Dreaming of white sandy beaches and toes in the sand? Or maybe your dreams include wandering the streets of Paris or swishing down a snow-covered mountain. Whatever that vacation dream entails, wanderlust is real. The trick question is how are you going to pay for the lovely adventures you’re dreaming about?
The real question is: do you have credit cards with travel rewards to help you accumulate rewards towards your next vacation escape? If the answer is no, then you’re missing out on easy money for your travels!
A quick internet search on vacation destinations and you’ll find countless opportunities to join travel reward credit card programs, earn miles and points, and start saving for an epic vacation. But, have you ever wondered if it really pays off to collect bonus miles or if the earned points can ever actually get you somewhere?
Let’s take a closer look at earning miles, points, and credit cards with travel rewards, so you can decide for yourself if travel reward credit cards are really worth it.
How to Choose a Travel Reward Credit Card
With so many credit cards with travel rewards, how do you know which one to choose? How do you know which will give you the most bang for your buck? It depends on you, your spending habits, and your travel aspirations. Some travel reward credit cards earn you points, while others earn you miles. Research what it will cost you to use the card and what you get in return from each credit card with travel rewards.
Some credit cards allow you to use their rewards on only their brand. For example, the Delta SkyMiles card is one of the better ones when it comes to what you earn from it; you can earn points from the card both from flying on Delta and using the card for other purchases. The downside to this card is that you can only redeem those travel rewards by flying on Delta Airlines. So, if you are a frequent Delta traveler, it makes sense to take advantage of their travel rewards credit card.
Other cards, like the Chase Sapphire Preferred card, offer some real incentives towards travel that allow you to use the travel rewards earned towards any type of travel or travel brand. A card like the Chase Sapphire Preferred even offers greater travel rewards when cashing in the earned points towards travel.
These two scenarios are both attractive, but very different, because one is specific to a brand and one is not. When you’re figuring out how travel rewards credit cards work, you need to know which scenario works best for you.
If you’re less of a frequent flyer but you still spend quite a few nights at hotels, then it may be better to look at travel rewards credit cards offered by hotels, which will help you accumulate points in a similar fashion.
Whether you have brand preferences when you travel or you travel frequently to a destination where you can regularly stay at one type of hotel or fly on a certain airline, it makes sense to use that brand’s travel rewards credit card, as it will help you wrack up the rewards points more quickly.
Credit Card Travel Rewards: Miles vs Points
Credit cards vary in how they offer rewards. Like entering into any credit card agreement, it’s important to read the fine print on what any travel reward credit card will offer in return for your spending. Some credit cards allow you to earn points, which means you’ll get points based on your purchase amounts. In some cases, you can get more points for purchases on certain things, like using the credit card at a restaurant or a grocery store. Other credit cards with travel rewards will allow you to earn miles towards travel. In this case, the more bonus miles you accumulate, the more you can cash in towards travel rewards.
In most cases, the term points and miles can be used synonymously; you can usually earn a point or a mile for each dollar you spend through any credit card travel rewards program.
Travel reward credit cards like the Bank of America Travel Card offer points on every purchase, and the points can be redeemed towards travel with no blackout limitations. However, not every card is this open-ended. Do your research on how each credit card with travel rewards gauges earnings, whether in points or miles, and consider whether it offers you rewards that make it worth it for you.
Whether a travel reward credit card is offering miles or points is an important distinction to note in the credit card rewards world. Consider these questions when searching for the right credit card with travel rewards:
- Does the credit card give points for all purchases?
- Does the credit card give miles for travel purchases only?
- Can the points or miles be redeemed for anything, or only for travel?
The Potential Downside of Miles
If you decide to choose a travel rewards credit card that offers miles, remember that those miles will only be valid for the airline associated with your credit card or rewards program. So, when booking a flight, you’ll be able to cash in the frequent flyer miles or points towards discounts or even free flights on the associated airline only. Although beneficial when the airline has good conversion rates of points to dollars and a broad reach in terms of airports and destinations, airline travel reward credit cards are also likely to be more restrictive in terms of how you can cash in your miles and points.
On the other hand, regular credit cards usually offer rewards programs in points or miles, and both of these will typically allow you to trade earnings in for travel rewards. Therefore generally speaking, the more generic the credit card, the more freedom you’ll have to use the points you earn for any number of travel options.
Credit Card Travel Rewards: Points vs Cash Back Rewards
If you are using your credit card with the intention of working towards a vacation, it’s important to also think about the difference in points-based rewards versus cashback rewards.
If a travel rewards credit card offers points, then you redeem the points towards your vacation or other travel plans. As you make purchases using your credit card with travel rewards, the points accumulate based on the dollars spent. Then once you have enough points, you can trade the points in for an airline ticket or night at a hotel.
On the other hand, if the card offers cashback, then you accumulate cashback on purchases and have the option of cashing it in and purchasing flights or hotel stays with the money. Some people like the idea of a credit card giving them money in return for using the card, rather than points. It can feel like you’re really winning at life when you get “paid” money from a credit card for making purchases!
It feels good to earn cashback, and it provides you with the flexibility to use the cashback reward money how you see fit. But, this might also mean you’re periodically tempted to use the cashback for buying this week’s groceries instead of putting it towards your dream flight to Key West. However, generally speaking, cashback travel rewards tend to earn more quickly than points, so they can be more beneficial in the short term.
So, which credit card travel reward option is better? This is another moment when personal preference comes in.
How Much Does a Dollar Spent Earn in Travel Rewards?
If I have a credit card with travel rewards, the real question is how much do I earn? In most cases, you earn one point in rewards for every dollar you spend. Translated that means when you spend $100, you get the equivalent of $1 in rewards. If you spend $1,000, you get points that will equal $10. Keep in mind that if you choose a credit card that earns frequent flyer miles instead of points, then the values vary greatly from card to card (see the section on Airline Credit Card Considerations below for more advice).
If you have ever taken a vacation, you know you need some serious money saved to really enjoy yourself. Looking at those conversions of travel reward points to dollars, you might be thinking it will take a very long time for your rewards points to be worth anything, especially a whole vacation! This is why it’s important to check into each travel reward credit card’s conversion rates and fine print.
Easy Ways to Multiply Your Travel Rewards
Some cards will offer you two and sometimes three times the value for every point earned, so you could double or triple the value of the travel rewards you earn without doing anything different. Most credit cards with good travel rewards programs also offer a bonus or extra points just for signing up for the card. Other travel reward credit cards will offer a significant bonus or extra rewards points when you spend a certain amount within a short period of time. Some cards will even offer extra rewards points when you refer a friend and they successfully sign up for the credit card too!
One great way to rack up credit card travel rewards is by using the card for all your regular household purchases. Many seasoned travelers even choose to use one card for all their monthly expenses, so they are always earning travel reward points while living their normal, everyday lives.
What are the Benefits of Getting an Airline Travel Reward Credit Card?
From what you’ve learned so far, it might seem like the most advantageous would be to get a general credit card that earns points that you can use towards a variety of travel options. So, you might be wondering why people choose to get airline credit cards at all. If you are a loyal flier with one particular airline and fly often, it does make sense to use that airline’s travel rewards credit card, because the miles will add up quickly and be easy to use with the airline.
There are often many other advantages of having an airline credit card, that go beyond rewards points. These may include:
- Free checked bags
- Priority boarding
- Seat upgrades
- Lounge access
- Added benefits when you reach elite cardholder status
Other Airline Credit Card Considerations
There are a few other things to consider when deciding if an airline travel reward credit card is best for you. You want to ask yourself:
- Will the rewards have restrictions related to when you can use them?
- Do they have blackout dates that will prevent you from redeeming them?
Some airline cards allow you to use miles or points incrementally, so instead of waiting until you have earned enough for a whole flight, you might have enough to upgrade your seats. Or, you might be able to take a hundred dollars off the overall price of a ticket by using points and then pay the rest out of pocket. It’s important to understand what your airline credit card will and will not allow you to use your points for, as well as when and how.
Typical Travel Reward Credit Card Restrictions Worth Noting
Read the fine print! Whether you are hoping to use your reward points from your credit card to book a vacation or you want to redeem frequent flyer miles from the airline card to buy a flight, there is likely to be fine print that will restrict how you use your earnings. For example, if you make a purchase and earn rewards points, but then return the item, you should expect to have the points you earned taken away. Additionally, many credit card companies require you to keep your account in good standing. Therefore, if you fall behind on your payments, you may have to forfeit the reward points you have earned.
You should also make sure you know how long your rewards will last before expiring. Some companies have tricky fine print surrounding expiration of their credit card rewards points. While you might think you are being careful to save up so you can get a whole vacation with credit card travel reward points, if some expire because you have not redeemed them in time then you’ll be out of luck.
Credit Cards with Travel Rewards, Worth It or Not?
The lure of a free plane ticket or a vacation partially covered by travel rewards sounds good to just about anyone. But, are the credit cards with rewards programs attached really worth it? The answer is a resounding…maybe. The value a credit card travel reward program can offer depends on you as both a consumer and as a traveler.
Getting bonus miles or earning rewards points on your everyday purchases sounds lucrative for sure, but will you earn the points quickly enough to make the cost of the card worth it? A credit card might offer a big upfront reward for spending a higher amount in the first 90 days you have the card, but it could also cost more to keep the card in the long run. You might get a card with lower fees attached to keeping the card, yet there are more restrictions attached to when and how you can use the reward points.
Again, it all comes down to knowing your own spending habits and travel dreams, and then reading the fine print before you choose a travel reward credit card.
If you have some travel dreams, and who doesn’t, it’s best to set some goals. Research both the cost of a card in fees and interest, then counter that with the travel rewards points you can get in return for your spending. Also consider how much you will actually use the card to earn the points, and if the cost of that card will, in turn, be worth the expense. Usually the more you spend the more points you can earn, so it makes sense that eventually you might earn a reward that makes any travel reward credit card worth it.
Understanding the reality of your own travel dreams as well as your monthly spending habits can help you find a credit card with travel rewards that will give you the biggest return on your investment.
Disclaimer: Opinions expressed here are the author’s alone, not those of any bank or credit card issuer, and have not been reviewed, approved or otherwise endorsed by any of these entities. It is intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.