This article was updated on June 23, 2018.

I've used travel credit cards to fly for free, stay in hotels that I'd never pay for out of pocket ($500 a night? That's what points are for!), and to get my luggage from one end of the country to another without paying ransom -- er, checked baggage fees.

And that's just the beginning.

In all, the value I've extracted from credit cards is easily tops $10,000, and unlike so-called "travel hackers," I didn't exactly work all that hard to rack up the rewards. If you know what you're doing -- I wish I could get all those points back from when I definitely did not -- it's very easy to accumulate piles of rewards without going to the extreme. 

Here are some things I've learned along the way, and things I wish I knew when I got started with travel rewards cards. 

1. Not all points or miles are equal

Card companies like to use "points" or "miles" so as to avoid making their rewards a mere commodity. In some ways, it obscures the true value of the rewards you earn.

Case in point: The Chase Sapphire Preferred® and Barclaycard Arrival Plus® World Elite MasterCard® are favorites among casual card users and travel hackers alike, with seemingly equivalent new cardholder bonuses of 50,000 points and 50,000 miles, respectively.

But don't take this to mean that the points and miles have equal value. In actuality, the difference can be pretty substantial. The table below shows the new cardholder bonus for both cards, and some important conditions for what these rewards are actually worth, and how they can be redeemed.

Card

New Cardholder Bonus

Value in Travel

Redemption Method

Chase Sapphire Preferred®

50,000 points

$625

Chase Ultimate Rewards portal

Barclaycard Arrival Plus® World Elite MasterCard®

52,500 miles*

$525

Statement credits

Data source: Card companies. *Includes 5% redemption bonus.

The big advantage with the Barclaycard Arrival Plus® World Elite MasterCard® is that miles can be redeemed for statement credits. Thus, all cardholders have to do to redeem their miles is make a travel-related purchase with the card, log in online, and make a few clicks. Miles will be converted to a statement credit to effectively reverse the charge for the travel purchase. 

If it sounds trivial, it isn't. It's actually a really big deal, as statement credits can be redeemed in so many more ways than proprietary redemption programs.

  • Buy travel through an online travel agency? That counts.
  • Purchase flights or hotels directly from an airline or hotel chain? Check!
  • Renting a car that you get for cheap because you found a coupon in your spam box? Of course.
  • Airbnb? Yeah, that works. 

If the purchase codes as travel, it qualifies for statement credit redemptions. It's super easy.

On the other hand, rewards on Chase Sapphire Preferred® are primarily redeemed through the Chase Ultimate Rewards Portal, which has inherently fewer redemption options than a statement credit rewards program. That's not to knock it -- Ultimate Rewards can be redeemed for hotels, flights, and even esoteric experiences like scenic city tours by Segway -- but there is a limit to just how vast any one rewards program can really be.

If you're the type to shop long and hard for the best travel bargains, statement credits might be the way to go. Those who are content with a bank's portal can find plenty of valuable redemption options, too.

Woman on Segway looking back at camera

The best part about travel rewards is that you don't have to feel bad about how you use them -- even if you spend them on a Segway tour. Image source: Getty Images.

2. Make sure you really want to travel

Many travel cards have reduced redemption rates when points or miles are redeemed for cash, which is a nice way to say that travel cards are terrible cash-back cards.

For consistency, we'll compare the Chase Sapphire Preferred® and Barclaycard Arrival Plus® World Elite MasterCard® on the basis of cash redemptions. Notice that the difference in cash value is substantial, as points and miles translate into 20% to 50% less cash than travel.

Card

New Cardholder Bonus

Cash Value

Cash Value as a Percentage of Travel Value

Chase Sapphire Preferred®

50,000 points

$500.00

80%

Barclaycard Arrival Plus® World Elite MasterCard®

52,500 miles*

$262.50

50%

Data source: Card companies. *Includes 5% redemption bonus.

The Chase Sapphire Preferred® is the better card in terms of cash redemptions, as each point currently equates to $0.01 in cash vs. $0.005 in cash for each mile earned by the Barclaycard Arrival Plus® World Elite MasterCard®.

But we can ignore all the talk about redeeming for cash, because redeeming points or miles for cash is like throwing money away.

The Chase Sapphire Preferred® earns 2 points per dollar spent on travel and meals around the world ($0.02 in cash), and 1 point on all other spending ($0.01 in cash). The all-in rewards rate on the Barclaycard Arrival Plus® World Elite MasterCard® is 2.1 miles on every dollar spent, which equates to a cash value of $0.0105 per dollar spent.

In either case, a true cash-back card would be a superior choice. The Citi® Double Cash Card gives cardholders 1% cash back for purchases, plus 1% when balances are paid off, for cash value of $0.02 per dollar. It earns more than both travel cards on a cash basis, and although it may not have a new cardholder bonus, it doesn't have an annual fee, either.

Personally, I stick to travel cards rather than cash-back cards, because I know I'll have travel expenses every single year, and because I've found that the travel rewards are occasionally really valuable for incremental benefits like hotel or flight upgrades. But those who don't have time to travel, or can't justify taking trips over collecting cash, a cash-back rewards card would be a better pick.

3. The best travel cards have annual fees

For a very long time I held out on cards with annual fees, believing that it was ridiculous to pay so much as $59 each year just for the privilege of having a credit card. It was a perfect example of letting principle get in the way of a logical decision.

As an example of how my view has changed, last year I forked over $450 for the Chase Sapphire Reserve®, and I felt good about it. (Unlike many cards, the annual fee isn't waived in the first year, but the new cardholder bonus more than paid for it.)

The truth is that cardholders who are willing to do some work can accrue points, miles, and cash much faster with annual fee cards. Cards with annual fees frequently have the largest sign-up bonuses, higher ongoing rewards rates, and create more value for the cardholder, but maximizing the value of these cards often requires closing cards before the annual fee comes due.

To demonstrate what I mean, see the table below, which compares cards from Fool.com's rankings of the best travel cards for 2017 on the basis of bonuses, reward value, and annual fees.

Credit Card

New Cardholder Bonus

Travel Value per Point/Mile

Annual Fee

Chase Sapphire Preferred®

50,000 points

1.25 cents

$95 (waived in the first year)

Barclaycard Arrival Plus® World Elite MasterCard®

52,500 miles*

1 cent

$89 (waived in the first year)

Bank of America® Travel Rewards

20,000 points

1 cent

$0

Capital One® Venture® Rewards

40,000 points

1 cent

$59 (waived in the first year)

Data source: Card companies. *Includes 5% redemption bonus.

Notice that the sole no-annual-fee credit card on this list has a sign up bonus worth $200 in travel. The annual fee cards have a new cardholder bonus worth at least twice as much.

The enterprising travel rewards accumulator can really do some work with these four cards. In all, the combined new cardholder bonuses have a value of $1,750 when redeemed for travel. Meeting the minimum spending requirement on each card to qualify for every bonus would require $11,000 in spending across all four cards, a level of spending that many people and families could reach within a calendar year.

Do the math: $1,750 in travel rewards for $11,000 of spending equates to a rewards rate of nearly 16% when perfectly optimized. That's pretty remarkable. Couples should know that they can do double duty, thus accumulating $3,500 in travel bonuses on $22,000 of spending if both parties sign up individually for each card.

Of course, cardholders who sign up for every card would have a long list of annual fees to pay the following year ($243 in total), but there is no rule that says you must hang on to every card for years on end. You might decide to keep just one card -- or none at all -- in which case you've played the travel rewards game perfectly, assuming, of course, you always pay your balance in full each month.

On that note, this is perhaps the most important tip for any travel cardholder: No one wins by paying interest on any credit card.

Accumulate points, not debt, and travel freely -- you earned it.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Mastercard. The Motley Fool has a disclosure policy. The Motley Fool receives compensation from some advertisers who provide products and services that may be covered by our editorial team. It’s one way we make money. But know that our editorial integrity and transparency matters most and our ratings aren’t influenced by compensation. The statements above are The Motley Fool's alone and have not been provided or endorsed by bank advertisers. Review The Motley Fool’s ratings methodology to uncover how we pick the best credit cards.