Travel credit cards work just like any other rewards credit card, though they tend to reward cardholders more for making travel-related purchases than anything else. The points or miles that travel credit cards provide are also usually worth more when redeemed for travel, compared to other redemption methods. 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. On that note, co-branded travel cards tend to give higher rewards rates and special perks with specific airline and hotel brands, while non-cobranded travel cards don’t favor any particular brand but give good rewards on travel purchases in general.
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 5 points per $1 spent on travel purchased through Chase, 2 points per $1 on all other travel purchases, 3 points per $1 on dining and online grocery purchases, 3 points per $1 on select streaming services, and 1 point per $1 on all other purchases. But this isn’t true for every card. Capital One Venture, for instance, gives 2 miles / $1 on almost 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.
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.
You may need at least good credit.
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 & other perks.
Travel insurance is a big plus. Some cards 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. Certain cards, generally those with annual fees, 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, you might as well get rewarded for trips you’d go on anyway.