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Are Travel Credit Cards Worth It? Solved!

By: Swena Kalra

Edited By: Scott Sidders

Updated on November 6, 2023

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It's no secret that traveling can be expensive. But what if there were a way to travel for free or at minimal costs? Believe it or not, several credit cards offer bonus points and rewards for spending on travel-related expenses. So, are travel credit cards worth it? This blog post will explore the pros and cons of using travel credit cards and provide tips on maximizing your rewards.

Before we do that, however, let's take a quick look at how travel credit cards work.

What are Travel Credit Cards?

Travel credit cards are particular types of credit cards that offer rewards and perks for spending on travel-related expenses. These include airfare, hotels, rental cars, and even dining out while on vacation. In most cases, you'll earn points or miles for every dollar you spend on travel-related expenses. And, in some cases, you can even earn double or triple points for every dollar spent.

However, it's important to note that not all travel credit cards are created equal. Some offer more generous rewards than others. Therefore, comparing travel credit cards is essential before choosing one.

Now that we've answered the question, "what are travel credit cards," let's look at the pros and cons of using them.

The Benefits of Using a Travel Credit Card

There are several benefits of using a travel credit card, including the following:

1. Earn Free Travel

One of the most significant benefits of using a travel credit card is that you can earn free travel. Using your card for all your travel-related expenses, you can quickly rack up points or miles to redeem free travel. It's an easy way to save money on your next vacation. You can often redeem your points or miles for free flights, hotel stays, rental cars, and more. This can help you offset the cost of your travel and even save you money.

2. Get Discounts and Perks

In addition to earning free travel, you can get discounts and perks when using a travel credit card. Many cards offer exclusive discounts and deals on travel expenses. For example, some cards offer airfare discounts when booked through the travel portal. Others offer free checked bags, priority boarding, or complimentary lounge access. When used correctly, these discounts and perks can save you significant money on your travels.

3. Build Your Credit History

Using a travel credit card can help you build your credit history if you're responsible for your spending. This is because major banks and financial institutions typically issue travel credit cards. And these issuers report your payment activity to the major credit bureaus. So, if you make on-time payments and keep your credit card balance low, you can improve your credit score over time. A good credit score can help you qualify for better interest rates on loans and lines of credit in the future.

4. Enjoy Protection and Peace of Mind

When used correctly, travel credit cards can offer protection and peace of mind while on vacation. For example, most cards offer purchase protection. This benefit can reimburse you for damaged or stolen items purchased with your card. Many cards also come with travel insurance benefits like trip cancellation and interruption insurance. These benefits can reimburse you for non-refundable travel expenses if your trip is canceled or interrupted due to a covered reason.

5. Earn Rewards

In addition to the benefits mentioned above, using a travel credit card can also help you earn rewards. With most cards, you'll earn points or miles for every dollar you spend on travel-related expenses. You can then redeem your points or miles for free travel, gift cards, statement credits, and more. Rewards credit cards are a great way to get something back for your spending.

The Drawbacks of Using Travel Credit Cards

The benefits of using a travel credit card are clear. However, there are also some drawbacks to consider. These include:

1. Annual Fees

One of the most significant drawbacks of using a travel credit card is that many come with annual fees. While some cards have no annual fee, some premium credit cards can charge upwards of $500 per year. This can offset the value of the rewards and benefits you earn.

2. Higher Interest Rates

Another drawback of using a travel credit card is that they often come with higher interest rates than other types of credit cards. This is because issuers view them as a greater risk. If you carry a balance on your card monthly, the interest charges can quickly offset any rewards or benefits you earn.

3. Foreign Transaction Fees

If you plan to use your travel credit card while abroad, you'll also need to be aware of foreign transaction fees. These fees are typically around 3% of the total transaction and can add up quickly if you're not careful.

4. Limited Redemption Options

Another drawback of using a travel credit card is that they often have limited redemption options. For example, some cards only allow you to redeem your points or miles for travel expenses. This can limit how you use your rewards and make it more challenging to get the most value out of them.

5. Complex Terms and Conditions

Finally, it's essential to know that travel credit cards often come with complex terms and conditions. This can make it difficult to understand how to use the card and take advantage of the benefits. It's essential to read the terms and conditions carefully before using a travel credit card to avoid unwanted surprises.

How to Choose the Right Travel Credit Card for You?

Choosing the right travel credit card can be tricky. With so many different cards to choose from, it's essential to compare your options and find the best fit for your needs. Here are a few things to consider when choosing a travel credit card:

1. Your Travel Habits

Do you travel often? Do you spend a lot on travel-related expenses? If so, you'll want to choose a card that offers generous rewards for your spending. For example, you may want a card that offers free checked bags or priority boarding if you travel frequently. If you spend a lot on travel expenses, you may want a card that offers bonus points or miles on travel-related purchases.

2. Your Credit History

Do you have good credit? If so, you'll likely qualify for a rewards credit card with a generous sign-up bonus. However, you may want to consider a secured credit card if you have bad credit. With a secured card, you'll need to provide a deposit that will serve as your credit limit. This deposit is typically equal to your credit limit.

3. Fees

Be sure to compare the fees associated with each card. Some cards have annual fees, while others have no annual fees. There may also be foreign transaction fees, balance transfers, and cash advance fees. These fees can add up, so be sure to compare them before you apply for a card.

4. Perks

In addition to the rewards and discounts, many travel credit cards offer additional perks. For example, some cards offer trip delay insurance, which can reimburse you for certain expenses if your flight is delayed. Others offer rental car insurance, which can provide coverage if you damage your rental car. When comparing cards, be sure to consider the perks and benefits that are most important to you.

5. The Application Process

Finally, be sure to compare the application process for each card. Some cards require good credit, while others only require fair credit. And some cards have an annual fee, while others do not. Be sure to compare these factors before you apply for a card.

As you can see, there are many things to consider when choosing a travel credit card. By comparing your options and finding the best fit for your needs, you can ensure you get the most out of your travel credit card.

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