Are Travel Rewards Credit Cards Worth It?

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Are Travel Rewards Credit Cards Worth It?

After a year in which many tourists were forced to postpone or cancel their trip plans, Americans are raring to go. According to a Motel 6-commissioned poll, two-thirds of Americans want to travel in 2021. 1

If you want to earn points or miles for your purchases, a travel rewards credit card might be a good option. It is estimated that the average traveler has 64,800 points/miles worth $684 in travel credit. 2 In addition to travel miles, travel rewards credit cards may provide extra perks. Is it, however, worthwhile to get a travel rewards card? Here’s how to make your choice.

Key Takeaways

  • Travel rewards credit cards allow you to earn miles or points on purchases that you can then redeem for free flights, hotels, and other travel expenditures.
  • Some travel rewards credit cards may provide extra advantages and privileges such as airport lounge access, sign-up incentives in the form of points or miles, and free checked luggage.
  • Obtaining a travel rewards credit card may help you earn elite status in participating airline frequent flyer programs or hotel frequent guest programs more quickly.
  • When selecting a travel rewards card, consider the value of the benefits gained vs the annual fee or interest charged if you carry a debt month to month.

Travel Rewards Cards and the Monthly Balance

It comes to reason that the more money you charge on a travel rewards card, the more points or miles you’ll earn. If you can pay off your credit card amount each month and avoid interest charges, the travel benefits may be worthwhile. When you pay off your credit card, you avoid accruing exorbitant interest and penalties that increase when you carry a debt from month to month. 3

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So, how can you be certain that you will pay the amount in full each month? Some people restrict their credit card spending to one card and pay it off monthly. Isolating expenditure makes it simpler to accumulate the necessary points or miles. You may try acquiring a single travel rewards card and charging all of your monthly expenditures to it, then paying the bill when it arrives.

Travel rewards credit cards may also be a terrific bargain for business owners or workers using corporate cards. These cards enable users to collect points on business travel and operational expenditures while having the accounting department pay down the monthly sum. Again, this may assist in avoiding the payment of interest on charges.

Tip

Many travel rewards card companies have online calculators that enable you to estimate how many miles or points you may earn each year depending on your regular spending patterns. Crunching the statistics may assist in determining if a travel rewards card is worthwhile.

Travel Rewards Card Limitations

Travel rewards cards, like any other sort of credit card, have restrictions and limitations. When deciding if travel rewards cards are ideal for you, it’s critical to understand how those rules function.

Assume you receive a travel rewards credit card and want to use it all year to accumulate points for a trip. Cardholders who desire to redeem travel points should be aware that airlines and hotels may have limited availability. There may be ban periods on when you may and cannot book rewards travel, for example. Peak days and seasons vary by travel company, so a travel rewards card may be ineffective if you cannot utilize the rewards points or miles when you need them.

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Note

Even though your cardmember agreement indicates that there are no blackout periods, there may be additional limits or limitations on how you may redeem travel points or miles.

A travel rewards card, on the other hand, may be the greatest solution for someone who travels regularly. People in this group fly and stay in hotels all year and frequently take advantage of slow travel days and seasons to maximize their benefits. So, while you weigh the benefits and drawbacks of travel rewards cards, keep your own travel habits in mind.

Travel Rewards Credit Card Bonuses

Credit card companies make travel benefits seem to be free, but they are not. The cost of obtaining them, especially rewards cards with introductory bonus offers, may influence whether the card is worthwhile.

For example, one rewards card may provide 40,000 points for spending $3,000 in 90 days, while another may offer the same number of points for spending $1,000. The reduced spending requirement may seem to be a better bargain, but more fees and blackout periods may be included, thereby lowering the card’s worth. As a result, it’s critical to analyze all benefits and charges, as well as your own spending habits, before selecting which card, if any, is worthwhile.

Also, think about whether you’d rather receive incentives in the form of miles or points. If you’re a fan of a certain airline, for example, it can make sense to choose a co-branded airline rewards card with a large mileage incentive.

Tip

Whether you’re looking for a general travel rewards card, consider if you can redeem your points by transferring them to a partner airline or hotel loyalty program on a 1:1 ratio.

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The Bottom Line

A travel rewards credit card may be worthwhile for you depending on how frequently you travel, whether you can afford to charge the required amount on the card to qualify for rewards, whether you earn enough reward value to justify any annual fees, and whether you can pay off the card balance on a monthly basis.

People who travel often for business or pleasure and can afford to spend enough on their credit card to earn considerable points or miles from one-time incentives and recurring rewards generally profit from travel rewards cards. Just keep an eye out for the APR and costs. You may also compare bonus incentives from other issuers to evaluate if travel rewards credit cards are worthwhile depending on your specific spending habits.

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