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A 2% return on every dollar you ever spend is easily achievable with a cash back credit card, but as a result of the travel rewards credit card arms race, returns many times higher than that are within reach.
Points are not created equal. With cash back credit cards, what you earn is what you get: 1 point is 1 cent. Travel rewards credit cards allow you to redeem those points for higher value through the company’s travel portal, or transfer those points to hotel and airline reward programs for incredibly lucrative redemptions. Last year I flew first class on Emirates and stayed 5 nights at the St. Regis Maldives, two experiences that top the aspirational travel list, all for a relatively low number of points.
Simply put, if you travel regularly, or want to travel regularly, and you’re not maximizing the return on your credit card spend, you’re leaving potentially thousands of dollars of travel and experiences on the table.
Get Past the Sticker Shock
Travel credit cards can come with steep annual fees, some more than $500/year. It’s important to see the value of a credit card in totality: its sign-up bonus, its perks, its credits, and its annual fee, when evaluating whether it’s a right card for you. If a hypothetical credit card has a $200 annual fee, but comes with $100 in Uber credits per year, and you take Uber constantly anyway, you can really think of that fee as $100.
Loyalty vs. Flexibility
For this article, we’re going to focus on travel rewards credit cards that earn flexible currencies. Almost every airline and hotel chain has at least one co-branded credit card that’s great for loyalists of those companies, and we’ll compare those in future articles.
An incredible offer: Chase Freedom Unlimited, no annual fee.
- 3X Ultimate Rewards on all spending up to $20,000 during your first year, then 1% after
The current offer on the Chase Freedom Unlimited is so good that it throws a wrench into the standard set of card recommendations. 3X back on everything on a no-annual-fee card, with no catches except the $20,000 cap, is amazing.
Ultimate Rewards is Chase’s travel rewards system, available on several of their credit cards. The points are transferable to many airline and hotel partners and never expire.
Best for Beginners: Chase Sapphire Preferred, $95 annual fee.
- 2X Ultimate Rewards on Dining
- 2X Ultimate Rewards on Travel
The Chase Sapphire Preferred Card is usually the best entry point into Chase’s Ultimate Rewards ecosystem, and the perfect first travel rewards credit card for most people.
Sign-up Bonus and Bonus Points
Spending $4,000 on your Chase Sapphire Preferred in your first three months will earn you a sign-up bonus of 60,000 points, worth around $750 on paper (when redeemed through Chase’s travel portal), or up to $1,200 when transferred to almost 30 partner airlines and hotel brands, according to The Points Guy’s latest valuations. Back in 2016 I cashed in 25,000 Ultimate Rewards points for a roundtrip flight to Hawaii, a route that can cost hundreds or even thousands of dollars.
The Sapphire Preferred punches above the weight class of its $95 annual fee, packing perks usually found on cards with much higher barriers to entry:
- Primary Car Rental Insurance
- Trip Delay and Cancellation Insurance
- Baggage Delay and Cancellation Insurance
- Purchase Protection
- Extended Warranty Protection
If you rent cars with any kind of regularity, the Sapphire Preferred is worth it for the Primary Rental Insurance.
Graduating to the Chase Sapphire Reserve, $450 annual fee
- 3X Ultimate Rewards on Dining
- 3X Ultimate Rewards on Travel
The Chase Sapphire Reserve is the flagship Ultimate Rewards credit card, and includes a 50,000 point sign-up bonus after you spend $4,000 in the
first 3 months. It gets you:
- A 50% bonus on points redemptions through Chase’s travel portal
- $300 annual travel credit
- Global Entry or TSA PreCheck credit, up to $100
- Priority Pass Select
- Upgrades to the Primary Rental Car and Trip Delay/Cancellation Insurances offered by the Preferred
The choice between the Sapphire Preferred and Sapphire Reserve was always tricky, but as of August 2017, once you get the sign-up bonus on one Sapphire card, you’ll have to wait 24 months before getting the sign-up bonus on the other. The Reserve also offers a higher return on Ultimate Rewards points (which you can combine across cards) when used through Chase’s travel portal: a 50% bonus vs. 25% on the Preferred. The best strategy is to get the Preferred, rack up points, and upgrade to the Reserve once you’re two years in.
Round Things Out with the Chase Freedom, no annual fee
- 5X Ultimate Rewards on rotating quarterly bonus categories
At some point between taking advantage of the sign-up bonuses on the Sapphire Preferred and Sapphire Reserve and the 3% promotion on the Freedom Unlimited, you should pick up the Chase Freedom, which offers a 5% Ultimate Rewards return on rotating categories like Restaurants and Gas Stations on the first $1,500 in spending in that category in that quarter, then 1% after. The Freedom is currently offering a $150 bonus after spending $500 in your first three months.
Best for Hotel Status and Lounge Access: The Platinum Card® from American Express, $550 annual fee
- 5X Membership Rewards on air travel booked directly through the airlines or through American Express
- 5X Membership Rewards on hotels booked through American Express
Membership Rewards are American Express’ travel point currency, and can be redeemed through Amex’s travel portal, but you’ll find maximum value by transferring them to more than 20 airline and hotel partners and finding sweet spots in their reward redemption charts.
The Platinum Card® from American Express offers the best airport lounge access and included hotel statuses in the industry. While its $550 annual fee is among the highest, it chops that fee down more straightforwardly than almost any other premium card. Its Uber and airline fee credits alone effectively bring the annual fee down to $150. Rewards credit cards are typically evaluated based on their raw earning potential, but the Platinum is a card worth holding for the perks.
- Up to a $200 annual airline fee credit, which does not apply to base fares. I typically use this on JetBlue Even More Space Seats.
- Up to $200 in annual Uber credits (up to $15 monthly increments and up to $35 in December) + Uber VIP Status
- Marriott Gold Status and Hilton Gold Status
- Airport Lounge Access
- Global Entry or TSA PreCheck Credit, up to $100
- Up to $100 in annual Saks credits (split into $50 increments for the first and second halves of the year)
- Statuses with various rental car companies
- Cruise credits and perks
You’ll get 60,000 Membership Rewards points after spending $5,000 on your Platinum card in the first three months, worth around $1,200 according to The Points Guy’s latest valuations, and you may even be eligible for an elevated 100,000 point welcome bonus via the CardMatch tool*.
*CardMatch tool offers are subject to change at any time.
Best for Dining (and U.S. Supermarkets): American Express® Gold Card, $250 annual fee
- 4X Membership Rewards on Dining
- 4X Membership Rewards at U.S. Supermarkets on the first $25,000 spent per year, then 1X after
After a recent, major update, The American Express® Gold Card is a frontrunner for best card in the Dining and Supermarket spend categories. While the Gold Card doesn’t earn bonus points on travel, its huge 4X earning potential at restaurants has made it my most used card at home and abroad.
The Amex Gold is offering a 35,000 Membership Rewards points bonus after new cardholders spend $2,000 on it in their first three months. That equates to around $700, according to The Points Guy’s latest valuations; not a massive number of points, but also a relatively low spending threshold, and you may be able to grab an even higher bonus via the CardMatch tool*.
The Gold Card includes a $250 annual fee, not waived the first year, with an annual dining credit of up to $120 (doled out in up to $10 monthly increments), and up to a $100 annual airline fee credit.
The upgrades to the Gold Card have made it essential, and made Membership Rewards a more cohesive points ecosystem that better competes with Chase Ultimate Rewards.
Most user-friendly: Capital One Venture Rewards Card, $95 annual fee waived the first year
When Capital One added the equivalent of a 20% return on Hotels.com bookings to their Venture Card, it instantly became the most approachable travel rewards credit card available. I say “equivalent” because that 10% return stacks with the Hotels.com free night you get for every 10 you book (this comes as a certificate worth the average value of the 10 nights). As of December, the Venture got even better by adding some optional but welcome complexity in the form of 12 travel loyalty program transfer partners:
- Aeroplan (Air Canada)
- Cathay Pacific
- Etihad Airways
- EVA Air
- Flying Blue (Air France and KLM)
- Hainan Airlines
- Qatar Airways
It was a huge change that put Capital One miles in the ring with the likes of Chase’s Ultimate Rewards Points and American Express’ Membership Rewards. The transfer ratio is two Capital One miles to 1.5 points (or “miles”) in each of the airline programs.
The Capital One Venture Card is currently offering a sign-up bonus of 50,000 miles after spending $3,000 in the first 3 months. Those 50,000 miles are worth $700 according to The Points Guy’s valuation. Plus, you’ll get a Global Entry or TSA PreCheck credit (up to a $100 value), a rarity for a card with this low an annual fee, much less one that’s waived the first year.
The Capital One Venture Card is a perfect entry point for newbies to the travel rewards space and a great points diversifier for seasoned veterans, with a tremendous return on Hotels.com spending.
Travel rewards can be a lot to take in the first time you pull up to the gate. If you read between the lines, it should be fairly obvious that the sign-up bonuses of these credit cards are just as, if not more valuable than their return on everyday spending. I currently hold every card in this article except for the Capital One Venture Rewards Card, which I’ll probably get eventually, along with around 10 others, and at least as far as the cards with annual fees are concerned, I get ample value from all of them on a yearly basis.
If you’re starting from zero, I’d grab the Chase Freedom Unlimited immediately, while it’s still offering that 3% return I mentioned way back at the beginning of this article, and then the Chase Sapphire Preferred to start that sign-up bonus clock, but all three of these point and card ecosystems offer amazing value for those willing to maximize the return on their spending.
Any opinions, analyses, reviews, or recommendations expressed on this page are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by card issuers.