5 Things to Look for in a Travel Rewards Credit Card

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There's no such thing as a one-size-fits-all travel credit card, but here are five things that can help you decide on the best one for you.

Most travel rewards credit cards have a collection of industry-standard benefits, such as no foreign transaction fees. Although they aren't universal perks, many travel credit cards also offer things like rental car insurance, baggage insurance, and trip-delay coverage.

Beyond the basics, however, there is a broad spectrum of credit cards geared towards travelers. Here are five of the things you should look for when deciding which of the many travel rewards credit cards on the market is best for you.

1. Look for a good rewards program that fits your life

As the title of the category implies, another universal benefit among travel rewards credit cards is some sort of rewards program. However, these come in all different shapes and sizes.

One basic decision you need to make is whether you want an airline- or hotel-specific rewards program, such as the ability to earn frequent flyer miles for your favorite airline, or a generic rewards program where points or miles can be redeemed for all sorts of travel expenses.

There are advantages to both types:company-specific miles/points and generic ones. For example, you can generally get more value from redeeming airline-specific miles or hotel-specific points than you can with a non-branded rewards program. On the other hand, not only are you obviously restricted to where you can redeem airline or hotel miles, but you generally don't earn miles (including status-qualifying miles) on award flights or rooms when you redeem them. However, with non-branded rewards points, you can redeem them for whatever flights or hotel stays you want, and the airline or hotel will treat it as if you had paid with cash for the purchase.

It may also be worth looking to see if a certain credit card's rewards points are transferable to any airlines or other loyalty programs, as this can be a unique way to extract maximum value.

In addition, you may want to consider paying a little extra for an excellent reward rate. Several credit card issuers offer multiple versions or tiers of their travel credit cards, with the cards with higher annual fees also coming with better reward rates, such as 1.5 miles per $1 versus 2 miles per $1.

Finally, check if the card has a rewards multiplier that you'll be able to take advantage of. Typically, travel rewards credit cards that are brand-specific offer an enhanced reward rate on purchases at that specific airline or hotel. Even non-branded travel rewards credit cards may have multipliers. For example, one of my favorite travel credit cards offers triple rewards points on travel expenses and restaurants. If you eat out often, a rewards program like this can be extremely valuable.

2. Perks at an airline or hotel chain

If you do want an airline- or hotel-specific travel credit card, you might find some additional travel perks when utilizing that brand's services.

As an example, airline credit cards often offer free checked bags for cardholders and others traveling on the same reservation, a benefit that can save frequent travelers or families with several children hundreds or even thousands of dollars each year.

Other benefits can include things like discounts on in-flight purchases, such as food, beverages, headsets, etc. Although it's not common among airlines, some hotel credit cards offer automatic elite status to cardholders, which can give you perks like upgraded rooms, even better reward-earning capabilities, and more.

3. Lots of value for your points or miles

If a travel credit card gives you generic points or miles, the standard value is $0.01 each when redeemed for travel. Some give you even more value, such as a multiplier when redeeming for travel through the credit card issuer's website. For example, you may be able to redeem points for $0.01 towards travel purchases as a statement credit, or for $0.0125 each (a 25% bonus) through the company's website.

Some airline- and hotel-specific miles and points can give especially good value. Airline miles have been known to have redemption values of $0.05 each or even more when redeemed, especially for international travel.

The point is that in addition to earning miles or points at a nice rate, you want to be able to redeem them for maximum value as well.

4. Valuable perks for frequent travelers

If you're a frequent traveler, there are several high-end travel credit cards that may be especially appealing to you. Just to name a few perks you can find that may be worthwhile to you:

  • Airport lounge access -- This is typically a defining perk of high-end ($400-plus annual fee) travel credit cards, especially those affiliated with a specific airline. Not only do airport lounges give you refuge from the noise and chaos of a busy airport terminal, but most lounges offer free food and certain complimentary beverages as well. Some lounges even have shower facilities, which can be great after getting off a long-haul flight.
  • Airline fee credit -- Several high-end travel cards offer airline incidental reimbursement, which can be applied towards baggage fees, in-flight purchases, and more.
  • TSA Pre-Check or Global Entry reimbursement -- This has become a standard benefit among high-end travel credit cards. These are excellent programs, and I don't think I'll ever travel without Pre-Check again (and mine was a free credit card perk).
  • Other spending credits -- Some credit cards offer additional credits on items such as hotel charges and Uber rides. Some travel credit cards even offer a broad "travel charge reimbursement" that can be applied towards any travel expenses, not just incidentals or a specific category.

To be clear, cards that offer these perks -- especially lounge access -- generally come with hefty annual fees, typically $450 or higher. This can be well worth it if you use these perks frequently. For instance, an annual individual membership to the Delta Sky Club costs $545 when purchased directly from Delta, so if you use it regularly, this can be a great credit card perk.

5. An annual fee that makes sense for you

As a final consideration, know that many travel credit cards come with some type of annual fee, especially when it comes to those with attractive perks. The majority of the credit cards we consider to be the best travel credit cards have annual fees.

The key question you need to ask is if the annual fee is worth it for you. A travel credit card with a $450 annual fee that comes with airport lounge access, a few hundred dollars in fee reimbursement, and a free TSA Pre-Check membership isn't likely to be worthwhile for someone who travels once or twice per year. On the other hand, to someone who takes a trip every few weeks, it could deliver value that's several times its cost.

The bottom line is that when choosing a credit card, smart consumers do a quick cost-benefit analysis of each option and choose the one that delivers the most value to them relative to the cost.

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