2 Travel Credit Card Bonus Tips

Travel credit cards have increased in popularity as card issuers increasingly sweeten the deal in an effort to draw customers. Many companies offer impressive travel credit card sign-up bonuses and other valuable perks.

In the following video segment, Motley Fool analysts Michael Douglass and Nathan Hamilton cover two travel credit card bonus tips that cardholders should know before applying for a new card.

Michael Douglass: All right. Let's talk about some important facts to know about when you're thinking about opening a travel credit card.

The first one: the qualification period. So first off, what is the qualification period?

Nathan Hamilton: Many travel credit cards come with a sign-up bonus that is one reward that credit card issuers offer to attract new card holders. What's important to understand about the qualification period is really getting into the details of when it applies.

Many are 90 days, three months, they have different ways of explaining it.

But that period starts upon application approval, not actual activation of the card, which, in some instances maybe one, two, three weeks on from when you are approved for the card. 

I know for my certain scenario or personal financial situation, what I do is when I apply for a credit card and take advantage of the sign-up bonus, I mark it on my calendar and put a deadline date. OK, you've got to meet the spending requirement to qualify for the bonus by that period.

Douglass: Yeah.

Rarely is it a good idea to say, "Oh, you know what? I'm gonna make sure that I spend an extra 500 bucks so I get that maximum amount," you know?

The key thing here is to, kind of beforehand, have looked at your budget and said, "Oh, OK cool. I spend," you know, I'm gonna make up a number here, "$2,500 a month on restaurants." Wow, that's scary, but possible, theoretically.

Hamilton: Very possible.

Douglass: Right, and this card will pay me. I'll get some money back if I spend $5,000 in three months. OK, I know I can do that because I'm doing that already and then some. Not, "Oh, you know, let me go ahead and make sure that I'm going and getting the nicest steak out there so that I can get up to that, you know, $5,000 number."

Hamilton: A lot of people can get there, if you actually think about your finances and what you spend each month. If you take all your utilities, if you take your bills, if you start taking all those payments and managing those expenses well, not getting into debt, it certainly does make sense to apply that to a credit card to earn rewards, to earn a bonus.

You hit a very, very important point, is, don't spend for the sake of earning rewards if the result is getting charged interest at a very high APR.

Douglass: Yeah.

And like I've seen this. I know you've seen this, too, where they just, you know, like oh my gosh, you know this like amazing, huge premier bonus. But the thing is that premier bonus tends to come with, as you would call it, a premier annual fee.

Hamilton: Yeah, premier annual fee, and it may make sense for some people that spend heavily on credit. They're gonna come out ahead by paying an annual fee, and getting those premier perks. Generally, what you can expect, there are a number of no-annual-fee credit cards, travel and cash-back cards that have sign-up bonuses. They're gonna to range $100 to $200 or so, with a very low spending hurdle to qualify in that three-month period.

Now once you go to the premier side and really get those premier super-lucrative rewards, which can be $400 plus -- some people value them to just above a $1,000 -- you can expect fees from anywhere from $89, $95, on up to $550 with some recent credit cards that have hit the market.

Douglass: Yeah, so definitely it's a big thing that you'll want to kind of consider.

Fortunately, there's a very simple box on the credit card application page, it's called the Schumer box, named for the senator. It's basically designed to like present those costs in a very sort of, like, easy-to-see, easy-to-understand, and easy to, like, compare across different credit cards format so that you can kind of understand like, "Oh, OK, cool, well, maybe this one doesn't make as much sense for me even though it's got this great, you know, thing because of X, Y, and Z."

Hamilton: We've had questions from people listening and talking about credit cards before and say, "How can I actually find out about credit card fees?" The answer is pretty straightforward, because if you look at the Schumer box, if you look on a credit card application page, there'll be a small link that says "rates and terms," some sort of small font.

You can get there and look at the details, and it's very easily understood. If you have questions, of course, throw 'em at us. We'll be happy to answer anything, but it's a standardized, easy format that people can find relatively simply.

Douglass: Yeah, and fortunately, we've got answers to a lot of frequently asked questions, as well as some great guides and picks: our favorite travel credit cards of 2017, what we think the best overall credit cards of 2017, and more, at fool.com/credit-cards.

Check us out there and we'll have a lot more information, and keep in touch. Thanks, Nathan.

Hamilton: Thank you.