America is a credit card loving country and you’ve probably seen all the ads for bonuses if you sign up with this or that credit card. Credit cards are omnipresent in modern day society. People use them to pay for everything from cars to groceries to sticks of gum.
Travel credit cards offer a great opportunity to earn free points that can be redeemed for airfares, hotels or cold hard cash. In the race to get customers, credit card issuing companies partner with various travel brands (or just simply offer their own card) that entice consumers with sign up bonuses, loyalty points, special discounts, and more. Their desire to get you, the consumer, is really your gain. By milking the system, you can get tons of free air tickets, hotel rooms, vacations, or even cash.
By using and signing up for travel credit cards, I have:
- Received over 300,000 America Airlines miles
- Received over 100,000 British Airways miles
- Received over 50,000 Virgin Atlantic miles
- Received 4 free nights at the Marriott
- Redeemed Citibank points for two free flights to Europe and $300 USD cash
- Received Hilton Honors Gold membership and 60,000 Hilton Honors points
And that’s only a partial list! That has translated to free first class flights, free nights at hotels, free upgrades, and free money. And it didn’t take me years to accumulate these points either. I received a lot of points through sign up bonuses and special offers that allowed me to get lots of points within only a few months.
With so many options to choose from, it’s hard to know which card is the best out there. And the truth is that there is no perfect travel card – they all offer different benefits that fit different people. I personally use two credit cards: Citi AAdvantage card and a Capital One card. I use the AA card for all my US purchases so I can earn frequent flier miles as American Airlines and their alliance partners are the airlines I tend to fly most. I use the Capital One card not because I want any of their points but because there is no foreign transaction fee when I use it overseas so I save money.
What to Look for in a Travel Credit Card
A huge sign-up bonus – Most of the time, the points are worth at least a free domestic flight. The American AAdvantage card offers 25,000 miles just for joining. That’s a free round trip domestic ticket or miles that can be used for an upgrade. United Airlines gives you 30,000 miles for signing up. Delta offers miles AND elite status miles when you sign up. Those alone are enough miles for a free plane ticket in the United States. Don’t join one that doesn’t, otherwise it will take you ages to get a free flight. Lately, in a bid to get more people to join their card programs, many airline and hotel-specific cards are offering bonuses between 60,000 and 100,000 points, which can help get you tons of free flights. I simply won’t sign up for a card that doesn’t at least give me 30,000 points when I sign up. Otherwise, it takes too long to get to a redemption.
Points per dollar – Most credit cards offer one point for every dollar spent. However, the good credit cards will give you extra points when you shop at specific retailers, or, if it is a branded credit card, with a particular brand. This will help you earn points a lot quicker. I don’t want just 1 dollar to equal 1 point. I want the ability to get two or three points every time I spend a dollar.
Low spending minimum – Unfortunately, in order to get the great bonuses these cards give, there is usually a required minimum spending before you’ll be eligible to receive the bonus. But sometimes the spending requirement is too high. I love the Starwood AMEX card but you must spend $5,000 USD before you get the reward bonus. I want to be able to get the bonus using my normal, day to day spending. Only sign up for cards that have a spending requirement of less than $1,000 USD.
Moreover, all of these travel credit cards offer great perks. Many will give you elite loyalty status or other extra perks. This will help you earn points a lot quicker. You’re going to shop anyway, so why not earn something for doing it? These cards are meant to get people to be loyal so they throw in lots of perks in hope you stick with them and not a competitor. I got 5,000 AA miles by opening a Citi checking account. I got triple miles by buying some clothes from Gap just by seeing it in their mailing list. Many cards also offer elite status with their credit cards, which is great for free upgrades and priority benefits.
No one likes paying annual fees for credit cards. Many of the fees for company branded credit cards range from $50-$95 per year. I pay an annual fee. For those who travel a lot and fly a lot, I think it is worth it to get a card with a fee. Fee-based cards tend to give you a better rewards scheme, where you can accumulate points faster, get better access to services and special offers, and get better travel protection. With these cards, I have saved more money on travel than I have spent on fees.
Foreign Conversion Fees
The majority of credit cards charge a 3% fee when you use them overseas. Credit cards are great to use because you get a good exchange rate from them but if you are paying a fee every time you use the card, then it doesn’t become as good. The best card for avoiding foreign fees is the Capital One No Hassle Card (this card has none). You get some rewards (one point for every dollar spent) with it but the rewards structure is really, really awful. Between this card and my Charles Schwab ATM card, I never pay any bank fees when traveling outside the United States.
Will this hurt my credit?
While it’s true that “churning and burning” i.e. opening an closing a lot of credit cards at once can hurt your credit, opening a few accounts over a period of time won’t kill your credit rating. I’ve been opening and closing accounts for years and I still have a credit score close to 800 and have never been denied a card.
Your credit score will slightly dip every time there is an inquiry into whether that is a credit card or home loan or car loan. It’s how the system is set up. But so long as you space out your applications and maintain good credit, you won’t find any long term damages to your credit. Your credit rating rises over time as long as you maintain it, you aren’t going to have a bank officer tell you years from now “sorry, because you cancelled three credit cards in 2012, your loan is denied.” I once cancelled 4 credit cards in one day and the impact on my score? Nothing.
Which Credit Card Should You Get?
To answer that question you need to think about why you want to use the card. Are you interested in loyalty to a brand, free rewards, or avoiding fees? Do you want to milk the rewards and bonus system to get free flights or do you just want a card that won’t charge you a fee for using it at that restaurant in Brazil? Is elite status the most important perk for you?
I can’t answer those questions for you. If you are on the road for business a lot, then getting a hotel card, like the Starwood AMEX card, would be perfect for you. You would get a lot of hotel points, free stays, discounts at other retailers, and you could also transfer those points to airlines for free flights.
Read more: Expert Brian Kelly talks more about travel credit cards and how to pick the perfect card in my interview with him.
For those who only care about price and not brand loyalty, a general rewards credit card like a Capital One or AMEX card would be best. You will still get points for free flights and discounts as well as cash-back, but you wouldn’t get any of the elite benefits. However, by getting a general travel credit card, you would have access to a wider range of brands and companies than if you had a brand-specific card.
If you don’t want to be bothered with points, miles, status, and everything else involved, then you should simply get a card with no transaction fee. Don’t worry about anything else. While credit cards can be a great way to get free stuff, that process requires a lot of work. I once asked my father why he didn’t do any of the tips I give him and he said “I can’t be bothered doing it. It’s too much effort.”
However, if you are willing to do a little work, you can use credit cards to gain tons of free miles and reward points before you go on your trip to keep you getting free flights and hotels for a long, long time. I sign up for multiple credit cards and whenever a company offers a new deal, I jump at it. This keeps me flush in frequent flier points and traveling for free.
HERE ARE THE CURRENT BEST PROMOTIONS AND CARDS TO SIGN UP FOR:
- Starwood Preferred Guest® Credit Card from American Express – Get 25,000 Starwood points when you sign up. You also get 5,000 bonus Starpoints after you transfer 20,000 points to over 30 airline frequent flier programs (a 20% bonus!). This is one of the best cards out there. This is my primary travel card because of the good points program. I HIGHLY RECOMMEND THIS CARD.
- The Platinum Card® from American Express – This card is expensive ($450 annual fee) but great for frequent travelers. You get free airport lounge access, a $200 USD airline credit, travel coverage, and elite status for a number of companies. Earn 25K Membership Rewards® points after you spend $2,000 during your first three months of Card membership. As a frequent flier, this card pays for itself.
- Chase Sapphire Card – Another great card with a 50,000 Ultimate Rewards sign up bonus. You can transfer those points to companies like United, Hyatt, Amtrak, and more. Or use them for a travel credit. This card comes with no overseas transaction fee and when used in conjunction with an airline credit card, can jump start your mileage balance.
- American Express® Premier Rewards Gold Card – Earn More: earn 25K Membership Rewards® points after you spend $2K during your first three months of Card membership; earn 15K points after you spend $30,000 within one calendar year. Double points on groceries and triple points on travel. It also comes with a $75 annual restaurant and hotel credit. A good card travel card.
- American Airlines Citi Card – Loyal to American Airlines? Get their credit card. You get up to 40,000 bonus miles when you sign up, priority access, and free checked bags.
- United Mileage Plus Chase Card - Loyal to United? Get their credit card. You get up to 40,000 bonus miles when you sign up, priority access, and free checked bags.
- The US Airways Premier World MasterCard – With this card, you get up to 40,000 bonus miles when you sign up, lounge passes, reduced reward redemptions, and free checked bags. This is a good card to get because when US airways mergers with American, your frequent flier accounts will get combined doubling your mileage account! Plan head!
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