September 24, 2023

How points and miles credit cards can ease the return to travel

As COVID-19 vaccines make it safer to travel, many people who stayed home during pandemic…

How points and miles credit cards can ease the return to travel

As COVID-19 vaccines make it safer to travel, many people who stayed home during pandemic shutdowns are vacationing again.

Rewards like points and miles earned from a travel credit card can help you get to a long-awaited dream destination, especially as a new cardholder. There’s no shortage of sign-up offers for those with good credit (a FICO score of 690 or higher), but before accepting one, consider whether a travel credit card aligns with your spending.

There are general travel credit cards that allow flexible redemptions and co-branded travel credit cards allow travel redemptions with certain hotel brands, airlines or third-party travel websites.

These types of credit cards may be useful if you travel regularly, have no debt and pay the bill in full each month to avoid interest charges. Otherwise, the high interest rate on these cards chips away at the value of rewards. If you check off these boxes, then you could consider a travel credit card.

Here are some factors to consider:

Annual fees. Consider travel credit cards with steep annual fees only if the card’s perks can offset the cost. Less frequent travelers may get more value from a no-annual-fee credit card.

Introductory offers. A sign-up bonus can cover the cost of a vacation, but overspending to meet the requirements to earn one defeats the purpose. Instead, plan to apply for a travel credit card around a high-spending month or season to meet bonus requirements with in-budget purchases.

Rewards. Look for a rewards rate of 1.5% or 2% of your spending. Depending on a card’s terms, the value of rewards may increase or decrease with different redemption options. Travel redemptions typically get the best value. In some cases, you can maximize rewards by transferring points to loyalty programs.

A broad merchant network. You’ll likely have fewer hiccups abroad with a card that belongs to the globally accepted Visa or Mastercard networks.

No foreign transaction fees. For international travelers, a credit card that doesn’t charge foreign transaction fees saves money. These fees are typically assessed as a percentage of the amount of every purchase made abroad.

Money-saving perks. Valuable perks are typically offered on travel cards with annual fees. Airline credit cards may have free checked bags or priority boarding. Hotel-branded credit cards may include a free night. Some general travel credit cards offer statement credit for Global Entry or TSA Precheck application fees or airport lounge access.

Travel benefits or protections. Credit cards may offer trip cancellation or interruption insurance, lost baggage reimbursement, rental car insurance and more. Protections are often secondary to any existing insurance.

Read the terms carefully to make the most of your benefits.

This article was provided to The Associated Press by the personal finance website NerdWallet. Melissa Lambarena is a writer at NerdWallet. Email: [email protected].