How to choose a travel credit card: 4 questions to ask

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A travel credit card can be a valuable tool when it comes to planning your next vacation.

These cards offer convenience and security while you're on the go. Plus, they reward you with exclusive perks and benefits that enhance your travel experience.

There are different types of travel cards, from airline-specific cards to general travel rewards programs. Asking yourself the right questions will help you find the best travel card for you.

How do travel credit cards work?

Before choosing a travel card, it’s important to know how these cards work.

Travel credit cards offer rewards, benefits, and perks tailored to travelers. These cards allow you to earn points, miles, or cash back on travel-related expenses. Rewards can be used for flights, hotel stays, car rentals, and more.

When you purchase a travel credit card, you earn rewards based on a set earning rate. For example, a card may offer 2X points for every dollar spent on travel purchases and 1X points for all other purchases. You can redeem rewards through the issuer's rewards portal or transfer them to partner airlines or hotel loyalty programs.

These cards often come with added benefits, like airport lounge access, priority boarding, and travel insurance. Some cards don’t charge foreign transaction fees, making them ideal for international travelers.

Many travel credit cards come with an annual fee, which can vary depending on the card. The value of the rewards and perks can often outweigh the cost of the fee, especially if you take advantage of the card's benefits.

The right travel credit card for you depends on your financial situation and goals. Here are four questions to ask yourself when deciding on the right travel card for you.

1. What are my spending habits?

Your spending habits impact how easy it is to earn rewards and maximize the card’s benefits.

As we mentioned before, different travel credit cards offer varying reward structures. Some cards offer higher rewards for specific categories like travel, dining, or groceries. Others provide a flat rate on all purchases.

You want a card that rewards you for your daily purchases. If you’re a frequent grocery shopper, you may want to look for a card offering extra points for those expenses.

For example, the Blue Cash Preferred® Card from American Express gives you 6% cash back at U.S. supermarkets (up to $6,000 per year, then 1%). This card also earns 3% cash back at U.S. gas stations.

A co-branded hotel or airline credit card can amplify your rewards and status benefits if you're a loyal member.

The Citi® / AAdvantage® Platinum Select® World Elite Mastercard®, for example, allows you to earn AAdvantage® miles on your everyday purchases. It also includes added perks like complimentary checked bags and discounts on inflight food and beverage purchases.

2. What type of rewards do I want?

Travel credit cards offer various types of rewards, such as points, miles, or cash back. You can use these rewards for flights, hotel stays, and other travel-related expenses.

Here’s an overview of some of the rewards you could earn:

• Points: You can use points on travel expenses like flights, hotels, and car rentals. Points can be transferred to partner loyalty programs for increased flexibility and value.
• Miles: Miles can be redeemed for flights with specific airlines or airline alliances. They can be used to book flights, upgrade seats, or cover other travel-related expenses.
• Cash back: You can redeem a percentage of your spending as a statement credit or direct deposit. Cash back offers flexibility, as it can be used for any expense, including travel-related costs.
• Hotel rewards: Co-branded cards often offer rewards in the form of free hotel nights, upgrades, or other perks within specific hotel loyalty programs.

Understand what rewards you value most, whether it's flexible redemption options, free flights, hotel stays, or cash back. That way, you can choose a card that provides the highest value for your spending habits and travel plans.

For instance, if you prefer airline miles, you might opt for a card that offers priority boarding, lounge access, or free checked bags. A card offering complimentary upgrades or late checkout would be valuable if you prioritize hotel stays.

While the type of reward is important, so is the earning rate. If it takes a very long time to accumulate points or miles, they may not be as useful as you hoped.

3. What are the fees?

Even the best travel credit cards come with annual fees. Knowing what fees come with the card helps you decide if the benefits and rewards outweigh the potential cost.

If your spending aligns with the bonus categories and perks, the rewards may outweigh the annual fee. But if the benefits don't align with your travel needs or the rewards are minimal, it might make more sense to consider a card with no annual fee.

For example, the Chase Sapphire Reserve® charges a $550 annual fee. However, it has a $300 annual travel credit and a $100 credit every four years for TSA PreCheck

You can compare different credit card rewards programs to learn the estimated value of their rewards.

4. How can I get the most value?

Review your financial habits and spending patterns to determine how to get the most out of your card. This includes:

• Knowing your spending habits: Use a budget to figure out where you spend the most (gas, groceries, travel, etc.). Choose the card with the highest reward rates in your highest spending categories.
• Maximizing rewards: Always use the card to earn you the most rewards. For example, use your grocery credit card when buying groceries and your hotel card when booking a hotel.
• Earn your welcome bonus: Many cards allow you to earn bonus points, miles, or cash back after spending a certain amount within a given amount of time.
• Pay off your balance every month: Travel credit cards often have high interest rates, which can negate the benefits. Make sure to pay your balance in full each month.
• Redeem wisely: Some travel credit cards have higher redemption rates. For example, your points may be worth even more if you book travel through your issuer’s travel portal.
• Take advantage of card perks: Travel cards come with a wide range of perks, including free checked bags, late checkout, and travel insurance. These perks could save you a significant amount.
• Watch the expiration dates: Some points or miles expire after a certain period if you don’t use them. Keep track of your points or miles so you don’t lose them.
• Pay attention to annual fees: If you don’t take full advantage of the card, it may not be worth it to pay a high annual fee.

The bottom line

While there are pros and cons of using travel cards, they often help you stretch your dollars further while earning rewards and getting perks.

To make the best choice, it’s important to know how these cards work and the types of rewards available. That way, you can pick the right type of reward and use strategies to maximize your rewards. Picking the right card means choosing one that aligns with your spending and travel habits and using it responsibly. 

Editorial disclaimer: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.