Picking a Travel Credit Card
credit cards America is a credit card loving country and you’ve probably seen all the ads for bonuses if you sign up with this or that credit card. Credit cards are omnipresent in modern day society. People use them to pay for everything from cars to groceries to sticks of gum.
Travel credit cards offer a great opportunity to earn free points that can be redeemed for airfare, hotels or cold hard cash. In the race to get customers, credit card issuing companies partner with various travel brands (or just simply offer their own card) that entice consumers with sign up bonus, loyalty points, special discounts, and more. Their desire to get you the consumer is really your gain. By milking the system, you can tons of free air tickets, hotel rooms, vacations, or even cash.
With so many options to choose from, it’s hard to know which card is the best out there. And the truth is that there is no perfect travel card – they all offer different benefits that fit different people. I personally use two credit cards: Citi AAvantage card and a Capital One card. I use the AA card for all my US purchases so I can earn frequent flier miles as American Airlines and their alliance partners are the airlines I tend to fly most. I use the Capital One card not because I want any of their points but because there is no foreign transaction fee when I use it overseas so I save money.
However, whenever I choose a new credit card, I always look for a few things:
A huge sign-up bonus – Most of the time, the points are worth at least a free domestic flight. The American AAdvantage card offers 25,000 miles just for joining. That’s a free round trip domestic ticket or miles that can be used for an upgrade. United Airlines gives you 30,000 miles for signing up. Delta offers miles AND elite status miles when you sign up. Those alone are enough miles for a free plane ticket in the United States. Don’t join one that doesn’t, otherwise it will take you ages to get a free flight. Lately, in a bid to get more people to join their card programs, many airline and hotel-specific cards are offering bonuses between 60,000 and 100,000 points, which can help get you tons of free flights. For UK residents, the new Virgin AMEX has a good airmiles card that gives you one miles for every pound spent. I simply won’t sign up for a card that takes without at least giving me 30,000 points when I sign up. Otherwise, it takes too long to get to a redemption.
Points per dollar – I want a card that gives me the opportunity. Most credit cards offer one point for every dollar spent. However, the good credit cards will give you extra points when you shop at specific retailers, or, if it is a branded credit card, with a particular brand. This will help you earn points a lot quicker. I don’t want just 1 dollar to equal 1 point. I want the ability to get two or three points every time I spend a dollar.
Usability – I’d like to define this as the ability to use the card anywhere. Many cards, especially those that are specific to an airline, limit your ability to use your points with certain retailers, airlines, or merchants. You don’t want to be tied to a specific airline, hotel chain, or certain travel dates. Get a card that will let you use those earned points anytime, anywhere. Even if I get a branded credit card, I want flexibility when redeeming points.
Moreover, all of these travel credit cards offer great perks. Many will give you elite loyalty status or other extra perks. Most good credit cards give you extra points when you shop at specific retailers, or if it is a branded credit card you’ll get extra points with that particular brand. This will help you earn points a lot quicker. You’re going to shop anyway, so why not earn something for doing it? These cards are meant to get people to be loyal so they throw in lots of perks in hope you stick with them and not a competitor. I got 5,000 AA miles by opening a Citi checking account. I got triple miles by buying some clothes from Gap just by seeing it in their mailing list. Many cards also offer elite status with their credit cards, which is great for free upgrades and priority benefits.
Annual Fees
No one likes paying annual fees for credit cards. Many of the fees for company branded credit cards range from $50-$95 per year. I pay an annual fee. For those who travel a lot and fly a lot, I think it is worth it to get a card with a fee. Fee-based cards tend to give you a better rewards scheme, where you can accumulate points faster, get better access to services and special offers, and get better travel protection. With these cards, I have saved more money on travel than I have spent on fees.
Foreign Conversion Fees
All credit card companies — except Capital One, the Chase British Airways card, and Discover — will charge you a 3-10% foreign currency conversion fee. That fee can add up over a long trip and can cost you hundreds of dollars. There’s not much you can do to avoid this fee. It’s the cost of using a card abroad. You can simply hope to minimize this fee. It’s best to buy everything online through the U.S. version of each website so you will get charged in U.S. dollars and avoid the conversion fee. Whenever possible, you should always try to do this for whatever your home currency is.
Which Credit Card Should You Get?
Now that we know why we should get a card, we need to figure out which one we should get and we have a lot of options to choose from.
To answer that you need to think about why you want to use the card. Are you interested in loyalty to a brand, free rewards, or avoiding fees? Do you want to milk the rewards and bonus system to get free flights or do you just want a card that won’t charge you a fee for using it at that restaurant in Brazil? Is elite status the most important perk for you?
I can’t answer those questions for you. If you are on the road for business a lot, then getting a hotel card, like the Starwood/AMEX card, would be perfect for you. You would get a lot of hotel points, free stays, discounts at other retailers, and you could also transfer those points to airlines for free flights.
For those who only care about price and not brand loyalty, a general rewards credit card like a Capital One or AMEX card would be best. You will still get points for free flights and discounts as well as cash-back, but you wouldn’t get any of the elite benefits. However, by getting a general travel credit card, you would have access to a wider range of brands and companies than if you had a brand-specific card.
If you don’t want to be bothered with points, miles, status, and everything else involved, then you should simply get a card with no transaction fee. Don’t worry about anything else. While credit cards can be a great way to get free stuff, that process requires a lot of work. I once asked my father why he didn’t do any of the tips I give him and he said “I can’t be bothered doing it. It’s too much effort.”
While that is a waste because he is missing out on free stuff, he echoes a point a lot of people feel: they just want it simple.
However, if you are willing to do a little work, you can use credit cards to gain tons of free miles and reward points before you on your trip to keep you in free flights and hotels for a long, long time. I sign up for multiple credit cards and whenever a company offers a new deal, I jump at it. This keeps me flush in frequent flier points. I’ve fly first class numerous times thanks to free sign up bonuses. I’ve gotten countless free hotel rooms and access to first class lounges.
Below are some travel credit card options. Scroll through them and decide which one is right for you.
http://www.creditcards.com/airline-miles.php (US)
http://www.creditcardfinder.com.au/travel-rewards-credit-cards (Australia)
http://uk.creditcards.com/travel.php (UK)
http://www.rewardscanada.ca/topcreditcard2009.html (Canada)
No matter which credit card you choose, remember that your card should work for you. Do your research first. Then choose the right travel credit card so you can start earning points faster and get your rewards sooner.
To get a lot of miles without actually flying, you need to use credit cards. Leveraging a frequent flier program as well as credit card offers can get you free flights and upgrades within just a few months. If you don’t want to join an airline specific card, you can still apply the same principles, it will just take you longer to see the benefits.