*Articles in this travel series include: TSA PreCheck, Global Entry, Automated Passport Control and Mobile Passport and What’s Your Debit Card Costing You Abroad?
Best Travel Credit Cards
As you already know, using a credit card for everyday spending provides better protection of your money especially when making online purchases, returning merchandise or have a dispute with a merchant. There is also great purchase and travel protection with specific travel rewards cards.
However, credit cards can be damaging if you spend more than you can afford to pay. The key to getting the best value from a rewards card is to pay it off every month. Otherwise, you’ve traded the interest your paying for the benefit of the card.
If you’re an avid traveler or want to be and you don’t have a travel rewards card, you are leaving money on the table. This isn’t about spending money you don’t have. It’s about getting rewarded for the spending you already do.
With so many cards to choose from, it’s hard to navigate sign-up bonuses, loyalty programs, specialized perks, points redemption, and hidden fees. Like any big decision, you have to know what you want to get out of it – airline tickets, hotel stays, car rentals, etc. You also have to know what your monthly spending is and if you can obtain the minimum spending required by a card.
There are several comparison websites like The Points Guy, NerdWallet and Forbes Best Travel Credit Cards. I’ll leave you to refer to these sites to decide on which card is right for you after you consider these 7 details.
- Initial Minimum Spending and Huge Sign-Up Bonus
Most travel reward cards have a minimum spending requirement within a specific timeframe. This can be up to $5,000 over 3 months. Once you’ve met the minimum requirement, you are rewarded with a massive sign up bonus anywhere from 25-100K points. Most points are equal to one cent. A 25K point bonus would equal $250, and a 100K point bonus would equal $1000. However, each credit card values their points differently, and you’ll want to take a closer look.
- Annual Fee, Travel Credits and No Foreign Transaction Fees
The best travel reward cards have annual fees. My husband used to ask, “Why would you pay to have a credit card?” The same could be said for monthly maintenance fees on checking accounts. Why am I paying a bank to use my money? Then I switched to Schwab High Yield Investor Checking. As for a travel credit card, the trick is to determine if the value of the card outweighs its annual fee. That’s where travel credits come in. Some cards with hefty yearly fees say $450 and up, also give up to $300 automatically in annual travel credits or Uber rides or airline fees. Many also offer an additional $100 credit for Global Entry and TSA PreCheck every 4 years.
- Points or Miles Earned Per Dollar Spent
Most credit cards offer one mile or point for every dollar spent. However, the really great cards offer 2 to 3 points for every dollar spent. It’s a great way to earn points quicker. For instance, Chase Sapphire offers 3x points on all travel and dining and 1x point for all other purchases.
- Redemption of Rewards
How your points or miles are redeemed could make or break the value of the card you choose. I gave up my American Airlines-branded credit card several years ago for this reason. After earning miles, I found that I was limited to redemption flights with stopovers or crazy times. The most popular times and direct flights (if they’re even offered on miles) were often set at a miles valuation that exceeded the value of merely purchasing the ticket. Then to add salt to the wound, not only did I have to pay taxes and fees on those flights usually $100 or more, but if I booked it within 14 days of departure, I had to pay an additional $75 per ticket. Essentially, I’d pay close to $200 or more just to use my own miles. Don’t even get me started on blackout dates which are likely the only time you can travel with kids.
The best travel credit cards will give you greater flexibility in how to spend your rewards. You can often transfer your credit card points to airline or hotel rewards programs at a dollar to dollar value. Or if you use their travel redemption website like Chase Ultimate Rewards, the points you’ve earned can be valued up to 50% more when you go to redeem it. For instance, I used points to stay at the Beverly Wilshire (Pretty Woman Hotel) on our Spring Break Trip to Los Angeles last year. One night at the Four Seasons property cost $850. If I booked it with reward points, like Capital One Venture Rewards, it would essentially cost 85K points. However, with the Chase Sapphire Reserve credit card, my points are valued at 50% more. When I booked the hotel on Chase Ultimate Rewards redemption website, it only cost me 60K points. On a dollar to dollar scale, that one redemption saved me $250.
When booking through a travel rewards site, the total cost of the trip (flights, hotels and rental cars) including taxes and fees can be redeemed through points. Plus, there are no blackout dates. If there’s a seat on a flight, hotel or car available, you can book it.
Some cards like Capital One Venture allows you to book your flights directly with the airlines and issues a statement credit for the entire cost of the flight. Booking directly with an airline can save you time and money if there are delays or cancellations. Without a third-party payer, airlines are able to re-book you on another flight without issue.
- Airport Lounge Access and/or Elite Status
Some travel cards offer airport lounge access through Priority Pass. Other cards provide Elite status with airlines, hotels or rental car companies that have their own added benefits like free checked luggage, priority boarding, free hotel room upgrades or access to executive status vehicles. The Platinum card by American Express offers the highest level of airport lounge access, including Centurion and Delta Sky as well as Priority Pass. If you’re a road warrior and already have your hotel and miles accounts, this might be the card for you.
- Card Benefits – The Details Matter
Not all credit cards offer the same benefits. This is often the fine print that most people miss. Chase Sapphire Preferred, and Chase Sapphire Reserve offers the most comprehensive travel benefits. I’ve yet to find another credit card with Trip Insurance coverage. If you’re a person that fights the internal battle of whether or not to pay for trip insurance before clicking Pay Now, then this is the card for you. Imagine never having to spend that additional 8-10% on trip insurance, and still be covered automatically.
- My Favorite Travel Credit Card
Unfortunately, neither my husband nor I travel for work. We don’t have a stockpile of airline miles or elite status for free upgrades or checked bags. We don’t have special status with branded hotels or rental car companies. We are lucky in that we carry no consumer debt and use our credit card to pay for everyday expenses and pay it off every month.
I have Chase Sapphire Reserve. I think my husband had thoughts of cutting me off financially when I applied for the card. He was so focused on the $450 annual fee, he didn’t see the value at first. With the $300 Annual Travel Credit, the cost of the card is really $150. Last year I renewed my Global Entry and received a $100 credit. That made the cost of the card $50. With my initial sign up bonus points, I booked my husband a flight to DC and a rental car on reward points. A $450 trip total would have required 45K points with any other card, but with Chase Sapphire Reserve I booked it for 30K points. That’s a $150 value in savings, and that was just the first reward trip we booked.
I’m a minimalist by nature and like to simplify things. I appreciate having one credit card, one bill to pay and one place to redeem all the value. That’s a lot of pressure to put on one card. But it’s like having a solid go-to pair of jeans that fit in all the right places. I’ll be honest, sometimes I’ll accessorize my favorite travel credit card with another one. Every six months to a year, I’ll come across a great sign up bonus that waives the annual fee for the first year, and I’ll get it. I’ll use it for several months until I’ve met the required spending, use the points, and then cancel it before I’m charged the annual fee the following year.
Here’s the thing, I always come back to my favorite card. Especially, if I’m booking a trip, I always use Chase Sapphire Reserve because of the Trip Cancellation/Interruption Insurance and other travel benefits like the Primary Auto Rental Collision Damage Waiver. That was $400 we didn’t have to cough up in Ireland last summer. These are benefits that are just not offered by any other credit card out there. I also saved another $250 value by redeeming the 1.5x point value for a luxury hotel in LA. On that same trip to LA, I didn’t have enough Marriott points to cover a 2-night stay at a Courtyard property across from Disneyland. I wanted to be able to use the points I did have in that Marriott account, so I transferred the additional 20,000 points needed from my Chase Sapphire Reserve card to my Marriott Rewards account. Did I mention my family and I also used Priority Pass Airport Lounge in Venice, Italy and saved on the cost of airport food and drinks by eating in the lounge? This is a card that has continued to delight us over the past few years and has proven that the benefits far outweigh the cost.
Listed below the benefits offered by credit cards. Note the (*) are only provided by Chase Sapphire Preferred and Chase Sapphire Reserve credit cards.
Auto Rental Collision Damage Waiver is offered through most major credit cards for car rentals within the United States. However, it is typically as secondary insurance after your personal auto insurance. However, many credit card CDW coverages aren’t accepted in certain countries because it is not primary coverage. For instance, we rented a car in Ireland last summer, and while previous travelers told me that U.S. credit card CDW isn’t covered there, my Chase Sapphire Reserve credit card was. This is because, with Chase, the coverage is a primary insurance service provided by the credit card company to cover any damages to the rented vehicle instead of using your personal auto insurance coverage. I called the benefits administrator to confirm it, and she emailed me a letter stating it was. I presented it to the car rental company and was not required to purchase the additional insurance. Since it was an 8-day rental, it saved me about $400 in additional cost.
*Trip Cancellation/Interruption Insurance is the insurance coverage typically offered for an 8-10% fee as you purchase your flights or book a trip. The benefit covers up to $10,000 for each covered trip. If you are buying travel insurance, having a Chase Sapphire credit card could save you thousands of dollars a year by not having to purchase trip insurance.
*Trip Delay Reimbursement will reimburse you up to $500 for additional expenditures for meals, lodging, toiletries, clothing, and personal use items that aren’t covered by the Common Carrier on delays more than 6 hours.
*Baggage Delay Benefit will reimburse you up to $500 for luggage misdirected or delayed through a Common Carrier for more than 6 hours. It covers incidental emergency purchases up to $100 per day for 5 days.
*Emergency Medical and Dental Benefit will reimburse certain medical expenses up to $2500 incurred on a trip that is not covered by medical insurance. This benefit also includes $75 per day up to 5 days for the cost of a hotel if required by a physician before returning home.
*Emergency Evacuation and Transportation will provide emergency arrangements should you become ill or injured during a trip. It will cover expenses not paid by medical insurance up to $100,000. It will also pay for a relative or friend to be at your bedside if you are hospitalized for more than 8 days.
Travel and Emergency Assistance Services is a 24-hour hotline to a benefits administrator that can help you through any emergency service. They can make medical and legal referrals, help with emergency ticket replacement, offer translation services or find an interpreter. Although costs are on your own, there’s peace of mind knowing someone knowledgeable is available to help.
Roadside Assistance like jump-starting a battery, changing a flat tire, fuel delivery or lockout services can be covered up to $50 per incident up to 4 times per year. Towing services can be provided, but only $50 of the total cost would be covered.
Purchase Protection covers personal property purchased by your account in the event of theft, damage or accidental parting within 120 days of purchase. Including items purchased outside the of U.S. The $10,000 maximum coverage is in excess of any other valid insurance.
Return Protection covers the cost of an item that a merchant will not accept as a return within 90 days. Up to $500 for each eligible item. Some merchants only offer a 30-day return policy. This benefit has saved me a few times on gifts I’ve purchased for my husband, and he waited too long to tell me he didn’t really love it.
Price Protection allows you to recover the difference (up to $500) of a lower advertised price within 90 days of purchase. It is limited to a total of $2500 per year.
Extended Warranty Protection extends a manufacturer’s warranty up to one additional year with up to $10,000 per claim.