Thu. Jan 21st, 2021

Best Cards Summary

Capital One Venture Rewards Credit Card
Why this is one of the best travel credit cards: This card is a good all-around travel credit card for earning unlimited miles. Every dollar you spend earns 2 miles, which you can redeem with no blackout dates or restrictions. Plus, receive up to a $100 statement credit toward Global Entry or TSA Precheck. Cardholders pay a $95 annual fee.

Chase Sapphire Preferred® Card
Why this is one of the best travel credit cards: The Chase Sapphire Preferred Card is good for squeezing more value from your reward points. Travel and dining purchases earn two points per dollar, and you can get 25% more point value when you redeem points for travel through the Chase Ultimate Rewards portal. Other card benefits include five points per dollar on Lyft rides through March 2022 and no foreign transaction fee. A $95 annual fee applies.

Chase Freedom Flex℠
Why this is one of the best travel credit cards: Chase Freedom Flex offers 5% cash back on travel purchased through Chase, plus 5% back in rotating bonus categories each quarter you activate. You’ll also receive 3% back at drugstores and restaurants, including takeout and delivery, and 1% on other purchases year-round.

Hilton Honors American Express Card
Why this is one of the best travel credit cards: If you prefer Hilton to other hotel brands, this card could be a natural travel rewards choice. Cardholders earn seven Hilton Honors bonus points per dollar on Hilton purchases, along with five points per dollar at U.S. supermarkets, U.S. gas stations and U.S. restaurants. All other eligible purchases earn three points per dollar. You also get complimentary Silver status in the Hilton Honors loyalty program.

Chase Freedom Unlimited®
Why this is one of the best travel credit cards: Chase Freedom Unlimited earns 5% cash back on travel purchased through Chase, plus 5% back on grocery purchases on up to $12,000 spent in the first year. You’ll also receive 3% back on drugstore and dining purchases, including takeout and delivery, and 1.5% on all other purchases year-round.

Chase Sapphire Reserve®
Why this is one of the best travel credit cards: The Chase Sapphire Reserve offers a unique take on travel rewards. You can earn a $300 annual travel credit as reimbursement for travel purchases, and once you do that, you get three points on travel purchases. You also earn three points on dining, three points on up to $1,000 in monthly grocery store purchases made from Nov 1, 2020 to Apr 30, 2021 and one point on all other purchases. When you redeem your points for travel through the Chase Ultimate Rewards portal, you get 50% more point value. Points also transfer to travel partners on a 1-to-1 basis.

Delta SkyMiles® Gold American Express Card
Why this is one of the best travel credit cards: If Delta is your preferred airline, this card can help you earn free award flights faster. Delta purchases and purchases at restaurants and U.S. supermarkets earn 2 miles per dollar, and you’ll earn 1 mile per dollar on all other purchases. You’ll also get your first checked bag free on Delta flights, priority boarding on Delta flights and 20% savings as a statement credit when you charge Delta in-flight purchases.

The Platinum Card® from American Express
Why this is one of the best travel credit cards: The Platinum Card from American Express is a travel card that offers elite perks and benefits. The card earns five Membership Rewards points per dollar on flights booked through the airlines and the American Express Travel portal (beginning Jan 1, 2021, bonus points in these categories will be limited to the first $500,000 in combined purchases each year). It also earns five points per dollar on hotels booked on amextravel.com. Valuable card features include up to a $200 airline fee credit, Uber VIP status, complimentary benefits through Fine Hotels & Resorts, and access to the Global Lounge Collection. You’ll pay a $550 annual card fee.

IHG® Rewards Club Traveler Credit Card
Why this is one of the best travel credit cards: The IHG Rewards Club Traveler Credit Card can help you maximize reward earnings on hotel stays. You can earn up to 15 points per dollar at IHG hotels and get a fourth reward night free. Purchases at gas stations, grocery stores and restaurants earn two points per dollar, while all other purchases earn one point per dollar. You’ll pay neither an annual fee nor a foreign transaction fee.

United℠ Explorer Card
Why this is one of the best travel credit cards: If you fly United, you may want this card along for the trip. Cardholders earn 2 miles per dollar on United purchases and hotel stays as well as at restaurants. All other purchases earn 1 mile per dollar. Card extras include up to a $100 fee credit toward Global Entry or TSA Precheck. You can also get 25% back on United in-flight purchases. The card charges a $95 annual fee after your first year.

What You Can Expect From Travel Credit Cards

If you’re feeling overwhelmed by the number of choices you have, you can relax. We’ve made it easy for you to decide. Everything you need to know about travel credit cards is right here.

Rewards earning: About 85% of travel credit cards earn at least two points or miles per dollar on travel purchases. Some programs offer a variety of categories that have different rewards values. Because each travel rewards card has its own rewards program, you will need to read disclosure statements carefully.

Rewards redemption: Your options will differ based on the card you have, but almost half of travel rewards credit cards have flexible redemption options. Some cards offer cash back rewards or statement credits.

Other programs offer multiple redemption or transfer options. Nearly all others earn rewards that can be redeemed with multiple partners, such as within an airline alliance or a hotel group.

Sign-up bonus value: About 47% of travel cards have a sign-up bonus worth $500 or more. For example, you might have to spend $3,000 within three months of opening your account to earn 60,000 miles.

Annual fee: Most travel rewards credit cards charge an annual fee. But 30% don’t have one, so you have options if you’d prefer to avoid this fee.

About 20% of travel cards have an annual fee greater than $100. But cards that waive the annual fee the first year or charge a fee of up to $100 are the most common.

Benefits: Finding a travel credit card with valuable benefits should be relatively easy, as 68% of these cards offer top-level benefits. You can expect benefits such as travel credits, free hotel nights, priority boarding, free checked bags, airport lounge access and hotel status.

U.S. News Survey: These Common Travel Credit Card Mistakes Could Lead to Missed Savings

A third of people plan to spend $500 or less each on their next vacation, according to a U.S. News survey of travel credit card users. Nearly three-quarters of them said they won’t carry a credit card balance to pay off their travel.

More than 61% of people surveyed don’t have a travel credit card, missing out on travel discounts and rewards. Those who use travel rewards credit cards reported earnings between $351 and $1,750 in travel rewards last year.

But even those with travel cards said they either don’t shop around for travel savings or spend two hours or less on research for travel savings.

Other key U.S. research findings include:

About half of respondents who are taking a vacation are planning a road trip.

Not many travelers place value on travel insurance.

Many consumers plan to spend $500 or less per person on their next vacation.

Most respondents who plan to take a vacation don’t have a travel credit card, but many who do can use it to offset expenses.

About a quarter of respondents plan to carry a balance to pay off their vacation.

Cash back, free hotel nights and free domestic flights are the most appealing travel rewards.

More than 70% of respondents wouldn’t open a credit card to help pay for a vacation.

About 35% of respondents would carry a balance on their credit card to pay for emergency expenses.

Nearly a quarter of respondents would exceed their budget for an upcoming vacation by up to $500.

Most respondents aren’t shopping around much, if at all, for travel savings.

  • U.S. News ran a nationwide survey through Google Surveys in April 2019.
  • The sample size was the general American population, and the survey was configured to be representative of this sample.
  • The survey asked 10 questions relating to travel and credit card use.

How Do Travel Credit Cards Work?

You can use travel rewards cards to save money on travel expenses such as airfare, hotel stays, restaurants, and car rentals. By using travel rewards credit cards to pay for your trip, your earning rewards you can redeem for future travel savings.

Or you can even use the rewards to pay for the trip you just took. The earnings add up.

Travel credit cards fall into one of three types: airline cards, hotel cards and general travel cards.

A co-branded airline or hotel credit card enters you into a specific brand’s loyalty membership club and rewards all types of spending. For example, Delta has several branded credit cards. If you use a Delta credit card, you earn SkyMiles for future travel expenses. Some co-branded cards offer membership tiers that give you a variety of perks when you attain certain levels.

But the points you earn can only be redeemed toward that brand and its partners. General travel cards also reward all types of spending, but they have more redemption options. You can even cash in your rewards for a statement credit. Some of the issuers of these cards also offer travel rewards portals or access to an issuer’s airline or hotel loyalty program partners.

Travel rewards cards offer higher earning rates for travel spending than other types of rewards cards. Rewards may be redeemed for highly discounted or even free flights and hotel stays, or other travel expenses.

Lucrative sign-up bonuses are common among travel credit cards, with some cards offering 100,000 points or more to new members who hit a minimum spending amount within the first few months.

Try not to get dazzled by a sign-up bonus. Make sure your spending habits fit well with the rewards card. If you travel often and always use the same airline, then an airline-branded card might be best, and it probably has a good sign-up bonus.

Travel credit card benefits may include free or reduced baggage fees, priority boarding and other perks. But travel cards with premium perks often charge annual fees, which is why they may not help the occasional traveler.

Let’s take a closer look at each of the three basic types of travel credit cards: airline, hotel and general travel.

Airlines partner with credit card companies to offer co-branded travel rewards credit cards. Usually, these cards earn the most miles when used for flights with the airline or partner airlines, typically at least 2 miles per dollar.

Cardholders still earn miles for other purchases, but often at a lower rate, generally 1 mile per dollar. You can redeem earned miles with the airline or its partners.

Airline cards can deliver a more economical, comfortable flying experience. Benefits often include free checked bags, priority boarding, complimentary or discounted access to airport lounges, and discounts on in-flight purchases.

Hotel credit cards are most valuable when used to book accommodations with participating hotel chains. As with airline cards, hotel cards earn bonus rewards for loyalty spending and offer a lower rewards-earning rate for other purchases.

One-time sign-up bonuses are common, providing bonus rewards if you spend a minimum amount within the first few months. Points are redeemed through the hotel brand or its partners.

Hotel credit cards work best for loyal guests of a hotel group. If you regularly stay at properties within a hotel group, your card can earn more rewards that can be redeemed for free nights at participating hotels.

Some hotel credit cards offer an annual free night’s stay or automatic hotel status. Hotel status may unlock perks such as complimentary upgrades, late checkout or free Wi-Fi. Many hotel cards provide various forms of travel insurance, including lost baggage protection, trip delay reimbursement, emergency assistance and car rental insurance coverage.

General travel credit cards

With general travel credit cards, your rewards aren’t tied to a particular travel brand. You can redeem rewards for many things, including statement credits, booking trips via the issuer’s travel portal, transferring rewards to partners or buying gift cards. With some general travel cards, you can use your rewards to pay for Amazon purchases.

General travel cards are more flexible than airline or hotel credit cards, which is a big plus for travelers who aren’t loyal to a particular brand or who travel to destinations with fewer options for hotels or airports. Cardholders can worry less about blackout dates or travel restrictions because they’re not tied to a sole provider.

Points can sometimes be transferred to partner loyalty programs. However, the value of your points may change, and in some cases, you get the best redemption value by transferring points to partners.

What Are the Pros and Cons of Travel Rewards Credit Cards?

For the right consumer, travel credit cards can make a lot of financial sense, but make sure you know the pros and cons.

Research the rewards program for the credit cards you’re considering. That way, you can truly take advantage of the benefits and rewards that are offered.

Better point valuations and redemptions: Travel-related spending with travel credit cards accrues points and miles faster than general rewards credit cards. When those rewards are redeemed for travel, they could deliver better redemption values than other rewards, such as cash back or statement credits.

No foreign transaction fees: A foreign transaction fee is a surcharge on every purchase made using a credit card in a foreign country or foreign currency. The fees are typically 3% of every purchase. So if you have an international trip planned, a travel rewards credit card that waives foreign transaction fees can save you a lot of money.

High costs: Travel card APRs and annual fees tend to be above average, so you may pay more to keep a travel card in your wallet. The higher costs are why you should never carry a balance with a travel rewards card.

Restrictions: Travel credit cards can also cost you time. Some cards require lots of planning or working with customer service to navigate blackout dates, limited seat availability, or decipher confusing terms and conditions.

Depending on the card, there can also be restrictions on earning miles, including caps and expiration dates. And, of course, bonus points from airline and hotel cards are restricted to redemption with certain brands or qualifying partners.

How Can You Choose the Best Travel Credit Card?

Before signing up for a travel rewards credit card, make sure to assess whether you:

  • Travel frequently. If you don’t consistently spend on airfare, hotels or other travel expenses, consider a cash back credit card instead. These cards have easy redemption options, and some of them don’t even have annual fees.
  • Have a good credit score. You have the best chances of being approved for a travel credit card if you have a FICO score of at least 670, which is at the bottom of the good FICO score range. The higher your score, the better your chances to get approved for the elite travel cards.
  • Pay off your balance each month. Because travel credit cards have higher-than-average APRs, you should only get a travel card if you can pay off your balance each month.

To find a travel card that meets your needs, evaluate each card using the following criteria:

  1. Pick the right rewards program for you.
  2. Calculate earning potential.
  3. Factor in sign-up bonuses.
  4. Calculate redemption value.
  5. Subtract annual fees.
  6. Understand travel benefits.
  7. Avoid foreign transaction fees.

1. Pick the right rewards program for you.

Your travel credit card will work either in conjunction with the loyalty program of an airline or hotel chain or with the issuer’s rewards program. Each program has unique terms and conditions for earning, redeeming and transferring points.

For some travelers, loyalty to any particular airline lasts only as long as that airline offers the cheapest flights. But frequent flyers might be willing to forgo initial cost savings in exchange for benefits later. Which airline program works best for you depends on how frequently you fly with the airline and how much value you can get from your rewards.

Popular airline programs:

As with airline cards, choosing a credit card from a hotel group you regularly patronize is likely to offer the best value for earning and redeeming rewards.

Popular hotel rewards programs:

General travel rewards programs

Using a general travel credit card earns rewards that can be redeemed for a statement credit or through the issuer’s travel portal, or transferred to partners. Many of these programs also have redemption options for gift cards, experiences and more.

Which is the right choice?

If you’re loyal to a particular travel brand and want to earn rewards and take advantage of benefits with the brand, an airline or hotel card is the way to go.

But if you travel infrequently or with many different brands, or simply want more flexibility, a general travel card may be a better choice.

2. Calculate earning potential.

Travel cards earn rewards at different rates for spending in different categories, so you have to analyze your spending habits to determine which card will help you maximize your rewards value. A good travel card will have a range of purchases that qualify as travel spending, which may include flights, hotels and car rentals.

Depending on the type of card, these purchases can earn two points per dollar or more. Other purchases may earn one point per dollar or more.

3. Factor in sign-up bonuses.

The most lucrative travel cards offer consumers bonus points for meeting a spending threshold within a few months of opening an account. These bonuses can be worth hundreds of dollars.

4. Calculate redemption value.

Every travel card has a rate at which points or miles are awarded. However, what those points are worth to you depends on redemption value as well as your preferences and priorities.

For general travel cards, point valuation may be as simple as the number of points multiplied by the redemption rate, often a rate of 1 cent per point.

Awards travel with airlines or hotels is more complicated. The number of points or miles needed to book a flight or hotel room may fluctuate from card to card.

But airlines and hotels frequently adjust the price of award travel based on award level, award availability, time, destination, fare or hotel class, demand, and other factors. And rewards values aren’t consistent across all programs: You might be able to redeem a point or mile for a value of 3 cents with one program or less than 1 cent with another.

The average annual fee for travel credit cards is about $110, according to U.S. News research. Credit card companies sometimes entice new users by waiving the annual fee for the first year.

Once the fee kicks in, be sure you’re earning enough rewards or enjoying the other card benefits to compensate for it. Also, about a third of travel cards don’t carry an annual fee.

6. Understand travel benefits.

Travel benefits can be practical tools, discounted pricing or luxe perks. Common benefits include no foreign transaction fees, access to 24/7 concierge or customer service assistance, a free checked bag – and sometimes a free checked bag for a travel companion – and travel insurance.

The Chase Sapphire Preferred Card, for example, comes with trip cancellation and interruption insurance, auto rental collision damage waiver, baggage delay insurance, trip delay reimbursement, 24/7 customer service, and more.

7. Avoid foreign transaction fees.

Many travel cards don’t charge a foreign transaction fee, which is typically 3% on every purchase in a foreign currency or country. Because these fees can be greater than any rewards you earn, frequent international travelers will want to make this card feature a top priority.

How Can You Compare Two Rewards Travel Credit Cards?

To help consumers understand how to evaluate travel cards, U.S. News researchers compared two popular general travel cards: the Chase Sapphire Preferred Card and the Bank of America Travel Rewards credit card. You can follow these same steps when you’re comparing travel credit cards.

1. Pick the right rewards program for you.

Both cards are general travel cards, offering a flexible range of rewards but providing the most value when redeemed for travel.

2. Calculate earning potential.

The Chase Sapphire Preferred Card gives you five points per dollar on Lyft rides (valid through March 2022), two points per dollar on up to $1,000 in grocery store purchases per month made from Nov 1, 2020 to Apr 30, 2021, two points per dollar on travel and dining at restaurants and one point per dollar on all other purchases. And the Bank of America Travel Rewards credit card offers 1.5 for every dollar you spend.

Estimate your yearly budget by separating expenses into credit card categories.

General: $390

Groceries: $334

Dining: $250

Utilities: $323

Gas: $174

Travel: $167

Now calculate how many points you’d earn in one year based on your spending.

Chase Sapphire Preferred Card first-year points after Apr 30, 2021

Dining and travel purchases

$417 * 2x earning rate * 12 months = 10,008 points

Other categories

$1,221 * 1x earning rate * 12 months = 14,652 points

Total

10,008 + 14,652 = 24,660 points

Bank of America Travel Rewards credit card first-year points

Total

$1,638 * 1.5x earning rate * 12 = 29,484 points

3. Factor in sign-up bonuses.

Both cards offer sign-up bonuses for eligible spending within the first three months. The Chase Sapphire Preferred Card earns a 60,000-point bonus – increasing annual point earnings to 84,660 – when you spend $4,000 on purchases in the first three months from account opening.

And the Bank of America Travel Rewards credit card earns 25,000 bonus points when you charge $1,000 in purchases in the first 90 days of account opening. The sign-up bonus brings your total annual points to 54,484.

4. Calculate redemption value.

You can convert points to cash through Chase Ultimate Rewards at a ratio of 1 point to 1 cent, so 84,660 points are worth $846.60. But if you use those points to book travel with Chase Ultimate Rewards, your points are worth 25% more, or $1,058.25 in travel purchases.

The Bank of America Travel Rewards credit card has a 1-point-to-1-cent ratio, so the card has a first-year value of $544.84.

To understand the real value of your travel rewards card, you need to subtract the annual fee. The Chase Sapphire Preferred Card has a $95 annual fee. Every year after the first year, it earns 24,660 points, or $246.60. If you book travel with Chase Ultimate Rewards, those points are worth $308.25. After the annual fee, you receive a yearly value of $213.25 at that same spending level.

The Bank of America Travel Rewards credit card has no annual fee, so every year after the first year, your yearly earnings value will be $294.84. Because the Bank of America Travel Rewards credit card earns more than the Chase Sapphire Preferred Card starting in the second year, it earns more overall rewards by the sixth year, even with Chase’s 25% redemption bonus.

Seven-year rewards value after annual fees at $1,638/month spending

1st year

2nd year total

3rd year total

4th year total

5th year total

6th year total

7th year total

Chase Sapphire Preferred Card $846.60 $1,093.20 $1,339.80 $1,586.40 $1,833 $2,079.60 $2,326.20
Bank of America Travel Rewards Credit Card

$544.84

$839.68

$1,134.52

$1,429.36

$1,724.20

$2,019.04

$2,313.88

6. Understand travel benefits.

The Chase Sapphire Preferred Card offers trip cancellation/interruption insurance, auto rental collision damage waivers, travel and emergency assistance services, extended warranty coverage, and purchase protection. The Bank of America Travel Rewards credit card offers a zero dollar liability guarantee for fraudulent transactions, account alerts for balances and due dates, and free monthly FICO credit score access.

7. Avoid foreign transaction fees.

Neither card charges a foreign transaction fee.

Summary: For people who can qualify for the sign-up bonus and want to take advantage of the Chase Ultimate Rewards travel redemption bonus, the Chase Sapphire Preferred Card earns more overall rewards in the first few years. But if you can’t meet Chase’s sign-up bonus spending requirement, the Bank of America Travel Rewards credit card may be a better choice for you.

What Are the Best Strategies to Maximize Travel Rewards?

Pick the right travel card.

When you’re starting out with travel cards, select one with a general miles program that gives you the flexibility to earn rewards for all spending and redeem with the largest variety of brands. Unless you spend large amounts on travel expenses with a particular brand, airline and hotel cards offer less flexibility and savings.

Combine a general travel card with a co-branded or loyalty card.

Used in tandem with a general travel card, an airline card or a hotel card makes sense for frequent travelers who are comfortable committing to one particular travel brand. This combination allows you to use the co-branded card to earn bonus points on purchases with your preferred brand and to use the general travel card to earn bonus points in other categories.

How Can You Maximize Your Card Benefits Abroad?

Knowing how your travel credit card works and what benefits and protections it offers can help you solve some of the problems that may arise when you’re abroad. It’s always best to be prepared.

Avoid foreign transaction fees.

If you’re not sure whether your card has foreign transaction fees, check with your issuer when you notify it of your upcoming trip. You most likely have a card that has EMV smart chip technology, which is the most compatible with foreign merchants and provides the best security.

Most of the cards in the U.S. are chip-and-signature cards. Overseas, credit cards that have chip-and-PIN capability are more common. Check with your issuer if you are unclear about the type of smart card you have.

Avoid dynamic currency conversion.

Many foreign merchants let you choose to be charged in local currency or to pay with dollars through dynamic currency conversion. You should always opt for local currency.

The exchange rate with dynamic currency conversion might be unfavorable or even have a fee tacked on top. It’s always good to have cash on hand in case a store or restaurant won’t accept your card.

Know who to contact in an emergency.

Some travel credit cards offer free access to a 24/7 benefits administrator – also called a concierge service – that can provide medical referrals, contact loved ones and arrange for payments. Likewise, as a cardholder, you may be able to receive round-the-clock referrals and other help with medical and legal emergencies.

Some programs, such as Visa Signature and World Elite Mastercard, provide 24/7 global services for card-related needs and expedited card replacement. Visa offers emergency cash advances or wires.

Take advantage of travel insurance.

Many cards offer trip cancellation or interruption insurance or travel accident insurance. Life is unpredictable, so these benefits can provide protection if you need to make changes to your trip or experience an accident. You may even want to opt for third-party travel insurance for fuller coverage.

Your personal car insurance policy may not cover foreign travel, so you might need to purchase auto insurance in your destination country. Cards that offer an auto rental collision damage waiver can handle some of your rental car insurance needs, covering theft or damage to the car, up to the full cash value of most rental vehicles booked using that card.

There are restrictions, however, including the country of travel, type of vehicle, age of vehicle and length of rental. And you’ll be required to refuse the collision damage waiver at the car rental counter. Third-party liability, personal accident and personal property coverage will not be included with your card’s coverage.

Before your trip, find out which of your credit cards will give you the best coverage. If you feel unsure about the details, call your issuer and ask for an explanation of the rental car coverage that comes with your card.

Get help with your lost luggage.

Many travel rewards credit cards offer benefits to help you deal with lost or delayed baggage. With this coverage, you can get reimbursed for some or all of your expenses related to the claim, such as toiletries or clothes purchased while waiting for your bags. But note that maximum amounts and restrictions might apply, depending on the travel rewards credit card.

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