Travel Rewards Credit Cards

Do I have to be a frequent traveler to get a travel rewards credit card? Well, it depends on your motivation in opening a credit card with travel rewards. If you simply wish to take advantage of an offer with an attractive initial bonus (e.g. a free flight or free hotel), then by no means do you need to be a frequent traveler. Everyone takes vacations, after all. However, you should be a frequent traveler if you plan on using a travel credit card on an ongoing basis because not only do you want your rewards credit cards to match your biggest expenses, but you also need to be in a position to minimize the threat of rewards devaluation, which is only possible via frequent redemption. A frequent traveler is someone who compiles at least 30,000 air miles or 20 hotel nights a year.

What type of travel rewards credit card should I get? Obviously, if you’re just after an initial bonus, get whichever card offers the most free stuff that you can use. As explained above, only frequent travelers should use travel reward cards on an ongoing basis. So, assuming you are a frequent traveler, the type of card you get depends on your brand loyalty. If you always use the same airline or hotel, get the card affiliated with that company. If you use different accommodations, get the most lucrative generic travel credit card. Finally, if you do not travel that often, your best bet is a cash back credit card, since cash back is the most straightforward rewards currency and you can obviously use it for any type of purchase, including travel.

How do I compare travel rewards programs? The following are some important terms to watch out for when comparing travel rewards programs, as each impacts the usability and ultimate value of any such program:

1. Rewards Value: Travel rewards are not only fragmented between points and miles, but also within each of these main rewards currencies. For example, one card might offer Hilton points, while another might have Capital One No Hassle Miles, and still another might provide American Airline AAdvantage miles. Given that this can make comparison difficult, it’s a good idea to reference your spending in past months in order to see how lucrative a given travel rewards card will be in dollar figures. In other words, determine how many points or miles you can expect to compile in, say, a month and what you can redeem them for. The price of this good or service is therefore the card’s monthly cash value, which you can, of course, compare to that of other cards. When doing your comparison, look out for any earning tiers -- which dictate the rate at which you earn points/miles, depending on how much you have spent in a certain period of time -- or earning caps -- which limit the rewards you can earn, typically in a month, quarter or year. Both obviously can affect how lucrative a particular travel reward credit card offer will be.
2. Initial Bonus: The number of points/miles that certain travel rewards credit cards provide in return for new customers signing up and spending a certain amount within the first few months may exceed the rewards one could ordinarily earn during an entire year of card use. Gravitating toward such cards is therefore advisable. Just make sure you’ll be able to meet any spending requirements that may exist.
3. Redemption Limitations: While rewards that do not expire are becoming increasingly popular as different credit card companies jockey for the business of the best consumers, if expiration is part of a particular travel rewards program, it will likely be tied to the passage of time or account inactivity. Similarly, things like blackout dates and limited room/seat availability are now less in evidence, but it’s worth double-checking to verify that your rewards will be practically beneficial and not just good on paper.
4. Status points: In addition to points and miles redeemable for free stuff, certain hotel-affiliated and airline-affiliated credit cards also give you status points, which help you move up the loyalty ladder and get additional benefits. The inclusion of status points is a key factor for many brand-loyal travelers, especially when one airline or hotel chain offers multiple credit cards.