How to choose a travel credit card

Few offers are as enticing as the prospect of a vacation paid for by travel credit card rewards. Now that travel is picking up again, you may feel the push to secure a solid travel rewards credit card.

Even if you’re new to travel rewards cards, you probably know their biggest lure is that you can earn points or miles and redeem them for travel purchases.

What you may not know is that aside from the chance to earn points and miles, travel rewards credit cards also offer a range of valuable benefits. These benefits can include travel insurance, waived fees and even access to airport lounges. Cards co-branded with airline or hotel loyalty programs can also offer credit toward elite status, which allows you to earn even more travel perks.

To help you speed up your research, here’s what you need to know about choosing a travel credit card.

Decide between a co-branded card and a general travel card

If you’re choosing a travel rewards card, you’re looking at two basic types. While there are many categories and subcategories, all travel cards are either general travel rewards cards or cards co-branded with a travel company such as an airline, hotel chain, online travel agency or cruise line. Co-branded and general travel cards function differently — but can often work together. Many frequent travelers have more than one travel card so they can optimize how they earn rewards.

Co-branded travel credit cards

Some of the first travel rewards credit cards were airline cards, known as frequent flyer miles cards. Airline credit cards are co-branded with an airline and offer both travel rewards and benefits when flying with that carrier. With an airline card you’ll typically earn 2 “miles” (rewards points) per dollar you spend with the airline and in other bonus categories, and 1 mile per dollar you spend elsewhere. Airline cards also offer perks such as priority boarding, discounts on in-flight food and beverages and a free checked bag.

Hotel credit cards work in much the same way — they’re co-branded with a hotel chain and are designed to reward purchases with that chain. Some hotel cards offer enticing perks and bonuses, enabling you to earn points toward free night stays and get benefits like room upgrades, late checkouts and even free breakfast. But hotel cards differ from airline cards in that there’s no standard reward structure — 10,000 points can mean one thing at one chain, and another at the next — so it’s trickier to compare them.

Co-branded cards sometimes offer generous sign-up bonuses. For example, the Marriott Bonvoy Boundless® Credit Card offers the chance to earn 3 Free Night Awards (each night valued up to 50,000 points) after you spend $3,000 on purchases in the first three months from account opening. A typical airline credit card will offer new applicants a welcome bonus that can be redeemed for two or more roundtrip domestic flights in economy class.

When you’re able to redeem your airline miles for expensive awards in business or first class, you can get far more value than the typical 1 cent per mile you’d get from booking travel directly through the card issuer. The same is true when you redeem hotel points for expensive reservations during peak travel periods.

General travel credit cards

Travel rewards credit cards that aren’t co-branded with a travel provider can also be considered general travel rewards cards. These cards offer points or miles in a program created by the card issuer. Credit card users who earn these rewards redeem them directly with the card issuer for travel reservations. For example, the Bank of America® Travel Rewards credit card offers points that are worth 1 cent (for cash rewards this drops to 0.6 cents) each as statement credits toward travel purchases.

Other card issuers offer incentives if you redeem rewards for reservations booked through their travel programs. Citi offers several credit cards that earn rewards in its ThankYou points program, for instance. You can redeem them for travel reservations or transfer them as frequent flyer miles to use with its airline partners.

The American Express Membership Rewards program and the Chase Ultimate Rewards program work similarly, each offering its own list of travel partners. With the Capital One Venture Rewards Credit Card, you earn miles that you can redeem for travel statement credits or transfer to airline and hotel partners.

What to consider when choosing a travel rewards credit card

When you’re choosing a travel rewards card — either a general travel card or a co-branded one — there are several things you should evaluate.

New account bonuses

Credit card issuers try to attract new customers by offering sign-up bonuses. You can expect to earn a valuable bonus, but keep in mind that most cards require you to earn it by spending a certain amount within a certain time period.

Ongoing travel rewards

While you might earn a great, one-time sign-up bonus, make sure the card you choose earns travel rewards for your spending. The best card for you should reward points or miles for the specific purchases you make — such as travel, dining, gas or groceries.

Foreign transaction fees

Many credit cards charge a foreign transaction fee of 3 percent on all charges processed outside of the U.S. But with a travel rewards card, you won’t want to pay that fee, which is usually worth more than any rewards you earn. Thankfully, most travel rewards cards no longer impose this fee. But if you travel internationally, double-check the card’s terms and conditions.

Travel redemption value

Rewards points and miles that different credit cards offer vary wildly in value. For example, one hotel program may require 50,000 points for a free night’s stay in a mid-priced property, while another might only charge 12,000 points for a night in a similar property in the same neighborhood. The best way to weigh the value of the rewards a card would earn is to look at a travel reservation you might redeem your points or miles for.

Annual fees

While there are a few no-fee travel rewards credit cards, most come with an annual fee — and the fees for premium travel cards can be very high. The more you travel and the more you use your card, the more likely the rewards and benefits you earn will be worth the fee. If you’re considering paying an annual fee, look closely at the value of benefits, such as waived checked bag fees and statement credits toward travel purchases.

Bottom line

There’s a whole world of travel rewards credit cards out there designed for nearly every kind of use. Do your research before you apply for a new travel credit card. Choosing the right one will help you earn the rewards and benefits that matter the most to you.