s look at the top 3 travel rewards credit cards for 2018.
The Top 3 Travel Rewards Credit Cards for 2018
The Platinum Card from American Express
Sign On Bonus: 60,000 bonus points after spending $5,000 in the first 3 months
Earning Potential: 5 points per dollar spent on airfare
Special Benefits: $200 annual airline fee credit, $200 annual Uber credit, $100 fee credit for Global Entry or $85 fee credit for TSA precheck every 4 years
Foreign Transaction Fee: None
Annual Fee: $550
Click here for a complete review of The Platinum Card from American Express.
Chase Sapphire Preferred
Sign On Bonus: 50,000 bonus points after spending $4,000 in the first 90 days
Earning Potential: 2 points for every dollar on travel and dining & 1 point per dollar on all other purchases
Special Benefits: Travel & purchase insurance, primary rental car insurance, extended warranty protection
Foreign Transaction Fee: None
Annual Fee: $0 for the first year, and then $95
Click here for a complete review of Chase Sapphire Preferred.
Citi AAdvantage Platinum Select World Elite Mastercard
Sign On Bonus: 60,000 bonus miles after spending $3,000 in the first 90 day
Earning Potential: 1 mile per dollar
Special Benefits: Free checked bag, preferred boarding, 10% back on redeemed miles
Foreign Transaction Fee: None
Annual Fee: $0 for the first year, and then $95
Click here for a complete review of Citi AAdvantage Platinum Select World Elite Mastercard.
Is a Travel Rewards Credit Card Right For You?
Now that you know what to look for in a travel credit card, let’s discuss if a travel credit card is right for you.
In order to qualify for the best travel rewards credit cards, make sure that you have a good credit score. The FICO credit score ranges from 300-850. A credit score above 700 is considered good. Therefore, if your credit score is above a 700, you should qualify for the best cards. Credit Karma or Credit Sesame will allow you to check your credit score and provide you with tips in order to improve your score. If you haven’t checked your credit score lately, head to Credit Karma or Credit Sesame now to see where you stand.
With any credit card, you must pay off the balance each month to avoid interest charges. If you do not pay the balance in full, you will pay an additional fee for the goods and services that you charged. A travel rewards credit card is no different. Make it a point to use your travel rewards credit card responsibly and only finance purchases that you can pay off in full within the month.
All credit cards have fine print that you must honor in order to reap the benefits. For travel rewards credit cards, it is common that late payments can result in forfeiture of the rewards points that you have earned. It is imperative that you pay the credit card bill on time each month to keep your points and avoid a derogatory mark on your credit report.
Travel rewards cards typically have an annual fee. Make the most of your travel rewards credit card by using the points and other special benefits. According to a survey by NerdWallet, 1 in 5 consumers did not redeem any credit card points last year. If you don’t travel at least once a year, then a travel rewards credit card may not be right for you.
How to Travel for Free Using Travel Reward Points
Once you have found the right travel rewards credit card for your lifestyle, head to the company website and apply! After opening the credit card, make sure you use it consistently to earn the sign on bonus. Once you have earned a significant amount of points and have a trip planned, it is time to reap the benefits.
There are two main ways to redeem the points from your travel credit card. First, you can transfer the points directly to the airline that you are booking your flight with. The second way to use your travel reward points would be to cash them out and then purchase your flight with that money. Personally, I prefer the ease of transferring the points directly to the airline that you are booking with. However, make sure to read the fine print of your credit card to ensure you are able to maximize your points.
Do you have a favorite travel credit card? Have you had any special trips or excursions you purchased through travel rewards? Leave the community a comment and continue the conversation.
Tia Chambers is a personal finance writer with 9 years of experience in the banking, student loan and investing industries. She loves to help millennials kick their finances in shape and still live their best lives by investing in themselves and traveling on a budget. You can find more of her tips at financiallyfitandfab.com.
Curious as to why you rated Chase Sapphire Preferred over the Reserve. Is it the annual fee difference? Ultimate Rewards points paid for part of my trip to Cuba last year so I’m a fan. Also the redemption rate is better when either purchasing through the credit card travel site (like Ultimate Rewards redeem for 1.5x on site booked travel) or transferring the points to an airline partner. Redeeming for cash has the lowest redemption value so you’ll get less flight for your points.
I will say that earning rewards can be a bit addictive so having the card encouraged more spending than I normally would do. I think it’s important to have a consistent budget that you actually follow BEFORE opening up one of these cards. It will help keep the spending reined in. I know from personal experience that intending not to charge more than one can pay off in a month is not the same as actually doing it.
Hey openmouthsgetfed!
I did go with the Chase Sapphire Preferred instead of the Reserve primarily due to the large annual fee. I do agree with you that it can be easy to over spend with the travel credit cards. So it is important to stay diligent about sticking to your spending plan and only charging what you can pay off in full that month.
Girl! You ain’t never lied. I didn’t even have a spending plan to stick to when I first got my card. I think step 1 is get on a budget. Stick to it for a few months. Then play the rewards travel game. Doing it out of order cost me more than I was rewarded and that’s without paying interest.
Good post! Sad to see none of my cards are on the list. I got the Capital One Venture card last year so I could fly free to Miami. Currently, I waiting on my Southwest chase card to come in!
Hey Jerry!
There are quite a few travel credit cards on the market. That is awesome that a rewards credit card helped you to fly to Miami for free. I love free flights!
Travel reward cards can actually save one some bucks especially if you travel regularly. But for people that don’t travel often, they may pay more at the end because of the annual fee.
I agree with you! It is important to know your spending habits and budget prior to opening a travel credit card to make sure it is right for you.