Transitioning from cash back credit cards to travel credit cards can feel a little daunting. But once you get the hang of it, it’s almost as straightforward. Almost.
Types of Travel Credit Cards
General Travel Credit Cards
These are your regular travel cards that offer rewards within a card issuer’s benefits program. Say you have the American Express® Gold Card
. You would redeem your rewards using the American Express Membership Rewards program. This can all be done in the app, so it’s less complicated than it sounds.
These types of travel cards are best for consumers who don’t have any kind of allegiance to a particular hotel or airline. These cards also have flexible redemption options, so depending on the issuer, consumers can transfer rewards to a number of travel partners.
[Read: Best Travel Rewards Credit Cards.]
Hotel Credit Cards
You might have seen these being called co-branded cards. That’s because these cards are a partnership between a hotel chain and an issuer. Points can be redeemed for hotel perks, like free stays and room upgrades. Consumers also earn the most rewards when they use their card at their preferred hotel chain.
For example, consumers with the Hilton Honors American Express Aspire Card earn 14 Hilton Honors Bonus Points for every dollar they spend at Hilton hotels and resorts. It’s worth noting, though, that cards with high earning rates often charge higher annual fees. Such is the case with the Aspire Card, as it charges an annual fee of $550.
[Read: Best Hotel Credit Cards.]
Airline Credit Cards
Also considered co-branded cards, airline credit cards cater to the consumer who frequents a specific airline. Many offer introductory bonuses in the form of miles and provide perks like award flights, free checked bags and priority boarding.
The Delta SkyMiles® Blue American Express Card, for example, has a welcome offer of 10,000 miles after you spend $1,000 in eligible purchases in the first six months as a cardholder. And cardholders earn 2 miles for every dollar spent on Delta purchases and at restaurants worldwide. (See Rates & Fees)
[Read: Best Airline Credit Cards.]
Common Travel Credit Card Perks
These benefits will vary depending on the type of travel credit card you have, but many perks include:
— No foreign transaction fees
— Trip cancellation and/or trip delay insurance
— TSA PreCheck or Global Entry application fee credit
— Baggage delay or lost baggage insurance
— Auto rental collision damage waiver
— Airport lounge access
[READ: Top Credit Cards With Priority Pass Lounge Access]
How Travel Credit Cards Work
Cardholders can earn points and miles in the same way they’d earn cash back. Just use your travel credit card for purchases that help you get the most rewards. Once you’re ready to spend them, it’s best to use your issuer’s travel or shopping portal instead of a third-party site. Your rewards will have a slightly higher value that way.
Miles earned on an airline credit card get deposited into your airline frequent flyer program, usually when your statement closes. Similarly, hotel points earned on a hotel credit card get deposited into your hotel loyalty account.
Rewards earned on general travel cards have a bit more flexibility. Many have travel partners, allowing you to transfer rewards to multiple airlines, hotels and car rental companies.
How to Redeem Rewards
Rewards programs typically use a 1-to-1 conversion rate — this means one point is worth 1 cent. So 100 points are worth $1. But some issuers offer higher redemption values if you use their travel portal.
For example, if you have a Chase Sapphire Preferred® Card, one point is worth 1.25 cents when you redeem through the Chase Travel portal. Chase Sapphire Reserve® has an even higher redemption rate of 1.5 cents per point.
Another way to maximize your rewards is to transfer points or miles to a travel partner with a loyalty program you participate in. You can do this through the issuer’s portal. It’s worth noting, however, that once you transfer your rewards to a travel partner, you can’t transfer them back to the issuer.
Once you’ve made the transfer, your credit card issuer is no longer part of the booking process. You then book your trip through the airline or hotel loyalty program.
How to Pick the Right Travel Card
There are a plethora of travel credit cards out there. Here’s what to consider when choosing the one right for you:
— Travel preferences. Picking the right travel card means figuring out how you travel. For instance, if the airline or hotel doesn’t matter to you, then a general travel card is a good starting point. But if you consider yourself, say, a Delta die-hard, a co-branded airline card would be a better option.
— Introductory bonus. When you apply is almost as important as the type of card you apply for. Issuers often change their welcome offers on a yearly basis. Unfortunately, it’s impossible to predict when an issuer will increase its welcome offer. But compare these offers and determine if you’re able to comfortably meet the requirements before deciding on a card.
— Annual fee. There are plenty of travel credit cards with no annual fee for the budget-conscious traveler. But remember, the higher the fee, the better the perks (usually).
— Essential perks. That TSA PreCheck or Global Entry credit can go a long way. Or maybe you know you’re an over-packer and need that first-checked-bag-free credit. Make sure the travel card checks all your boxes.
After learning how to get the most out of your new travel card, you’ll be able to pay for whole trips with just rewards. They’re essential for those consumed with wanderlust.
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How Do Travel Credit Cards Work? originally appeared on usnews.com
