Travelers new to the world of travel credit cards confront a common question: What should I look for in a travel card?
The answer every pundit loves to give to this question is that there isn’t a perfect card, only the card that is right for you. This response is an incomplete answer.
There are several considerations you should take into account. Specifically, you need to consider seven factors before choosing a travel credit card.
Know your goals
First, if you don’t like a particular airline or hotel chain, avoid cards that give those point currencies or benefits.
Need versatility? Then choose an American Express or Chase card. These cards allow you to use their points with many partners – airlines and hotels directly through their sites.
Grocery shop a lot? Choose a card that gives rewards for grocery store purchases.
The point is to choose a card based on your needs, plans, and values.
Get the correct type of travel credit card
The second consideration is whether to get a co-branded or general travel card.
Co-branded cards are associated with an airline or hotel. The card has the name of the airline or hotel chain on the card. However, you may redeem any rewards from that card with only the airline or hotel listed. Exclusivity is neither good nor bad. It all comes down to your travel habits and plans.
Exclusivity grants you specific perks most who use the airline or hotel chain most people won’t get. Benefits include priority boarding for airlines or free upgrades at hotels. The Hilton Honors American Express Surpass Card (for Hilton hotels) and the Alaska Airlines Visa Signature Card are examples of co-branded cards.
General travel cards earn rewards for any travel expense — either through travel booked directly or redeeming points using your card account. One example of a travel card is the Chase Sapphire Preferred.
Accordingly, if you strongly prefer an airline or hotel chain, then a co-branded card may be for you. A general travel card may be for you if you desire more flexibility.
Get a significant sign-up bonus
Sign-up bonuses are one of the main perks of getting a travel credit card. This figure is the enormous number banks emblazoned across each travel credit card ad. Receive 30,000 points, 60,000 points, or even 100,000 points once you spend a certain amount of money on the card.
The bonus is why the first year of card usage is so important. You need to recoup the annual fee (if there is one) and maybe even come out ahead in value. Also, the first year is where you gain enough points for a free trip or at least some fantastic perks.
Choose benefits appropriate for your lifestyle
Do you need rental car coverage? Do you require lost baggage insurance? Travel delay insurance? Then choose a card that offers these protections. Many premium cards offer these valuable perks.
Watch out for extra fees
If you travel internationally, ensure your card does not have foreign transaction fees. Many cards charge extra fees on purchases done outside of the U.S. The challenge is that some cards are outright not accepted in many places overseas. Visa or Mastercard are generally accepted. American Express and Discover well, maybe, maybe not.
Keep your spending minimum low
The sign-up bonus is the key to getting maximum value from your travel credit card. To get a sign-up bonus, you must meet a minimum of required spending. Sure, everyday expenditure enables you to reach your goal. Timing a needed large purchase with the acquisition of a travel card featuring a sign-up bonus is even better.
But, the best way is to get a card with a lower spending minimum. Avoid business travel credit cards – unless you have a thriving business with sufficient expenses to get the points – and opt for personal cards. This writer prefers cards with a $4,000 spending limit or lower in six months or less. Be mindful of your spending. If you spend too much money, carry a balance on the card, and the like, you will lose the card’s benefits.
Choose three travel credit card options
This advice is a personal life tip applicable to your travel credit card options. Three options let you have backup choices if your number one choice doesn’t work out. That is, you get denied during the approval process. That way, you have two options left to pursue.
Be mindful of Chase’s 5/24 Rule
Don’t forget Chase’s unofficial policy put well by CNBC:
“Chase’s 5/24 rule means that you can’t be approved for most Chase cards if you’ve opened five or more personal credit cards (from any card issuer) within the past 24 months.
For instance, if you’ve opened two Citi cards and three Amex cards within the past 24 months, then you will likely be denied for a new Chase card until your 5/24 score decreases. There really aren’t any workarounds to the 5/24 rule, beyond waiting for a new account to be over 24 months old.”
So you may consider prioritizing Chase cards at the beginning of your travel credit card journey. That is not a requirement – especially if you do not qualify for one of them – but the 5/24 rule should be a factor as you compile your three options.
Conclusion
Follow these seven tips when choosing a travel credit card. You will have a selection of cards aligned with your life, avoid unnecessary fees, and maximize your benefits.
