One of the questions that I get asked a lot is “what is the best travel credit card?” It’s a tough question to answer because it really depends on a lot of factors. We’ll cover some of the questions you may want to ask yourself to determine which card is right for you.
What distinguishes a travel credit card?
To start off, most travel rewards cards have the following features:
- Travel benefits: Baggage and trip protection, perks, bonuses, etc.
- No foreign transaction fees: This allows you to use the card abroad without racking up any additional fees (which is usually charged on regular credit cards).
- EMV chip: This is now standard on most cards in the US and has been the used everywhere else in the world for years.
1. Co-branded loyalty cards
These include cards that are associated with a hotel brand or airline. There are credit cards for almost every major hotel and airline brand. These cards allow you to earn points that can be redeemed for travel with that brand. For example, if you earn Hilton points through your credit card, you would redeem them for points toward a stay at one of the Hilton family hotels, such as the Hilton Garden Inn, DoubleTree Hotel, Embassy Suites, Hampton Inn, etc.
Examples of these cards include:
- Chase / Southwest Rapid Rewards Visa
- Citi / American Airlines AAdvantage cards
- American Express Delta rewards cards
- Citi Hilton Honors
- American Express
- Club Carlson (US Bank)
Pros of co-branded loyalty cards
Simplicity in redemptions:
Since you are focused on a specific airline or hotel, it becomes less overwhelming than considering all your options.
These cards often earn a ton of points and also gain additional loyalty perks (like free baggage fees, priority boarding, discounts on in-flight purchases, late check-out, lounge passes, etc.). Some will even give you a free night certificate every year for paying the annual fee, which can be an incredible deal.
Higher earning rates:
You’ll typically earn more points if you make purchases with that specific brand.
Cons of co-branded loyalty cards
Restrictions on redemptions:
You are basically limited on where you can redeem the mileage and points. While some of these cards will allow you to redeem for other types of rewards (like gift cards or Amazon credit), you’ll often sacrifice a lot of value. You can also transfer these points to other vendors, but again, you’ll often redeem at a much lower value.
What type of traveler would benefit from a co-branded loyalty card?
- Travelers who go to the same destination and stay at the same place (e.g., annual vacations to Hawaii)
- Business travelers who are restricted to specific hotel and airline brands.
- Folks looking to establish or maintain loyalty status or specific perks
My experience and thoughts on co-branded loyalty cards
I have a few loyalty cards that I barely use but still pay the annual fee. Why? Because I get perks like a free night stays or priority boarding. For example, I have the IHG Visa card from Chase that has a $45 annual fee but provides a free night stay at any IHG hotel. I redeemed it last year for a $400 InterContinental Hotel stay in Vietnam, so it’s been completely worth paying the annual fee on the card.
2. Flexible Points Program Cards:
The second category of cards are the flexible points program cards. These include cards that belong to one of the following programs:
- Chase Ultimate Rewards
- American Express Membership Rewards
- Citi Thank you Program
- Starwood Preferred Guest Program
Examples of these cards include:
- Chase Sapphire Preferred & Reserve and Ink Preferred card
- American Express charge cards (Platinum, Gold, Green) and EveryDay cards
- Citi Prestige and Thank You Preferred & Premier card
- American Express Starwood Preferred Guest Card
I did a separate video/post on the Chase Ultimate Rewards Program and how I maximize my points using a variety of Chase cards. It gives a fairly comprehensive review of how to earn and redeem points in the program.
These programs allow you to earn points through a variety of cards. You can redeem them via multiple channels, the most popular being transferring the points to one of their airline or hotel partners. Since these programs are flexible, you can redeem them in a variety of ways, from full travel experiences (like a cooking lesson with a celebrity chef) to gift cards for major retailers. Some of these programs also have portals that allow you to book travel like you would through Expedia or Kayak, except that you can redeem points to pay for the trip. Though much like the co-branded loyalty cards, you will often sacrifice the point value by redeeming for non-travel related rewards.
One more note: The Starwood Preferred Guest Program is technically a hotel loyalty program, so you might be wondering why I’ve lumped it into this category of travel reward cards. Though it’s connected to a hotel brand, it has many of the features of a flexible point program, such as the ability to transfer points to airlines (with a bonus). I know several folks that use their Starwood Points for redemptions other than hotel stays. For a lot of people, Starwood points are considered to be the most valuable points to earn (in terms of value).
Pros of flexible points program cards:
Multiple redemption methods:
These points offer the most flexibility when it comes to redemption options. For example, with the Chase Ultimate Rewards program, I’ll often compare the cost of booking an airline ticket or hotel stay on the Chase portal versus transferring points to that partner. I know that I can earn at least 1.5 cents per point using the portal, so I’ll compare to see if transferring gives me a higher value.
Multiple cards that earn points:
With the exception of the Starwood Preferred Guest card, the other programs allow you to earn points through multiple cards and accounts. This allows you to earn points quicker.
These cards often have bonus categories for specific spend categories, like travel, dining, or fuel purchases. This allows you to build up your points balances quickly.
Strong travel protection perks:
Perks like primary car rental insurance, baggage insurance, global entry fee reimbursement, and lounge passes are some of the valuable perks often associated with the top tier cards in this category (like the Chase Sapphire Reserve or the American Express Platinum Card).
Cons of flexible points program cards:
Confusing earning and redemption structures:
With all the options comes confusion. These programs can be quite complex and require a certain passion for researching and understanding the various redemption options.
It’s not uncommon for programs to lose their partnership contracts with certain hotels and airlines. A couple of years ago, Chase lost Amtrak as one of their partners, so folks were upset that they could no longer redeem their points for train travel.
What type of traveler would benefit from a flexible points program card?
- Luxury travelers that are looking for top-tier benefits and perks
- Points and miles collectors that are looking to earn the most points with bonus categories
- Travelers who like and enjoy the complexity of booking travel multiple ways
My experience and thoughts on flexible points program cards
I won’t lie – these programs are my favorite and the ones that I spend the most time researching and building. For my travel style and daily spending habits, I tend to get the most value from these programs. Though keep in mind that I’m a total nerd when it comes to this stuff!
3. Flat Rate Cash Back Cards
The last category of cards is the flat rate cash back cards. These cards earn points that can be redeemed at a fixed rate toward travel expenses. It’s very similar to a cash back card, but instead of getting cash back, you get reimbursed for travel expenses. For example, you may book a plane ticket, then log into the website of the card and redeem points to clear the amount of the charge.
Keep in mind that these cards will often refer to their points as miles, which is different from the miles that you would earn from an airline loyalty card. Since you can’t transfer points to another program, these are really points. This can be very confusing to new folks getting into this hobby.
Some of the popular cards in this category include the:
- Barclaycard Arrival cards
- Capital One Venture cards
- Discover Miles card
- US Bank Altitude Reserve card (NEW)
Pros of flat rate cash back cards:
General travel protections and perks:
These cards tend to have similar perks to the other travel cards, including no foreign transaction fees, global entry fee reimbursement, wifi passes, etc.
Simple earning and redemption structures:
Since you’re dealing with flat rate redemptions, it’s easy to understand and maximize your point redemptions.
Earn loyalty points:
On the flip side, since you’re purchasing your travel then reimbursing yourself afterward, you’ll earn points and miles from the hotels and airlines.
Cons of flat rate cash back cards:
Lack of redemption options:
This might be more of a pro than a con to you. With simplicity comes fewer options in terms of using your points towards travel. For example, with some of my flexible point programs, I have been able to squeeze more than three cents per point for a redemption. Granted, it took me a lot of time and research!
What type of traveler would benefit from a flat rate cash back card?
- Folks who want simplicity when earning and redeeming points: Not everyone wants to spend time researching how to stretch the most value from their points. These cards offer a great way to get better than average redemptions on your travel expenses.
- Travelers who are already invested in a flexible points program: These cards allow you have another option to cover charges.
My experience and thoughts on flexible points program cards
I think these cards are great! A lot of my friends and family use these types of cards, and they seem to be a good balance between earning rewards and getting valuable perks for vacations.
The top cards in this category have great benefits, and I often use them to supplement my flexible points cards. Examples include paying for smaller boutique hotel stays or booking an Airbnb. For those types of expenses, I will often use a flat rate card since it’s the easiest way to redeem points.
Several years ago, I went to a convention and was eating at the hotel’s restaurant. What I found was that the charges were marked as travel, so I could redeem points towards my meals. Even though they weren’t technically travel expenses, they still came through as reimbursable on my Capital One Venture card.
Given all the options, which is the right card for you? Well, it depends – and I suggest asking yourself a few important questions:
How important are travel perks and benefits?
If you’re not planning to take advantage of any of the travel benefits and perks, or already have a card with significant benefits, then it might make more sense to get a regular cash back card with no annual fee that can earn 2% cash back and apply the rewards toward your travel savings. Example of these cards would be the Fidelity Rewards Visa and Citi Double Cash Mastercard.
How invested are you in the points hobby?
If you’re not looking to get too nerdy into credit card rewards, then I highly suggest starting with a flat rate card.
How often do you travel?
Many flexible point travel cards reward you for spending on travel expenses. However, if that’s not important to you, you may want a flat rate card.
Where do you like to travel?
If traveling overseas, then you’re probably better off with a Visa or Mastercard (instead of an American Express or Discover card).
How do you like to travel?
Do you prefer traveling in luxury? Are you willing to spend more points on first class and business class tickets, or would you rather have points to spend on more trips? If you’re someone targeting luxury travel, then you’ll probably want a co-branded or flexible points program card.
For me, I’m in the latter category – I would rather be able to go more places than maximize my comfort on trips. Therefore, a mix of flexible points and flat rate cards works well for me.
What are the current promotions?
Credit card promotions change all the time, but there are often incredible deals available. I suggest doing a Google search on the card prior to applying to make sure that you’re getting the best promotion available. Some of the top bloggers will often have links to bonus offers that might not be showing on the issuer’s website.
One more piece of advice …
Lastly, before venturing too deep into the world of credit card points, I highly suggest that you take the time to organize your finances. This is an awesome hobby that has been very lucrative to me, but it’s also an easy way to fall into a hole if your financial house isn’t in order.
Do you have a favorite travel credit card? If so, please share in the comment section below.