The Ins and Outs of Travel Rewards Credit Cards
Things to Consider When Applying for Reward Cards.
There are many different kinds of rewards programs associated with credit cards where you can earn points whenever you charge something to the cards. One of the most popular rewards systems is the travel rewards program. Travel rewards credit cards let you accumulate points and redeem them for things like airplane tickets, hotel rooms, rental cars and events. Just like any other credit card, there are several different options and plans to choose from. Most people don’t do their homework when it comes to signing up for a credit card, and they end up shocked and angry when their monthly bill arrives. They also find themselves in unwanted debt that is hard to get out of. Travel points cards are no different, and should be researched and considered just as thoroughly as any other credit card. The following article will go over the many aspects of travel rewards credit cards so that you can make an informed decision if you want to sign up for one.
How Much Do You Plan on Traveling?
One of the main questions you have to ask yourself when considering a travel rewards card is how much you plan on traveling. Most cards are designed for frequent or semi-frequent travelers and their points systems are geared towards these kinds of spenders. If you can easily reach your card’s base number of points needed for an airline ticket, this will not be a problem. But if you don’t think you will spend enough with your card to tally up points very quickly, you might want to consider one that lets you redeem points at a lower level. Also, something else to bear in mind is that with a rewards card, you will most likely be paying an annual fee. Think about whether this fee is worth it for what you are looking for in travel rewards. Don’t fret, there are many different types of cards for all different kinds of travelers, and you should not have a problem finding one that fits your needs.
Understand Your Points System
The key to finding your ideal travel rewards card is to compare your spending habits with the points systems of the various cards. Most cards offer a $1 per one point ratio, meaning that for every dollar spent, you get a reward point. The lowest number of points or miles that you need to have to cash in for most travel cards is usually around 25,000. Cards with lower point minimums do exist, but you will have to accumulate more points if you are planning a substantial trip. Several cards offer double points or extra points when you use them at certain stores or restaurants and there are also bonus points just for signing up for particular cards. Also, some rewards systems have specific dates where you cannot purchase airline tickets called blackout dates. Another thing to pay attention to is the expiry time of your points. If you don’t use the points by a certain date, they may become unavailable. These are all things to consider when looking into obtaining a travel rewards card. Think about whether you are willing to spend the amount of money needed to compile your minimum amount of points and find the card that best suits your lifestyle.
Comparing Cards
Many different factors come into play when comparing travel rewards cards. Take into account your payment history and the interest rates of the card you’re looking at. If you normally pay off your balance in full then this is something you don’t have to worry about, but if you don’t, a travel rewards card might not be for you. Interest rates tend to be higher on these cards and if you’re being hit with finance charges every month, you might want to look into another type of credit card. A lot of times you’ll see cards advertised with 0% introductory rates, and while these are good for a short time, you’ll want to look into what the normal rates are and compare cards that way.
Annual fees are charges that come every year for being a member of that particular card, and they range anywhere from $50 to $95, depending on the company. Sometimes the first year will be free, but most travel rewards cards have a fee for every year of membership. This fee may rise each year depending on your credit limits and privileges.
Not Enough/Too Many Points?
Let’s say you have a travel rewards card and you amass a ton of points but you don’t anticipate using them any time soon. Or perhaps you don’t have enough points on one card or all of your points are spread out over different cards. You do have options if you don’t want these points to go to waste. One thing to consider is that slowly, more and more credit card companies are allowing for the combination of points. If you do your research, you will find that certain companies partner up with each other, such as airlines and hotels. These affiliations will allow you to swap miles for hotel rooms or vice versa. You can find out online which companies are associated with each other and easily figure out combinations that will help you with your shortage or surplus of points.
Other types of plans will let you shift your points between different airlines if one airline has a lower minimum amount of points or has a flight that another doesn’t. If you don’t feel that you will be adding up enough points to travel, there are programs where you can change out your points for gift cards or certificates to stores and restaurants. It’s also possible to use your excess points as auction money for tickets to events or luxury items. You can also give your points to friends and family members with the same cards and programs as you. Usually, this way of transferring points is limited to certain times of year and is much less common, but if you want to help out someone you know who is short on points or miles, this is a great way to do it.
Finally, you have the option of donating your points to charity. Most major airlines will let you donate your miles to charities such as the Red Cross and the Make a Wish Foundation. Every airline has a different program, so when you’re looking to sign up for a card and you think you may have extra miles, check out which charities are associated with what card when doing your research.
Other Things to Consider
If you’re looking into signing up for a travel rewards card and you have some reservations on whether it might be worth it or not, investigate a cash rebate card. One of the things you might think about is if you already know where you are going to travel, determine if you can do it cheaper with a cash rewards card. If you know your travel habits, and you know you’re not going far, then it may be a waste for you to try and accumulate thousands of miles on a travel rewards card. A cash back card, on the other hand, usually allows for a 1% rebate in cash points and this may be better if you’re not flying very far. If you tend to fly far, like overseas or coast to coast, a travel rewards card is probably a better option for you.
When planning on using your travel rewards points, you should look at the big picture. If you anticipate buying additional tickets, understand that those seats are not guaranteed to be on the same flight. Furthermore, your rewards program may require that you book all rewards and non-rewards tickets on the same flight. This may cause you to have to look around at different airlines to get all your seats together on one plane. You might also have to coordinate additional hotel plans with your flight if there is no hotel where you can spend your rewards points on in your destination area.
An extra aspect you should consider is how convenient you want your travel rewards card to be. Many cards offer the option to get cash advances, which can help you quite a bit. If you think you will use this option with your card, make sure you research the interest rates on cash advances because they can be very high. Travel rewards cards may also come with some sort of travel insurance, if you don’t already have your own plan. This will cover things like medical emergencies and lost luggage. With travel becoming increasingly more frustrating and difficult, this is a very nice option to have.
Summary
As you can see, there are numerous things to consider when getting a travel rewards card. Doing a thorough investigation can make a huge difference when deciding between companies and programs. If you want the travel rewards points as something practical and not just an added bonus to your credit card spending, try charging your larger regular expenses to the card like your groceries or maybe even your rent. Of course, be sure that you can pay these things off in a timely fashion.
Decide whether you will be able to put the points to good use and accumulate them on a regular basis. Maybe there’s a card that you’re looking into that offers bonus points for shopping at a certain store that you frequent. That’s a good way to rack up fast points if you want or need them in a shorter amount of time. Check with your friends and family if they have a plan that appeals to you. There’s a chance you can combine your points and travel together.
Just remember that a travel rewards card is a credit card and you have to do just as much research as when signing up for a normal one. Make sure you understand your spending habits and know the intricacies of the card you want before you make a decision. If you do a good job of matching a card to your expenditure tendencies, spot things like hidden fees, and learn the interest rates and annual charges, you shouldn’t have a problem with finding the right travel rewards card.
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