Updated: Apr 23
Travel credit cards, we all know about them, but sometimes they can be a mystery. There's a lot of posts on social media about free trips and earning luxury stays - but how is it actually done? Here is a beginners guide to travel credit cards from someone who was scared to start using them and who is now a huge fan of them!
I started taking my travel credit card journey seriously in 2021 and it really changed the travel game for me. Before that, I had a travel credit card, but didn't really utilize it much. However, when I started to take travel credit cards seriously, it made a huge difference.
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What are Travel Credit Cards?
Travel-specific credit cards work similarly to any other rewards credit card: When you make charges, you earn currency at different rates that can be turned into rewards.
Currencies vary from card to card, but are generally called "points" or "miles." For example, most airline cards pay miles in that airline’s loyalty program. Hotel credit cards and general travel cards usually pay you with points. Both types of currencies are redeemable for travel and other rewards.
Typically, a travel credit card will pay you extra in its currency when you use the card to purchase travel, but rates vary. One card might offer you 2 points or miles per $1 spent on airline purchases, while another might offer you 3 points or miles per $1 spent on airline purchases.
Many travel rewards cards also pay points or miles on everyday non-travel purchases, but usually at a lower rate — for example, only 1 point or mile per $1 spent.
Types of Travel Credit Cards
There are two main types of travel credit cards: co-branded (specific to a company) and general cards.
Co-branded cards are the cards for a particular travel company or brand. Think the Hilton Amex, Delta Amex, or Southwest Chase Visa Rewards card. These cards are specific to that company and will help you earn points as well as status for that particular company.
The major benefit of getting this type of card over a general travel rewards card is you can earn status much easier when you have their card. You can also earn more points specifically with them sometimes up to 6x the points depending on the card.
Your card might also come with perks like a free night each year you carry the card or automatic elite status in the hotel’s rewards program or priority boarding and a free checked bag on an airline.
The downside is a lot of cards will have lower point earnings for other categories like groceries or restaurants. Check the card carefully before deciding if you'd earn enough points to make it worth it.
If you find yourself always staying at a particular hotel chain or flying on a specific airline, this type of card can be a good choice. A few I recommend are below:
General Rewards Cards
The other major type of travel credit cards are general rewards cards. These cards offer greater flexibility in how you earn and spend your rewards. You can earn more points on every day spending, plus bonus points for spending in specific categories, like dining, travel or groceries. Points are redeemable for flights, vacation packages, rental cars, hotel stays and more. Some of these cards allow you to transfer your points directly to hotel and airline loyalty programs, too.
The major benefit of these types of cards is they offer more flexibility in how you use your points and how to earn them. Many of these cards also offer perks like free lounge passes and general travel credits.
The downside to these cards is it can be hard to earn status or perks on a particular airline/at a hotel. The points are not always equal in value depending on what airline or hotel you want to use the points with as well. For example...
Capital One Venture X does not have a partnership with Delta, its a 2:1 transfer. We had 100k Venture X points, but they only transferred as 50k to Delta. Their value would be cut in half by transferring them to Delta.
Venture X does have a partnership with British Airways, it's a 1:1 transfer. We have 100k Venture X points and they hold their value with British Airways.
If you are someone who travels a few times a year and wants flexibility, then these types of cards might be best for you.
Some of the most popular travel credit cards offer several added benefits. Before choosing a card, consider these benefits below and what is most important to you. Along with these benefits will come a yearly fee. Some cards offer all of these things, some offer a few. Look for these as you are choosing a card and thinking about whether you'd actually use them and if you feel like the yearly fee is worth it compared to how often you travel.
No foreign transaction fees: Some credit cards charge foreign transaction fees when making purchases in other currencies while abroad, others do not.
Trip cancellation or trip delay insurance: Your trip may not go as planned. A card with built-in travel insurance can reimburse you when your plans change due to qualifying reasons.
Baggage delay or lost baggage insurance: Travel credit cards may include coverage for baggage interruptions. This way, if your bag is lost or delayed for a lengthy time, you can purchase toiletries and/or clothing and get reimbursed.
Travel credits: A travel credit card may come with travel credits, which allow for a specific dollar amount of travel expenses to be offset by a statement credit.
TSA PreCheck/Global Entry application fee credits: Some travel cards offer up to $100 in application fee credits for TSA PreCheck or Global Entry. If you use your card to pay these application fees, you can earn statement credit for reimbursement.
Airport lounge access: Some premium travel credit cards include airport lounge access. This gives cardholders the ability to relax in a participating airport lounge before their flight.
Every card will have different earning potential and categories that will allow you to earn points in different ways. Read up on how it works and decide what categories you spend on most often (and what you can pay off regularly).
For example, if you have a large gas bill, consider a card with rewards on gas. If you take Uber or Lyft, consider a card with high points on ridesharing. If you go out to eat a lot, a card that does several times the points on restaurants, and so on...
While all cards have slightly different rules, there are some big ones to keep in mind. Some travel cards allow you to redeem points for any travel expenses, while others provide an incentive when you redeem through a specific site. As a general rule of thumb, you should shoot for a card that offers between 1.5%-2% rewards for your spending and a high welcome bonus.
Read up on the cards you are deciding between before you choose. Remember the 80/20 rule to help you sort through information you need to know. Focus on what matters to you most and ignore the rest (for now). Look for your top three benefits and make sure you could use the card consistently and pay if off consistently.
Every card varies, so it's important you choose one that's the right fit for you. Here are just a few examples of some of the variances you'll find across travel credit cards:
Chase Sapphire Reserve® You can use your Chase Ultimate Rewards® points to book travel on Chase's travel portal or you can transfer your points to one of over a dozen partners. The points typically have a higher value when they're redeemed on the website.
Southwest Rapid Rewards® Plus Credit Card While you can earn Rapid Rewards points with several Southwest partners, you can't use your Rapid Rewards points to fly other domestic airlines. The points are deposited directly into your Southwest account each month.
IHG® Rewards Premier Credit Card With this IHG card, you can earn 26 points per dollar spent at participating IHG hotels, but will only earn 5 points per dollar spent on gas stations, travel and restaurants. All other purchases earn 3 points per dollar.
AAdvantage® Aviator® Red World Elite Mastercard® When the card is used on eligible American Airlines purchases, you will earn 2 miles for $1. All other purchases earn 1 mile per $1.
Alaska Airlines Visa Signature® credit card earns 3 Alaska miles for every $1 spent on eligible Alaska Airlines purchases and 1 Alaska mile for every $1 spent on all other purchases.
United Club℠ Infinite Card has a high annual fee: $525. Despite the high annual fee, the card offers 4 United miles per $1 on United purchases, 2 United miles per $1 on restaurants and travel, a United Club membership, a $100 statement credit toward Global Entry, and much more.
Marriott Bonvoy Boundless® Credit Card Earn 3 Free Night Awards (each night valued up to 50,000 points) after spending $3,000 on purchases in your first 3 months from account opening with the Marriott Bonvoy Boundless® Credit Card. The card also comes with an annual free night certificate worth 35,000 points and a ton of other perks. The annual fee is $95 and not waived in the first year.
Hilton Honors American Express The annual fee is $95 and is not waived in the first year. With this card, you’ll earn 12 points per $1 on Hilton purchases and 6 points on select business and travel purchases. Terms apply. If Hilton hotels are your thing, this is a great card to have.
Maximize Earning Points
As we've now discovered, not all travel credit cards are created equal. Depending on which card you have, the card will offer bonus points for spending in a specific category. You want to pay attention to the portal for that credit card and emails as well for any rotating/ongoing bonus offers. In addition to paying attention to spending categories for your cards, there are a few other things that maximize earning points in specific categories.
Dining rewards programs provide an excellent and easy way to pick up some airline frequent flyer or hotel loyalty points just by dining at a participating restaurant. First, you sign up for an account with a dining program and add a credit card to your account.
Then, every time you visit a participating restaurant and use the card on file, frequent flyer miles will automatically post to your dining account. Currently, Alaska Airlines, American Airlines, Delta, JetBlue, Southwest, Spirit, United, Hilton and IHG offer dining programs.
These dining programs are run by the Rewards Network, so you can earn loyalty points on only one program at a time. At this time, only U.S. restaurants participate in the dining programs.
Some cards also offer extra points in the dining category. For example, the Chase Sapphire Preferred® Card earns bonus points on travel and dining at restaurants. So, if you hold this card along with another credit card, you’d probably use the Chase Sapphire Preferred® Card for all your travel and dining expenses because you'll earn more points using that card than others.
Book flights and hotel stays
Use your travel card to book flights and hotel stays. If you have an airline or hotel specific card, you will likely earn several times the points on the purchase, but no matter the card, you can earn extra by taking an additional step.
Each time you book a flight or make a hotel reservation, make sure that you’ve registered for the airline or hotel chain’s loyalty program and input your loyalty number into the reservation. Although this is a very straightforward way to earn travel rewards, it is often overlooked.
Many will provide you with bonus points when creating an account for the first time as well. You can also get additional perks by signing up like free waters or a priority line for hotel check in.
Shop in dedicated portals
An extremely easy way to earn points and miles is by shopping online via shopping portals. CashbackMonitor lists all shopping portals currently offering cash back, airline miles, hotel points or credit card points (transferable points).
Let’s say for example you want to make a purchase from Nike.com. Check CashbackMonitor for current shopping portal offers.
To earn the points, simply click on the portal you would like to earn points with. If you want airline miles, you could earn 6 British Airways Avios per $1 or 2 United miles per $1 (at the time of this example). If you’d prefer to have a more flexible currency, choose to earn 3 Chase Ultimate Reward points per $1 instead.
And don’t forget that these portal points are in addition to what you’ll earn from spending on your card. Let’s say you’re making a $100 Nike purchase and want some British Airways Avios. By simply clicking through the British Airways shopping portal, you will earn 600 BA Avios on the transaction. If you use your Chase Sapphire Preferred® Card for this purchase, you would also earn 100 Ultimate Rewards® points.
You can collect points or miles from day one of having your travel credit card. There are spending thresholds for each card's welcome bons you'll need to hit to earn that sign up reward.
For Co-Branded Cards...
You can generally redeem travel credit card rewards for flights, hotel stays, vacation packages and more. Several credit card issuers deposit miles or points directly into your account with the accompanying airline or hotel loyalty program.
For General Travel Cards...
Credit card issuers host their own online shopping portal for travel rewards. A few credit card issuers will let you transfer your points to partners, which can include other airlines, hotels and car rental agencies.
In most cases, you start at the card issuer’s online portal to transfer these points. Once your points have transferred to another loyalty account, you can book award travel directly through the hotel or airline loyalty program.
Some programs also let you redeem points and miles for gift cards, complementary travel experiences, cash back or a statement credit, but these choices typically don't offer the best value for your points.
Factors to Consider
So far I've outlined a bunch of different things to think about when choosing a card and how to use it. Below I'll summarize what you should consider when deciding which card will work best for you.
When choosing any financial product, always consider your personal goals and purchase habits. This can help you narrow down the right product for you.
Bonus offer: Most credit cards offer a sign-up bonus to new card holders. It's usually a chance to earn a lot of points after hitting a spending threshold. Compare these offers, the value of the points, and if you can wisely use the card with the minimum spend.
Earning potential: Not all travel credit cards offer the same earning potential. Look to see how each card rewards points or miles, and don’t forget to consider purchase categories. Also, check to see if the earning potential is unlimited, as you'll want to maximize your earning potential. You can also find the value of the points on sites like the Points Guy who will help you compare specific cards to each other.
No foreign transaction fees: If you travel internationally, you will want to see if the card charges foreign transaction fees. This way, you don’t get charged extra fees when using your card.
Perks: Extra travel benefits, like priority boarding for your flight or a welcome gift at your hotel can make your travels more enjoyable. Consider if you get free checked bags, automatic status, yearly free night, etc.
Annual fee: Some travel credit cards charge an annual fee, others don’t. It’s essential to understand the annual fee before applying for a credit card to make sure you can comfortably afford it. Travel cards with more perks may have a higher annual fee, but can be worth it if you are a frequent traveler. Some also do an introductory fee of $0 the first year.
Here are a few travel reward credit cards to consider.
Best for general rewards, perks, and large sign-on bonus (lower fee than Chase Saphhire, but same rewards): Capital One Venture X
Best for airline status (companion pass makes this card stand out): Southwest Rapid Rewards
Best for hotels, great rewards (automatic status & worldwide stays): Hilton American Express
Best for Luxury perks:The Platinum Card® from American Express
No annual fee (good introductory card): Bank of America® Travel Rewards credit card
I hope this beginners guide to travel credit cards has helped you think about the best options for travel credit cards and what might work best for you. Leave your thoughts on travel credit cards below!