Travel credit cards work just like any other rewards credit card, but they prioritize travel in their rewards and other benefits. Travel credit cards usually reward cardholders more for making travel-related purchases than anything else, and their points/miles tend to be worth more when used to pay for travel. Plus, travel credit cards commonly offer features such as travel insurance, no foreign transaction fee, airport lounge access, and reimbursement for TSA PreCheck/Global Entry application fees.
Travel rewards credit cards offer rewards in one of two currencies: miles or points. There isn’t much of a difference between the two, but miles are more frequently used in the context of airline rewards, while points are often associated with hotels. However, plenty of credit cards with points or miles don’t favor airfare or hotel reservations in particular – just travel purchases in general.
Overview of how travel credit cards work:
They often reward you more for travel. Travel purchases are usually going to be a lot more profitable rewards-wise than other types of purchases. For example, Chase Sapphire Preferred gives 2 points per dollar spent on travel and dining, and 1 point per dollar on other purchases. But this isn’t true for every card. Capital One Venture, for instance, gives 2 miles per dollar on all purchases.
Travel redemption is usually the best value. In most cases, you don’t have to spend your rewards on travel, but the credit cards companies give big incentives for you to do so. Take Chase Sapphire Preferred, for example. You get 25% more value from your points when you redeem them for travel, which turns the 60,000 points initial bonus into $1,000.
No foreign transaction fees. Very few travel cards will charge you extra for using your card abroad or with foreign merchants online. But you should check your cardholder agreement just to be sure.
There may be booking restrictions. Some travel cards, like Capital One Venture, pride themselves on rewarding you equally for any type of travel, no matter where you book it. But other cards, especially airline or hotel cards, may only give travel-specific rewards rates if you book directly through the issuer.
Your credit rating counts. Travel rewards cards are typically available only to people with good or excellent credit. You should shoot for a credit score of 700+ for cards that require good credit and 750+ for excellent credit.
You’ll often get travel insurance & more. Travel insurance is a big plus; cards like Chase Sapphire Preferred will cover you for trip cancellation, delays or accidents. Many travel credit cards still offer rental car insurance, too, though many regular credit cards have dropped that benefit. Some cards, like Chase Sapphire Reserve or Amex Gold, also give you a yearly credit toward airline or travel purchases. You may even get other perks like free airport lounge access and the ability to transfer your points or miles to hotel and airline loyalty programs.
So if you travel frequently, getting a travel credit card is a good idea. After all, if you’re going to take trips anyway, you might as well get rewarded for it. Some of your best choices are Capital One Venture for miles, Chase Sapphire Preferred for points, and Amex Platinum for luxury travel.