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Travel Credit Cards 101: Understanding How They Work And Maximizing Your Rewards

Guides11 months ago
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Do you want to save money, earn cheap flights, and travel cheaply in 2023? Our Travel Credit Cards guide will tell you everything you need to know about how to choose a travel credit card that will give you the best sign-up bonuses, the most airline miles, and the most beneficial rewards programs.

Travel credit card points can help to cut your costs considerably when you book flights, accommodation, and car rentals. And you may also be able to access statement credit for TSA Precheck, access to airport lounges, and free travel insurance!

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How to Select the Best Travel Rewards Credit Cards

Know What You Need from a Travel Rewards Credit Card

Before you apply for any card, you need to know exactly what you need from a hotel or airlines credit card. The right card for you isn't the same as the right card for someone else. The right choice will depend on your current travel habits, the type of savings you want to make, and your current rate of spending.

  • Are you a frequent flyer for a business who needs a premium experience every step of the way?
  • Are you looking for the quickest way to build up points cheaply with your everyday spending with no frills attached?
  • Does your current rate of spending meet the minimum requirements to access the welcome bonus on offer?
  • What airlines or hotels do you normally book with? Are there cards that will allow you to earn more points while booking your travel?

Having a clear idea of both your travel goals and current habits will help you quickly weed out cards that aren't suitable and recognize those which are most beneficial.

Setting clear goals for your travel rewards credit cards will also help you to plan properly to hit your spending goals for your credit card point and frequent flyer program targets.

 

Know the Value of the Airmiles and Points on Offer

When assessing the cards that offer air miles and points for your spending, you need to know how valuable these points are. Otherwise, how will you be able to assess which card will give you the best savings?

Different airline and hotel rewards points are of different value and can vary according to the partner you are redeeming them with. 10,000 points when redeemed with one airline may be less valuable than those on offer within a different program.

So do your research and check the redeemable value of the points on offer before applying for anything.

 

Know the Difference Between Points and Air Miles

When learning about travel rewards credit cards, you need to make sure you are clear about the difference between air miles and rewards points.

 

Airmiles Credit Cards

To earn air miles to book flights and access discounts, you will need to apply for a card that is connected to a frequent flyer program. For example, the United Explorer Card will allow you to build up miles within the United Mileage Plus program. You'll then be able to earn miles every time you buy a United flight or use the card to spend.

The number of miles you can earn will vary according to the airline-branded card you use. Some cards may reward you more miles for spending within certain categories or with alliance airline partners (such as those within the Star Alliance.)

 

Hotel Points Cards

Hotel travel credit cards work similarly to airline cards, but you will be earning points toward a hotel stay rather than a flight. Two of the biggest and most popular options for these are the cards available for the Hilton Honors or Marriott Bonvoy schemes.

By using cards such as the Marriott Bonvoy Boundless or Hilton Honors Card from American Express you'll be able to earn points with each stay and build up points towards your next trip with your everyday spending.

Bank Cards with Transferable Points

As well as co-branded cards with airlines and hotels, there are also a variety of cards that will allow you to build up points and miles which you can redeem against your travel. Transferable travel points schemes from card providers include:

  • Chase Ultimate Rewards Points.
  • Capital One Miles.
  • American Express Membership Rewards Points.
  • Citi ThankYou Points.

These points are usually redeemable with a variety of different partners and will offer more flexibility in both earning points and redeeming them for travel.

 

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What to Consider Before Applying for Travel Credit Cards

Before you apply for any travel credit cards, you need to make sure to consider the below:

 

What is your Credit Score?

Every time you apply and get rejected for a credit card; your credit score will be affected. And most travel cards require a good to excellent credit score for a successful application.

 

Make Sure You Can Cover Your Credit Card Bills

Your goal with using a travel credit card is sot save money, not get into debt, and damage your credit history. So, make sure:

  • Does your current spending level meet the minimum spending requirements to earn your introductory bonus within the required time period?
  • Do you have enough to pay off your bill each month with the interest rate included?

Make sure that you can comfortably use the card without having to adjust your spending habits or up how much you are paying each month.

 

Do You Need to Adjust Your Spending Habits for Maximum Points?

If the card you are considering rewards spending with a certain store or airline, is it feasible for you to make those adjustments? Remember, unless a card can be reasonably worked into your current lifestyle and will reward your current everyday spending, it may not be the right card for you.

However, there may be some painless changes you can make to make sure you are earning points at every opportunity.

 

How to Earn Points on Your Travel Credit Cards

Once you have successfully applied for a travel rewards credit card, you need to be strategic with your spending to make sure that you get the best possible discounts and benefits. Here are some tips to make sure you earn the most points:

 

Earn Your Introductory Bonus on your Card.

The easiest way to boost your credit card points is to make sure you hit your minimum spend requirement when you first get your card. Most card providers will reward you with thousands of points if you hit a certain spending target within the first few months.

These bonuses will normally have a value that dwarves your annual fee, so you'll start off in profit right away! But remember, don't overspend - the goal is to make money with your everyday spending, not fall into debt trying to increase it!

So, when you choose a travel credit card, make sure to select a card that will allow you to hit your bonus target comfortably.

 

Can You Transfer Points so They Are More Valuable?

You may find that some points increase in value if you transfer them to spend with a partner airline or hotel. Other points are worth more when you use them to buy travel through the Amex Travel website or Chase Rewards hub.

Think about how you want to spend your points, and research which rewards will be the most valuable for your future travel.

 

Keep Updated on Current Points Earning Opportunities

The points-earning opportunities that a credit card offers can vary. Different spending categories may be introduced which will allow you to earn more points by switching where you buy your groceries, or which card you use to buy gas.

Keeping track of current offers and partners for your credit card will help you to make sure you are doing everything you can to earn discounts on your future travel purchases.

 

Consider Applying for More than One Card

Different travel credit cards will reward you generously for different types of spending. For that reason, some find that holding more than one card helps them to rack up points quicker.

For example, you may use one card to earn the most valuable points on grocery and dining.

But it may not reward you as much as other purchases. Using a secondary card that rewards your everyday spending more generously might be a smart choice for building up transferable points you wouldn't access otherwise.

 

Takeaway - Travel Credit Cards 101: Understanding How They Work and Maximizing Your Rewards

When you first get started in choosing the right travel credit card, it is easy to get overwhelmed with all the options on offer. However, this is not a process that should be rushed.

Take your time to think about what you need from your card and recognize your current spending habits and goals. With so many options out there, you should be able to find a compatible card that helps you to earn points within your current spending levels.

Remember to do your own research, the offers listed on this page and related rewards can vary over time. Once you have successfully applied for your card, you need to make sure that you know how to get the most points out of every dollar that you spend. Then you can begin earning discounts and rewards for your travel right away!

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