Hi there! It’s Carly from 52 Cities, back to help guide you through one of the most important decisions you’ll make as you embark on your travel hacking journey: choosing a travel rewards credit card.
If you’ve read the beginner’s guide to travel hacking or the 6 steps to getting your first free flight, you already know that a good travel rewards credit card is the most powerful tool you can have in your arsenal when it comes to racking up points and miles. But unfortunately, choosing the right one can be a little complicated.
The reason? There is no one-size-fits-all “top” travel rewards card, and the best option for one person might be a poor fit for someone else. Where you live, what you spend your money on, how much you spend and how often you travel are just a few of the many factors that can influence your decision.
But while it may seem daunting to whittle down a wide array of options, it’s a lot easier to do if you know what to look out for. Here are 7 things to consider when choosing a travel rewards credit card!
7 Things to Consider When Choosing a Travel Rewards Credit Card
1. Your Credit Score
Before you apply for a travel rewards credit card—or any credit card, for that matter—it’s important to know whether you’re likely to be approved. Getting rejected can negatively impact your credit score, which is something nobody wants!
Make sure you know what your credit score is, and read up on the general approval range for the cards you’re interested in. While there’s no way to know for sure what will happen with your application until you submit it, there are plenty of data points out there that will help you get a sense of where you stand.
If you’re not where you’d like to be on the credit-score spectrum, don’t worry. There’s a points-earning card out there for everyone, and you can always work your way up to a more premium offering by going with a starter card and building your score from there.
They say timing is everything, and that’s true in the points world, too. Once again, if you’ve read the beginner’s guide to travel hacking, you may remember that credit card sign-up bonuses are the best opportunities you’ll have to earn large sums of points—but that you have to spend a lot in a relatively short period of time if you want to secure them.
For that reason, you don’t want to go with a card whose bonus requires a spending threshold that you can’t hit—for example, $5,000 in the first three months of card membership.
There’s another key reason to pay attention to timing, too, and that’s Chase’s infamous 5/24 rule. Credit card companies—most notably Chase and American Express—have started to crack down on serial credit-card holders that they view as gaming the rewards system, and the result has been limits on how fast you can take out cards and/or how many cards you can hold at once.
Chase does this through its 5/24 rule: If you’ve taken out five or more credit cards of any kind in the last 24 months and then apply for almost any Chase-issued travel card, you’ll be automatically rejected.
So while this may be your first travel rewards card, if you’ve recently taken out a number of store credit cards, for example, you’ll want to steer clear of Chase—at least, until you come back under 5/24.
3. Sign-Up Bonus
As I mentioned, sign-up bonuses will always be your best points-earning opportunities—but they’re not all created equal. Each points program is its own currency, so 50,000 points in Program A doesn’t necessarily get you the same value as 50,000 points in Program B.
To get a better idea of the value of a particular sign-up bonus, Google the number of points from the welcome bonus along with the name of the program. This should give you a good idea of how far those points will take you in terms of free travel. The Points Guy also publishes a monthly table that’s handy for calculating the value of a sign-up bonus in monetary terms!
Sign-up bonuses also aren’t set in stone; welcome offers can change multiple times per year, and sometimes you’ll see them go way up to lure in new cardmembers. Once again, turn to Google and see if you can find how many points the card issuer has offered in the past. If you can afford to wait, it’s sometimes worth it to stick it out until an elevated bonus opportunity rolls around!
4. The Card’s Earning Power
While the sign-up bonus is certainly important, it’s not the end-all be-all when it comes to credit-card selection. You’ll earn points for every dollar you spend on your card, but how many points you earn depends on what card you have and what you’re spending on. It’s important to get a card that you’ll be able to make the most of!
Almost every travel rewards card will have at least one bonus category, or a category that will earn you extra points per dollar—whether it’s 4 points per dollar spent on groceries, 3 points per dollar spent on travel purchases, etc.
You’re obviously looking for higher multiples—because who doesn’t want to earn extra points on money they’re already spending? But you’re also looking for bonus categories that line up with where your money typically goes.
If you cook all your meals at home, for example, a card with a restaurant bonus category probably isn’t going to benefit you, whereas it might be the perfect card for a frequent diner.
Unsurprisingly, cards with stronger earning power usually fall under the “premium” umbrella, which brings me to…
5. Annual Fees
While there are some great no-annual-fee travel cards out there, if you really want to build up your points and miles stash, you’re going to need to spend a little bit of money. $95 is a typical annual fee for your standard travel credit card, but you’ll see fees go up to $550 and beyond when you start looking at the premium category.
Yes, you read that right. While $550 may seem like a fortune, cards with higher annual fees generally come with larger sign-up bonuses and better earnings potential, and they also come packed with other perks (see the next section!). As long as the card offers benefits you’ll actually use, you can often actually wind up saving money by holding a premium credit card, despite the insane fee (trust me—I have four of them!).
Obviously, though, $550 per year to spend on a credit card isn’t in the budget for everyone, so it’s important to do your research and know what kind of price tag you’re looking at before you apply. And fear not—even with a $95 card, you can still score a great sign-up bonus (enough for an international round-trip ticket in economy!) and plenty of other benefits.
6. Additional Perks
So, about those perks we touched on in the last section. As I mentioned, when you factor in the value of a card’s sign-up bonus (reminder that you can use this table for that), its earnings potential and its other perks, you can almost always come out ahead, even with the priciest cards. That’s because credit card issuers pack their products with features like travel insurance, TSA/Global Entry application credits, lounge access, companion certificates and more.
Of course, these features won’t be selling points if they’re not things you can make use of (if you never rent cars, for example, car rental insurance isn’t going to do you much good.)
Go through the list of perks carefully and see what you’ll use and what you won’t. For the ones you’ll use, do your best to assign each perk a monetary value based on how much it’ll save you.
For some perks, this is easier than for others; for example, a TSA/Global Entry application is $95, so getting a credit for that is worth $95. For others, you may have to guesstimate. If you have airport lounge access, for example, how often will you be able to use it to eat complimentary lunch or dinner before a flight instead of buying food at the airport? Will doing so save you $50 over the course of a year? $100?
Once you have your ballpark number, balance that against the annual fee!
7. Redemption Flexibility
Last but certainly not least—in fact, maybe most importantly—you want to think about what type of points your credit card earns, where those points can get you, and how easy it is to use them.
For example, cobranded Delta cards will unsurprisingly earn you miles that you can only spend within Delta’s frequent flier program. But some cards, including options from Chase, American Express and Citibank, earn points that can be transferred to a range of travel partners, giving you more options when it comes time to redeem.
And there you have it! These are all the key things you’ll want to pay attention to before making your selection on the perfect travel rewards credit card for you.
We hope this post was helpful, and as always don’t hesitate to leave a comment below with any questions!