Is a rewards card the best way to travel?
As the world begins to travel again, you may be planning a family vacation or a trip to see someone you’ve missed during the past year. One question to consider is: should I get a credit card with travel rewards to help offset my travel expenses?
- Using a credit card, especially one with travel rewards, offers some basic protections for you including ticket purchase protection and trip delay/cancellation insurance.
- Travel credit cards help you maximize purchases you make every day (groceries, utilities, gas, phone, etc.) versus using a debit card to pay for them. Earning travel rewards for those purchases can enhance your next trip.
- Belonging to a travel-rewards program through your credit card can provide access to perks like lounge access, upgrades, free baggage fees, and priority boarding.
- Always pay your credit card bill in full every month. If you are not a disciplined credit card user, do not get a travel credit card. Travel credit cards typically have higher average annual fees and higher interest rates. You can quickly dig yourself into quite a hole if you do not fully pay your credit card bill every month.
- Be sure to understand restrictions that may be in place for when and how you can use your card’s travel rewards.
- Make sure you are using the best card for your lifestyle, spending, and travel habits or you’ll end up wasting a lot of points and fees.
Before enrolling in travel card program, review your travel habits. Consider if you would benefit more from a co-branded card or a general travel card. Some airlines, Delta, for example, offer their own co-branded credit cards and you only earn miles for Delta flights. If you often travel Delta, that might be the best option for you. If you travel on a variety of carriers, you might be better off with a general travel rewards card that allows you to use the rewards (points or miles) on a variety of different airlines or hotels.
Some cards allow you to earn more rewards for shopping in certain categories, like groceries, pharmacies, and gas. Consider your spending habits to see if they lend themselves to maximizing your reward-earning potential.
Annual fees are typically higher on travel reward cards. In general, the higher the annual fee, the better the rewards. If you are not a frequent traveler, the rewards may not offset these higher fees. Interest rates are usually higher on travel reward cards. Always consider cards that allow you the most benefit for the rates and fees you’re paying; don’t choose a card for the most rewards, which may cost more than they’re worth. Instead, choose the card that is best for your travel and purchasing habits.
If you don’t travel frequently or consistently, a travel rewards card may not be the best option for you. You might be better off with a cash back credit card or a card that offers a reward program that can be used in more categories than travel.