August 26, 2024

Are Travel Credit Cards Worth It? Explore the Pros and Cons

Most people dream of free flights and hotel stays. But for some, those perks become reality. And it all starts with the right travel credit card.

For every dollar they spend, travel credit card holders earn redeemable points or miles toward travel-related expenses. That means people who regularly drive across the country or hop on plans can earn hundreds (or even thousands) every year.

But are travel credit cards worth it? And are they good for homebodies who don’t travel often? Here’s a guide to these cards, how they work, and if they’re right for you.

What is a travel credit card?

Unlike alternative card options like cash back, travel credit card users earn points or miles for every dollar they spend, which they can redeem for travel-related purchases. These perks can cover airfare, hotel stays, and car rentals — but some cards come with extras like airport lounge access, priority boarding, and complimentary checked baggage. It all depends on the provider and the card.

How do travel credit cards work?

Travel cards function just like other rewards-based credit cards. For every transaction you make, you earn points or miles. For example, you might get two points for every dollar you spend. Premium cards might give you even more.

Different purchase types can also have different point rewards. Some cards may offer three points for every dollar on gas and groceries, while other purchases earn only one point per dollar. That’s why it’s key to read the fine print and figure out what you can get for the purchases you make most often.

Redeem points through an online portal, typically given to you by your credit card company at sign-up. Just like standard ticket prices, point values can fluctuate over time, so using them during slower travel seasons can help them go further.

4 benefits of credit cards for travel

Travel credit cards are an excellent choice for frequent flyers and people who love travel. Here are some benefits of this type of card:

1. Redeemable points or miles

Perhaps the single greatest draw for travel credit cards is the points. If you use the card for regular spending, you can rack up points without changing your habits at all, which can make it feel like you’re earning free money. Spend them on airfare, hotels, and even non-travel purchases like technology or kitchenware (depending on the card).

2. Travel-specific perks

Travel credit cards often offer even more perks beyond points or miles. Many cards provide travel insurance, priority boarding, and free checked bags with partner airlines. These perks can lead to significant savings while traveling — and provide a more comfortable experience.

3. Travel discounts

Many cards offer travel deals and discounts you can’t get anywhere else. The credit card issuer may send newsletters and deal-related emails or even give you access to special online bookings. This exclusivity is a huge perk, especially when you’re trying to choose between different cards.

4. Sign-up bonuses

Keep your eyes open for sign-up bonuses, which can get you thousands of extra points when you first get a card. These points are redeemable toward your future vacation, helping you save money.

3 disadvantages of travel credit cards

Getting a new credit card is no light decision. Here are three potential downsides to guide your thinking:

1. Excellent credit score requirements

Approval for high-value credit cards often requires a very good credit score and high income. Some income requirements can be anywhere from $60,000 to $100,000, making many cards inaccessible to a huge chunk of the population. Having an excellent credit score or meeting the high-income requirement is a challenge for many.

2. High annual fees

While there are no-fee travel credit cards out there, many of the best have high annual fees — think a few hundred dollars or more. These cards offer the most premium benefits, like near-immediate boarding, airport lounge access, and greater rewards per dollar spent, but you might not get your money’s worth if you don’t travel often.

3. Difficulty maximizing value

Generally speaking, frequent travelers get the most value from travel credit cards. If you don’t travel for work or vacation often, you’ll likely find better-value cards that fit your lifestyle, and with more relevant rewards.

Should you get a travel credit card?

Deciding if a travel credit card is right for you depends on your lifestyle, regular spending habits, and where you shop. Here’s more about the factors to consider:

Determine your travel goals and habits. Consider how you like to travel. Do you prefer road trips or flying? Hotels or hostels? Travel credit cards are typically more valuable to those who stay at traditional accommodations and use large airlines. If you usually road trip or crash on friends’ couches, this card type may not be worth it.
Learn what perks are available to you. Every credit card, travel or not, offers a variety of benefits. Some you may use, others not, so find benefits that best meet your lifestyle. If you love the luxury of an airport lounge instead of getting through the airport fast, get a card with related perks.
Consider your spending habits before making a choice. There are tons of credit card options that cater to different kinds of people with different spending habits, so find one that actually suits your needs. A travel card might seem fun, but if you drive to work every day, a card with good gas rewards may be a better choice.
Check the requirements. Every credit card has different credit score and income level requirements for approval. Know your score and income before you apply, and be realistic about what you might get. Remember, there are a variety of cards out there, so if you aren’t eligible for one, keep looking. There are tons of options — some of which don’t have minimum requirements at all.

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Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

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