5 credit cards that pay off in great travel rewards
If you’re going to be using your credit card for everyday purchases, you might as well get something out of it, right? That’s the idea behind travel credit cards, which allow you to rack up points towards flights, hotels, car rentals and more. “According to our customer data, last year people spent $2,319 on travel-related expenses. If you’re saving for a getaway, you might focus on collecting points you can convert to a plane ticket or hotel nights,” said Jason Gaughan, Bank of America credit card executive.
But according to Jackie Beck, personal finance expert and creator of the app Pay Off Debt, travel-friendly credit cards help fund more behind-the-scenes factors that might take a backseat to flight and hotel booking, including flight delay protection, priority boarding on associated airlines, no foreign transaction fees, Global Entry, access to airport lounges, air miles and points you can redeem for travel you’ve already taken.
Like any credit card, these perks come with high interest rates — especially if you carry a balance, according to Beck. You also start getting into trouble when you let your credit card dictate what you buy. Make sure you would have purchased the trip or flight regardless of the credit card, and instead, treat these rewards as an added bonus, not an incentive to purchase. “Hidden costs might come into play if you start spending more than you otherwise would have in order to earn rewards,” she said. You also generally need excellent credit to qualify for these cards.
With that in mind, here are five credit cards to consider if you’re already a frequent traveler.
According to Investopedia, most credit cards operate on a point-by-point system where one dollar spent on the credit card amounts to, say, one flight mile. This no-fee card rewards you with 1.5 points for every dollar you spend, with the ability to book your trip whenever and however you’d like, according to Gaughan. “There are no limitations to specific websites with blackout dates or restrictions. [Travelers] also have the flexibility to redeem points for a statement credit to pay for flights, hotels, vacation packages, cruises, rental cars or baggage fees,” he said. If you make a purchase of a minimum of $1,000 within the first 90 days of the opening of your account, you can earn 25,000 bonus points redeemable as a $250 statement credit toward travel purchases. Points do not expire.
The Bank of America Premium Rewards credit card lets you rack up unlimited points with two points given for travel and dining purchases. The $95 annual fee includes travel insurance to assist with trip delays and cancellations, emergency evacuation and more. If you make a purchase of a minimum of $3,000 within the first 90 days of opening your account, you can earn 50,000 bonus points that can be redeemed as a $500 statement credit toward travel purchases. Points also do not expire.
If you book a hotel through this card, their partnership with Visa Signature Luxury Hotel Collection will grant you the best rates on rooms, room upgrades upon availability, food and beverage credits, and more.
Beck recommended this card for its ability to double your rewards when making travel-related purchases like flights and meals, and a point for each dollar spent on goods and services outside that category. Purchases of 4,000 within the first 90 days of opening the account earn you an extra $625. You also earn 10,000 bonus points for each friend you refer to the program. Your first year is free, with a $95 annual charge after that.
Beck singled out this card for its ability to grant you 10 times the miles when you book through one of their partner hotels (this offer will only be available until January 2020). On all other types of purchases, earn 1.25 miles for every dollar spent. Earn a 20,000-point bonus when you make a purchase of $1,000 or more within the first 90 days of opening your account. Your first year is free, and then your APR (annual percentage rate) will vary between approximately 14 and 24 percent, depending on your credit score. Travel insurance covers all flights purchased on this card, and there are no foreign exchange fees when making purchases outside the U.S.
For American Airlines devotees, this credit card can help you save in a big way, with two points earned on every dollar purchased towards American Airlines flights as well as gas, and a point for every dollar purchased towards goods and services outside of those categories. Beck recommended it if you’re often looking for preferred boarding and a free checked bag (up to four passengers on your reservation are eligible for their first bag free, as well). In-flight meals are comped at 25 percent. Purchases amounting to $2,500 within the first 90 days of opening the account will reward you with an extra 50,000 American Airlines bonus miles. If you earn at least 20,000 points each card membership year, you get $100 off any American Airlines flight. Your first year is free, with an APR of around 18 to 26 percent afterwards depending on your credit score.