There are two types of travel rewards cards — ones that offer rewards with a single airline or hotel program, and ones through a bank that offer points redeemable for travel rewards. To decide which type is right for you, first take stock of how you travel. If you find yourself loyal to a specific airline or hotel chain, it may be worth it to apply for that company’s credit card.
Choosing a Travel Rewards Card with no Annual Fee
If you’re considering a travel rewards card with no annual fee, there are several things you need to pay attention to — how you earn points and the number of points you earn, what other fees the card has, and if it offers other benefits and perks that can come in handy when you travel.
How many points or miles will I earn per dollar spent?
For years, most cards would offer just one point or mile per dollar spent. But today, the best cards will offer more. For example, the Discover it® Miles card offers 1.5 miles per dollar spent on all purchases, while the JetBlue Card features double points for all restaurant and grocery store purchases.
How much are the points and miles worth?
With some cards, points or miles are simply worth a fixed amount as statement credits toward travel rewards. When you redeem rewards from your Discover it® Miles, your miles are worth one cent each as statement credits toward any travel reservations that you’ve already made. If you purchase a flight for $300, you can later redeem 30,000 miles to pay for it.
But when you are redeeming airline miles or hotel points, you have to figure out the value of the travel received in order to understand how much each point or mile is worth. For example, if you have to redeem 40,000 Hilton hotel points for a free night in a hotel that charges $200 a night, then you know those points are only worth a half a cent each.
Another part of determining the worth of airline miles or hotel points is understanding how flexible the rewards program is.This allows you to take advantage of the best offers available from several different frequent flyer programs. If you are skilled at redeeming frequent flyer miles, these kinds of reward points may be the most valuable to you. But, be wary of free flights — an airline may claim to offer award flights for a reasonable amount of miles, but the miles aren’t worth much if you can never find a flight for that price.
Are there other fees?
Most credit cards still impose foreign transaction fees on all charges processed outside of the United States, typically around 3%. So, even if a credit card offered rewards worth 2% of spending, having to pay a 3% foreign transaction fee would outweigh the value of the rewards earned, so it makes no sense to use a card like that outside of the US. Fortunately, a growing number of credit cards no longer impose this unnecessary fee, including some of the top travel reward cards including the Discover it® Miles and the JetBlue Card.
What features and benefits are included?
Finally, you need to consider the other travel features and benefits offered by these cards. All credit cards now have EMV smart chips that use the Chip and Signature system. But some are also compatible with the Chip and PIN protocol that can be required at some unattended card readers overseas, including those at subway stations, toll booths, and gas stations. Other helpful travel benefits to look for include baggage insurance, which compensates you for losses the airlines don’t cover, and a travel assistance hotline that provides legal or medical referrals, which can be especially helpful when traveling internationally.