Pros and Cons of Travel Credit Cards: Rewards, Perks, Fees

When it comes to credit cards, we value our rewards. According to an Ipsos survey, nearly three in four Americans say they have a card that gives them rewards. For those who love traveling, travel rewards credit cards can be especially helpful. With a travel credit card, you could earn valuable points or airline miles, and you have extra benefits available like travel insurance or airport lounge access.

However, travel cards can have costly fees, high interest rates, and can vary in how much value they can deliver on reward redemptions. In this breakdown of the pros and cons of travel cards, learn about their perks, fees, and features to help you decide whether a new credit card is right for you.

Key takeaways

• Travel cards boast valuable rewards and welcome offers.
• Travel credit card perks often include benefits like car rental coverage, travel accident insurance, and free checked bags.
• Some travel cards have high annual fees.
• The value of your rewards can vary by card and redemption method.

What is a travel credit card, and how does it work?

A travel credit card is a specialized type of rewards credit card. Intended for people who travel frequently for work or pleasure, these cards allow cardholders to earn points or miles on certain purchases. For example, you may be able to earn three points per $1 spent on flights or hotel accommodations.

Unlike co-branded hotel or airline credit cards offered by select airlines or hotel chains, a general travel card typically gives you more flexible rewards and a higher rewards rate on all travel, regardless of which company you book your hotel with or what airline you choose.

The pros and cons of travel credit cards

Pros

With a travel credit card, you could earn rewards on purchases like travel arrangements, meals at restaurants, entertainment, and other expenses. And, if you meet the card's spending requirements for new cardmembers, you may qualify for special bonuses. Plus, these cards often have added perks like TSA PreCheck or Global Entry fee waivers, airport lounge access or travel insurance — some of which provide enough value to outweigh the card’s annual fee.

Cons

Although travel rewards cards can be useful tools, there are some downsides. They can have high annual fees, and the fee is required regardless if you use the card or travel that year. Unless you use the card and rewards often, the fee may reduce the card's usefulness.

Some cards offer higher values for certain redemption methods. For example, you may get the highest value for your points if you redeem them for flights. Other redemption methods may give you significantly less value.

Finally, travel credit cards can have high rates. If you carry a balance from month to month, interest can build rapidly.

Earning rewards

With a travel rewards credit card, you could earn rewards in the form of points, airline miles, or cash back on certain purchases, depending on the rewards program. Typically, you earn a higher rewards rate on flights, hotel stays, and dining out.

Many cards have tiered rewards structures, meaning you earn a different rewards rate for each spending category. For example, the Chase Sapphire Preferred^® Card offers the following rewards:

• 5X on travel purchased through Chase Travel℠
• 3X on dining, select streaming services, and online groceries
• 2X on other travel purchases
• 1X on all other purchases

Maximizing rewards

With a travel credit card, you could earn valuable rewards by being thoughtful with your spending. To maximize your rewards, follow these tips.

• Meet the welcome offer requirements: Some cards have special offers for new cardmembers. If you spend a certain amount within a set timeframe, you could earn hundreds in bonus rewards. When applying for a new card, make sure you note any special promotions and the deadline to qualify for them to take advantage of these offers. For example, with the Chase Sapphire Reserve^® card you could earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
• Keep track of spending categories: If your card offers a tiered rewards structure rather than one flat rewards rate, keep a list of the leading spending categories on your phone so you can easily check it when you're out. Knowing which credit card gives you the best rewards rate on dining out, for example, could come in handy when deciding what card to use to pay for a restaurant bill.
• Pay off the balance in full: To get the most value from your card, avoiding interest charges and late fees is key. Aim to pay the statement balance in full each month by the bill's due date to avoid accruing interest charges.
• Consider annual fees: Some travel rewards cards have hefty annual fees. But depending on how you use the card, you could earn enough in bonuses and rewards to justify the cost. For example, the Capital One Venture X Rewards Credit Card(Rates and fees) has a $395 annual fee. However, new cardmembers could earn 75,000 miles when you spend $4,000 on purchases in the first 3 months from account opening — a $750 value. After the first year, you can take advantage of the card's $300 annual travel credit. What’s more, starting on your first anniversary, cardholders also earn 10,000 anniversary miles — about $100 in value — offsetting the annual fee.

Redeeming rewards

Redemption options and values vary by card. Some of the most common ways to redeem rewards include:

• Travel: Many cards allow you to redeem your rewards for flights, hotel accommodations, or cruises. You may get the most value for your rewards by booking your trip through the card issuer’s travel portal.
• Transfers: With some cards, you get more value for your points by transferring them to the card's partner airlines, hotels, and other rewards programs.
• Gift cards: You can often redeem your points or miles for gift cards to major travel chains, rental car companies, and retailers.
• Statement credits: Some cards allow you to redeem your rewards for statement credits to cover some of your credit card balance.

Is a travel credit card right for you?

If you have good credit and travel often, a travel credit card could be a useful addition to your wallet. With good credit, you can qualify for the best travel credit cards with valuable rewards and benefits. And, if you make it a rule to pay off the balance in full every month, you can take advantage of those rewards and benefits without worrying about interest charges.

Typically, travel credit cards are best-suited to those who travel frequently and spend substantial amounts within the card's key spending categories.

If you travel infrequently or tend to travel to more local destinations, a travel credit card may not make sense. The fees may negate some of its value, and you may not spend enough to offset them.

How to choose a travel credit card

There are hundreds of travel credit cards to choose from. When shopping for a card, consider these factors.

• Reward structure: Think about your typical monthly spending; if you tend to spend significant amounts in certain categories — such as dining out if you're a foodie — look for a card that offers a higher rewards rate in that category.
• Redemption options: Redemption options and values vary by card. If you prefer certain forms of travel, such as cruising or international travel, a card that gives you more value for that preferred redemption option could be the best fit.
• Annual fee: Some travel cards have triple-digital annual fees, so they may only make sense if you tend to travel frequently. For more casual travelers, a card without an annual fee may be a better choice.
• Benefits: Premium travel cards offer benefits like airport lounge access, travel interruption insurance, and no foreign transaction fees. If you travel often, the right credit card could enhance your travel.
• APR: If you may carry a balance, pay attention to the card's APR — the yearly interest rate you’ll be charged on that balance. The higher the APR, the more interest will accrue.

Travel credit card alternative

Although a travel credit card could make sense for some people, not everyone will benefit from them. They tend to be more suitable for those who travel at least once per year or want to use their rewards for future trips.

If you travel infrequently, a general rewards card may be a better option. You could earn rewards you could redeem for statement credits or gift cards, which you may get more use out of than a travel card’s rewards.

FAQs

Bottom line

If you're shopping for a new credit card and are planning to travel domestically or abroad, applying for a travel credit card could be a good decision. A new card could allow you to qualify for special welcome offers, and you could earn rewards on your spending.

However, be aware that travel cards can have high annual fees and APRs, so shop around and prequalify for credit cards to find the best option without damaging your credit.

Easy-to-Earn Unlimited Rewards

Bank of America^® Travel Rewards credit card

Benefits

Card Details

• $0 annual fee
• Simple, flat-rate rewards
• Flexible redemption options
• Up to 75% preferred Rewards bonus potential
• Apply Now

• Earn unlimited 1.5 points per $1 spent on all purchases, with no annual fee and no foreign transaction fees and your points don't expire as long as your account remains open.
• 25,000 online bonus points after you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $250 statement credit toward travel purchases.
• Use your card to book your trip how and where you want - you're not limited to specific websites with blackout dates or restrictions.
• Redeem points for a statement credit to pay for travel or dining purchases, such as flights, hotel stays, car and vacation rentals, baggage fees, and also at restaurants including takeout.
• 0% Intro APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 18.74% - 28.74% will apply. A 3% Intro balance transfer fee will apply for the first 60 days your account is open. After the Intro balance transfer fee offer ends, the fee for future balance transfers is 4%.
• If you're a Bank of America Preferred Rewards® member, you can earn 25%-75% more points on every purchase. That means instead of earning an unlimited 1.5 points for every $1, you could earn 1.87-2.62 points for every $1 you spend on purchases.
• Contactless Cards - The security of a chip card, with the convenience of a tap.
• This online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now.

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Intro Offer

Earn 25,000 online bonus points after you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $250 statement credit toward travel purchases

Annual Fee

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Why we like it

• The Bank of America^® Travel Rewards credit card is great for individuals who enjoy earning rewards and traveling.

• Cardholders will enjoy the flexibility to redeem points with no blackout dates and receive a statement credit to pay for travel and dining purchases.

• Earn 1.5X points on all purchases everywhere, every time.

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