Your credit card may be one that awards the highest number of airline miles or one that combines airline miles with discounts on hotels, restaurant meals and car rentals.
The best credit cards offer thousands of miles as a bonus when you open your new credit account. In addition, you may earn a few thousand more miles by making a certain number of purchases in the first 3-6 months after obtaining your new credit card.
If you can combine bonus offer for extra miles with offers of the highest air miles offered for purchases you frequently make, it’s a win-win situation for the traveler.
Foreign or Domestic Travel
Most lenders offering cards for travel rewards levy a transaction fee on foreign transactions. These fees are usually 2-3% and are a surprise to many credit card users who travel outside the country.
Paying an additional fee for every charge at an international shop or hotel or restaurant can add up to a substantial cost of using your card.
If travel outside the U.S. is your goal this is a fee you must carefully consider. Capital One is the only leading lender who currently offers a card specifically designed for travel rewards without international transaction fees attached.
For domestic travel your concern is for the number of air miles and rewards you can earn and how they can be used. Check for blackout dates or for costs associated with using your miles to choose the best credit card for your personal needs.
Rates and Fees
It is not surprising that credit cards that offer the best rewards may also have some of the highest fees attached. Banks issue credit to consumers because there is profit in doing so. Offering valuable rewards reduces the profit margin so lenders add other fees to increase profit margins.
Annual fees are common for travel reward cards but are often waived for the first year of the account. In addition, some banks will waive the fees in future years for customers who meet usage requirements on their accounts.
Fees to transfer balances and APR on these credit cards may be slightly higher than for credit accounts offering no special rewards. Before applying for a new account, evaluate the rewards and the fees to determine if this account will be cost effective for you in your travels.
Terms to Avoid
If you are planning to use your travel rewards on an infrequent basis, look for terms that limit the lifespan of your air miles or points program. Do the miles expire after a limited amount of time? Is there a limit to how many travel points you can earn each year?
Also look for terms that require a certain level of activity on your credit card in order to maintain the rewards or miles you have earned. Knowing what restrictions apply will help you determine how often to use the card in order to maintain your rewards earned.
Where Can You Redeem Travel Reward Benefits?
If the airlines where your miles may be used are limited, be certain these are airlines you can use to reach your destinations. An airline with routes only in the Western states will not be useful if you want to go to New York.
If hotel discounts are part of the reward offer check to see if these are hotel chains you are comfortable using and whether they service areas where you plan to travel.
Read the information provided by your credit provider to learn how to place reservations in a way that allows you to use your miles or points for the purchase.
Some lenders require all qualifying reservations of airline tickets, hotel rooms or car rentals to be made through the lenders concierge site or phone in order to use your miles or points.
If you are a frequent traveler or would like to be – a travel reward card may be just the ticket you want. Look for the highest reward offers and be certain these are points or miles that can be used for your purposes. Compare the terms of the credit cards and understand exactly how to use the rewards you earn.