Picking the Best Travel Rewards Card

By Lynnette Khalfani-Cox, The Money Coach®

Travel rewards cards are popular with both leisure and business travelers, and it’s easy to understand why. These credit cards provide attractive features, including airline miles; free or reduced-price hotel stays; and even concierge service before, during and after your travels.

The more credit card points you rack up, the more benefits you can potentially enjoy. For instance, just signing up for a credit card can often get you a boatload of points — 20,000 points to 50,000 points is common — once you’ve met a set level of spending.

Since points are typically valued at a cent apiece, a card offering 20,000 points as a sign-up bonus is worth $200 in cash, discounts or statement credits. With a rewards card, you also typically earn two or three points per $1 spent on travel and dining out; and one point per $1 spent on other purchases.

Having visited more than 30 countries for work and play, I’ve become an avid travel-rewards card user. I also know that despite the lure of points, travel rewards cards may come with a few drawbacks, such as annual fees and higher interest rates than cards that don’t offer travel rewards. You need to make sure that your travel perks outweigh any costs, such as annual, balance transfer and foreign transaction fees.

Analyzing Your Travel Needs

To select the best card, analyze your true travel needs. For example, if you often travel abroad, you’ll want a travel rewards credit card that’s widely accepted overseas with no foreign transaction fees.

If you travel for business and prefer a certain hotel brand, you might think it’s best to get a card that gives you points, discounts or free nights. However, if your spouse or significant other often travels with you, consider a rewards card that offers a lot of airline miles or free companion tickets.

It’s possible that a single rewards card could pull double duty, letting you earn both benefits. However, in terms of redeeming these awards, or if you had to choose one card over another, a travel rewards card with nice airline freebies could work out to be a better deal.

Why?

Your employer probably covers your hotel bill anyway, reimbursing you for the accommodations you incur during business travel. Your spouse traveling with you stays in your room, so this won’t generate a bigger hotel bill.

Of course, I’m not counting hotel dining or room service expenses for an extra person. Even those costs may be reimbursable as part of your daily meal charges or per diem expenses. But your employer won’t pay for your companion’s airline tickets. In this case, your true need is to lower airfare expenses.

Focusing on Travel Perks You Use

If you travel for work, you may want to leverage your spending by turning it into points or other perks to use for leisure travel. That’s a good idea, but it’s important to know how to use these benefits.

Let’s say your spouse is going to travel with you quarterly, and your card’s spending and the airline rewards allow you to get four free airline tickets for you or your spouse. Let’s put the value of those tickets at $500 each, or $2,000 total.

Now, say travel benefits on a different card lets you accrue a free seven-night stay at a favorite hotel brand. If that hotel costs a total of $250 a night, the value of this award is $1,750. Once again, the airline deal wins out. So always do a cost comparison to get the best savings.

Also, consider if you’ll really use that hotel benefit for personal travel. You may stay at a hotel that’s perfect for business, but not leisure travel. In addition, will you book that seven-day personal trip in order to take advantage of a free hotel stay? Some of us think we will, but when work and other obligations take precedence, it’s easy to forego locking in potential personal travel benefits.

Final Tips

If you want to get lots of points and free travel in a hurry, look for a travel rewards card with excellent all-around features: a hefty sign-up bonus, nice ongoing earning opportunities and a wide array of redemption possibilities. Also, if you don’t want to use your travel points for one particular category like airline tickets or hotel stays consider getting a flexible, general-purpose travel card.

Even if you only travel once or twice a year, a solid travel rewards card can help you score discounts and free awards on anything you’d like such as cruises, hotel bookings, vacation packages, rental cars, flights, baggage fees and more.

Best of all, earning travel rewards doesn’t require you to be a big spender. Nor do you have to spend money on travel itself just to be able to reap travel rewards.

 

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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or BALANCE counselor who can help tailor a solution for you.

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