Pros and Cons of Travel Credit Cards
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Written by
David McMillin
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Edited by
Jasmin Baron
Applying for a travel credit card can sound very appealing. Whether you’re hoping to feel like a VIP in the airport lounge, looking to earn a free hotel stay for your next getaway or trying to find a way to control the insane costs of a family trip to Disney World, a travel credit card can help make your next escape from home more rewarding and more affordable.
But with hefty annual fees and loads of fine print about how to redeem rewards, are travel credit cards worth it? Read on to learn about the pros and cons of travel credit cards to figure out if one deserves a place in your wallet.
Pros of Travel Cards
Lucrative Welcome Bonus Opportunities
Most travel credit cards can justify their value within a few months: If you can hit the spending threshold of the card’s welcome bonus, you’ll be able to earn points or miles that can help you get to wherever you’re dreaming of going.
For example, the Wells Fargo Autograph Journey℠ Card — one of the best Wells Fargo credit cards for travel — has a welcome bonus of 60,000 points after you spend $4,000 in the first three months (worth $600 in travel).
Alternatively, a top Chase credit card, the Chase Sapphire Preferred® Card, offers 75,000 bonus points after you spend $5,000 on purchases in the first three months from account opening. Your points are worth up to 75% more when you redeem them through Chase Travel, making this bonus worth up to $1,312.
Elevated Earning Potential in Certain Categories
After the initial thrill of earning the welcome bonus wears off, travel credit cards can continue to pay off with higher rewards rates for certain expenses. They typically offer bonus rewards for travel spending, naturally, with some cards offering up to 10x points on certain purchases like hotel stays and rental cars.
It’s not just travel, either. Consider the American Express® Gold Card (an advertising partner), which earns 4x American Express Membership Rewards® points on up to $25,000 of annual spending at U.S. supermarkets (then 1x) and 4x points on up to $50,000 per year in dining purchases (then 1x) to make staying at home feel rewarding, too.
Potential Fast-Track to Elite Status
If you’re in love with one airline or hotel chain, their co-branded credit cards may be able to give you a boost toward a higher status. Be sure to weigh hotel or airline credit cards versus general travel cards, as co-branded cards are typically less flexible in terms of how you redeem rewards.
More Convenience and Less Stress
Some travel cards can put money back in your wallet with perks like statement credits for TSA PreCheck or Global Entry and free checked bags. Many of them also offer peace of mind with travel insurance, such as trip cancellation and trip interruption coverage, reimbursements for essentials if an airline loses your baggage, and rental car insurance. While you hopefully won’t have to use any of the coverage options, the fact that they’re built into a card can reduce some worries when you’re away from home.
Cons of Travel Cards
Annual Fees
The travel cards with the biggest rewards potential also come with the steepest fees. If you want to score premium benefits like airport lounge access and airline credits, you’re going to need to get comfortable shelling out a decent chunk of cash each year for cards like the Capital One Venture X Rewards Credit Card ($395 annual fee), Chase Sapphire Reserve® ($795 ) or the double-take-inducing $895 yearly price tag of the American Express Platinum Card® (an advertising partner).
Complicated Redemption Rules
Talk to any credit card rewards enthusiast about the pros and cons of travel credit cards, and they’re going to warn you: Be ready for some advanced-level searching if you’re chasing the best value.
Take Chase Ultimate Rewards® for example. Should you transfer your points to United and book the direct business class flight to London on Tuesday? Or are you better off transferring the points to Aeroplan (which also partners with United) and booking the Air Canada flight that connects in Toronto on Wednesday? Or perhaps you should pay for your flight and transfer them to World of Hyatt so you can book a suite at the Park Hyatt?
These are the kinds of questions you’re going to need to consider when you’re evaluating transfer partners with programs like Ultimate Rewards, Amex Membership Rewards, Citi ThankYou® Rewards and Capital One.
Need To Change Booking Behavior
My biggest complaint about some of the most popular travel credit cards is a continuing push for banks to act as online travel agents. For example, with the Chase Sapphire Preferred Card, I earn 5x points for bookings made through Chase Travel℠ — significantly more than the 2x points I earn when making reservations directly with travel providers.
Capital One and Citi (an advertising partner) both have similar structures that incentivize customers to book their trips through their proprietary travel portals. On the hotel side, this typically comes with a major tradeoff of not earning any loyalty points toward elite status. Additionally, I have found that attempting to update airline reservations can be a pain: Since issuer portals reservations are considered third-party bookings, I haven’t been able to simply switch flights within the carrier’s app.
Higher Credit Score Requirements
Travel credit cards aren’t usually designed for those in the early days of building their credit or for someone who has struggled with managing their finances in the past. You’ll need a credit score in the good to excellent range to be considered for most travel credit cards.
Are Travel Credit Cards Worth It?
Credit card travel benefits can pay off for many types of cardholders. If you’re a frequent solo traveler, the chance to relax in a comfy lounge and get a bit closer to cabin upgrades makes adding one to your wallet a no-brainer. And even if you’re just aiming to take one big family vacation this year, a travel credit card could still make sense: You may be able to pay for a portion of the trip with a welcome bonus.
Before you start comparing your options, you should think about what typical travel looks like for you and what’s considered travel by the issuer. If you drive everywhere, for example, Chase doesn’t include gas stations in its travel bucket. And if you love riding the rails, American Express doesn’t include trains in the travel category.
If you’re worried about offsetting a yearly cost, it’s wise to consider a no-annual-fee travel credit card. While you won’t get nearly as many benefits as a high-end premium card, it’s a good introduction to learning how to navigate the points game.
Should You Get a Travel Credit Card?
Weighing the pros and cons of a travel credit card will look different depending on your overall financial picture. Ask yourself these questions to figure out if you should apply for a travel card:
- How much are you going to spend over the next three to six months? If you’re going to apply for a travel credit card, you need to be certain that you’re going to meet the spending threshold requirement to earn the welcome bonus. Don’t spend just to spend, either. The best time to get a travel credit card is when you’re already planning for purchases that will easily hit the minimum spend.
- What are your long-term travel plans? Look beyond what you plan to do with the welcome bonus to make sure that you’ll be able to offset any annual fee for the foreseeable future. If exploring new destinations is a top priority for your life, a travel credit card can make getting there more enjoyable.
- Where do you typically spend the most cash? In addition to timing your application around bigger transactions for your short-term bonus, make sure you consider your everyday expenses to estimate how bonus rewards will stack up. Look at the breakdown of your expenses last year to determine if you should be focused on maximizing travel purchases or other areas, such as groceries or streaming services.
The information related to the Chase Sapphire Reserve® was collected by CardCritics™ and has not been reviewed or provided by the issuer of this product/card. Product details may vary. Please see issuer website for current information. CardCritics™ does not receive a commission for this product.
Frequently Asked Questions About Travel Credit Cards
How does transferring rewards work with a travel credit card?
When you transfer your credit card rewards to a travel partner, you convert them into the brand’s currency, such as airline miles or hotel points. Depending on the partner, this can be a great way to increase the value of the rewards.
How much are rewards worth with a credit card?
The value of credit card rewards can vary wildly. While most cash-back redemptions translate to a 1-cent valuation (1,000 points = $10), travel credit cards can offer a much higher rate of return for certain award tickets and hotel stays. The key to finding those better deals is flexibility: If you’re able to accommodate different dates for a trip, you’ll increase your odds of scoring a better value.
Why are some travel credit card annual fees so high?
The adage “you get what you pay for” rings true in the travel credit card world. While some cards charge expensive annual fees, cardholders can typically offset a portion of that price—or, in some cases, all of it—with statement credits, lounge access and other valuable perks.
