A Guide to Choosing the Best Travel Credit Card
With the right travel credit card, you can enhance your experience while saving money. There are so many travel credit cards available, so how do you pick the one that’s right for you? The purpose of this comprehensive guide is to help you make an informed choice, including tips for people with less than perfect credit.
Table of Contents
- Know There Is No Perfect Card
- 5 Things to Look for in a Rewards Credit Card
- Will This Hurt Your Credit?
- What If You Have Poor Credit?
- The Best Travel Rewards Credit Cards
Know There Is No Perfect Card
When it comes to travel credit cards, it’s crucial to recognize that no single card will meet everyone’s needs perfectly. Each card has its strengths and weaknesses, so understanding what works best for you is key.
Factors to Consider
- Travel Habits: Are you a frequent traveler, or do you take occasional trips? Frequent travelers might benefit from premium cards that offer perks like lounge access and bonus rewards, while occasional travelers may prefer cards with lower fees and straightforward benefits.
- Spending Categories: Consider where you spend the most money. Some cards offer higher rewards rates in specific categories, such as dining or groceries. Make sure the card aligns with your spending habits.
- Fees: Many premium travel credit cards come with annual fees, which can range from $95 to $550 or more. Make sure the benefits you receive from the card justify the fee.
- Redemption Options: Look for cards that offer flexible redemption options. Some cards allow you to use points for flights, hotel stays, or even cash back, while others may be more restrictive.
- Introductory Bonuses: Many cards offer sign-up bonuses for new users who meet a spending threshold within the first few months. These bonuses can significantly enhance the value of the card, so compare offers carefully.
Personal Insight
As someone who has traveled extensively, I’ve found that the best card for me changed as my travel patterns evolved. For instance, during my backpacking days, I prioritized low fees and simple rewards. Now that I travel more for leisure and work, I seek cards that offer premium benefits and travel insurance.
5 Things to Look for in a Rewards Credit Card
When searching for a rewards credit card, keep an eye on these five essential features:
1. Earning Potential
The ability to earn points or miles is the cornerstone of any travel rewards card. Look for cards that offer competitive earning rates in categories where you spend the most. Here are a few examples:
- Chase Sapphire Preferred: Offers 2x points on travel and dining and 1x point on all other purchases. With an annual fee of $95, it’s a favorite for many travelers.
- American Express Gold Card: With a higher annual fee of $250, it gives you 3x points on dining and 4x points at restaurants, making it ideal for foodies.
2. Redemption Flexibility
You want a card that allows you to redeem your rewards in a way that suits your travel style. Some cards offer the ability to transfer points to airline and hotel partners, which can provide more value. For example:
- Chase Ultimate Rewards: Points can be transferred to over 13 travel partners, giving you options for maximizing your points.
- Capital One Venture Rewards: Offers straightforward 2x miles on every purchase and allows you to redeem miles for travel purchases or transfer them to airline partners.
3. Travel Perks and Benefits
Look for cards that offer additional travel perks that can enhance your travel experience. Some valuable benefits include:
- Lounge Access: Cards like the Chase Sapphire Reserve offer complimentary access to over 1,000 airport lounges worldwide.
- Travel Insurance: Some cards provide coverage for trip cancellations, lost luggage, and travel accidents. This can save you a significant amount of money and hassle.
4. Annual Fees vs. Benefits
Before committing to a card, evaluate the annual fee against the benefits you’ll receive. If you’re getting travel perks, rewards, and services that exceed the cost, it may be worth it.
5. Foreign Transaction Fees
If you travel abroad, a card without foreign transaction fees can save you money. Many travel cards waive these fees, allowing you to use your card globally without incurring extra charges.
Key Takeaway
Always read the fine print to understand what you’re signing up for. The best card for you will depend on your travel habits and financial goals.
Will This Hurt Your Credit?
Applying for a new credit card can temporarily impact your credit score, but understanding how this works can alleviate concerns.
Credit Score Impact
- Hard Inquiry: When you apply for a credit card, the issuer performs a hard inquiry on your credit report. This can reduce your score by a few points, but it typically rebounds within a few months.
- Utilization Rate: If you manage your credit card responsibly and keep your utilization rate below 30%, your credit score can improve over time as your credit history grows.
Managing Your Credit
To maintain a healthy credit score while using travel credit cards:
- Pay Your Bills on Time: Late payments can significantly harm your score.
- Keep Old Accounts Open: Length of credit history matters, so keep older accounts active to boost your score.
- Limit New Applications: Don’t apply for multiple cards at once. Instead, take your time to research and apply for the one that suits you best.
Personal Insight
When I first started traveling, I worried about how my credit score would be affected. However, by managing my cards responsibly, I not only maintained my score but improved it over time, allowing me to qualify for better cards.
What If You Have Poor Credit?
Having poor credit doesn’t mean you can’t get a travel rewards card. While options may be limited, several cards cater to those looking to improve their credit score.
Options for Poor Credit
- Secured Credit Cards: These require a cash deposit as collateral, making them easier to obtain. Many secured cards offer rewards programs.
- Discover it Secured Credit Card: Offers 1% cash back on all purchases and automatically doubles cash back at the end of your first year.
- Student Credit Cards: If you’re a student, several options provide lower requirements and rewards.
- Journey Student Rewards from Capital One: Offers 1% cash back on all purchases and has no annual fee.
Building Credit
Use your credit card responsibly to build your score.
- Make Small Purchases: Use your card for small, regular expenses and pay off the balance each month.
- Track Your Spending: Monitoring your expenses can help ensure you don’t overspend and can pay your bill in full.
Key Takeaway
Start building your credit with secured or student cards. Over time, you can transition to better travel rewards cards as your credit improves.
The Best Travel Rewards Credit Cards
After extensive research and personal experience, here’s a selection of some of the best travel rewards credit cards currently available:
1. Chase Sapphire Preferred
- Annual Fee: $95
- Rewards: 2x points on travel and dining, 1x point on other purchases
- Sign-up Bonus: 60,000 points after spending $4,000 in the first three months
- Pros: Flexible point transfers, great travel protections
- Cons: Foreign transaction fees (although waived for travel)
2. American Express Gold Card
- Annual Fee: $250
- Rewards: 3x points on restaurants, 4x points on dining at U.S. supermarkets (up to $25,000 per year)
- Sign-up Bonus: 60,000 points after spending $4,000 in the first six months
- Pros: Excellent dining rewards, great for foodies
- Cons: Higher annual fee
3. Capital One Venture Rewards
- Annual Fee: $95
- Rewards: 2x miles on every purchase
- Sign-up Bonus: 60,000 miles after spending $3,000 in the first three months
- Pros: Simple earning structure, no foreign transaction fees
- Cons: Limited transfer partners compared to others
4. Citi Premier Card
- Annual Fee: $95
- Rewards: 3x points on restaurants, supermarkets, and gas stations
- Sign-up Bonus: 60,000 points after spending $4,000 in the first three months
- Pros: Versatile rewards categories, no foreign transaction fees
- Cons: Limited flexibility in point transfers
5. Southwest Rapid Rewards Priority Credit Card
- Annual Fee: $149
- Rewards: 2x points on Southwest purchases, 1x point on all other purchases
- Sign-up Bonus: 40,000 points after spending $1,000 in the first three months
- Pros: Free checked bags, valuable for Southwest travelers
- Cons: Limited to Southwest airlines
Personal Insight
I’ve personally used the Chase Sapphire Preferred for several trips, and the flexibility of point transfers to various airlines has allowed me to maximize my travel rewards. The peace of mind that comes with their travel protections is also a significant plus.
FAQs
- How do I choose the best travel rewards card for me?
- Consider your travel habits, spending categories, and the benefits that align with your lifestyle.
- Will applying for a travel credit card hurt my credit score?
- Yes, it may cause a temporary dip due to a hard inquiry, but responsible usage can improve your score over time.
- Can I still get a travel rewards card with poor credit?
- Yes, consider secured or student credit cards that cater to those looking to build their credit.
- What is the best travel credit card for beginners?
- The Chase Sapphire Preferred is often recommended for beginners due to its flexible rewards structure and valuable sign-up bonus.
- Are travel rewards worth the effort?
- Yes, if you travel often and choose a card that fits your spending habits, the rewards can significantly enhance your travel experience.
Final thoughts
The best travel credit card depends on your spending habits, travel goals, and financial situation. It’s important to understand your needs and the features offered by various cards so you can make the best choice for you. Keep in mind that the goal is to maximize your rewards while enhancing your travel experience.
