How To Choose A Travel Credit Card

two persons holding premium credit card

One of the first things new travelers are eager to learn about is how to use travel credit cards. Unfortunately, it’s easy to get caught up trying to earn points and end up in serious financial trouble. The most important thing to remember is that nothing comes free. Although points can help you offset costs, they are tools, not magic! The real thing you want to look for when opening a new account is travel benefits.

Do Your Research

The first thing you will want to do is research the different options available to you. Most of the time, you can join great loyalty programs without ever opening a line of credit. Our favorite example of this is the Norwegian Airlines Cash Points program. By registering your e-mail address, you can immediately begin earning cash value toward your next flight.

But if your’e reading this, you already know about how to get basic travel perks, and are  looking to attain a higher status through a credit card. If you are financially responsible, applying for a sponsored card is a great option!

Before applying for new credit, we encourage you to do thorough research and open up accounts slowly. This will ensure you aren’t stuck with high interest rates and a bad credit score. We always consult NerdWallet to compare current deals. We then strategically apply for accounts based on the sign-up bonuses that are being offered.

Calculate the Real Savings

So how do you find what works best for you? Focus on finding cards or programs with benefits that fit your travel style. For example, some cards offer perks like airport lounge access, but if you aren’t a business traveler this particular benefit may not be useful to you. Instead, try finding a card that offers things you might actually need such as baggage insurance or upgraded hotel status.

You will also want to carefully research what those benefits are valued at in the real world. The different Hilton Honors cards from American Express are a great example. One card offers complimentary Silver status, while the other card, which has a $95 annual fee, offers complimentary Gold status.

Credit Card

Perks

At first glance, these two statuses don’t look very different. After all, “space available room upgrades” can be awarded to anyone who smiles and asks nicely enough.

Therefore, it may be tempting to forego the $95 annual fee and earn your way to Gold instead. But looking closely, you will notice that Gold status with Hilton entitles you to free breakfast at any property. 

To us, this is perk alone is worth the fee. Why? Our primary reason for booking a chain hotel is for our visits to Disneyland. As annual pass holders, we visit Anaheim about 4 times a year for at least 2 days at a time. Those visits alone equate to an average of 8 breakfasts x 2 the two of us. When we break down the $95 annual fee over these 16 breakfasts, we are saving quite a bit of money. The hotel points we accumulate on top of these stays are just an added bonus!

Not a hotel breakfast eater? No problem! There are a ton of cards on the market geared towards different types of travelers. If you are still having trouble, or worried about only having a narrow range of benefits with a specific company, look into a flexible card option like the Capital One Venture Rewards Card or the Chase Sapphire Preferred Card.

Spend Wisely

Once you have decided which card offers you the best benefits, it is important to avoid over using your new line of credit. As noted before, travel credit cards should be looked at holistically, not just as a means to accumulate points or miles. We recommend taking an honest look at your personal budget to see how much you can afford to put onto your new card. Everyone’s situation is different, and we are not here to give you personal finance advice. If you have the means to put a couple of large purchases on your new card, go for it! This will help jump start your earnings and most introductory offers reward you for this early spending.

But if you can’t feasibly meet the spending bonus requirements, don’t worry! We will show you exactly how we accumulate points over time:

  • Our first step is to determine what our travel goals are. This doesn’t mean we always know exactly what we will be doing in the future, it just means we like to have a general game plan. Something like, “we would like to go on a cruise through Europe next summer & travel through Asia the year after that”. This helps us to understand what kind of points we want to earn over a set period of time.
  • Next, we price shop. Just because we hold a certain type of airline card, doesn’t mean we automatically book through that company. We always compare our options to find the deal that best fits our budget. Sure, getting 2x the points for booking a United flight on a United card seems tempting, but if it breaks our budget, we never do it. No amount of points can help you pay off debt.
  • Finally, after we have decided our plan of action, we put all of our reoccurring bills, memberships, annual passes onto the credit card we have decided to use. These expenses are easier to pay off in full each month because they are already allocated into our budget. They also ensure that we are consistently gaining points each month.

Most importantly, we never make unnecessary purchases in order to accumulate points quicker.

Like all good things, this process takes time. But after a few years of careful budgeting, you will be pleasantly surprised at what you save. About 1/3 of our flights and hotel stays are now booked using points. Thanks to tiered loyalty programs, the more we travel, the more rewards we receive. So if you are interested in travel savings, you should start now!

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