Thriving Millionaires

Travel credit cards. You’ve seen the commercials. You’ve observed them in action. You’ve probably even had hundreds of offers mailed to you. Not only do these promise a series of rewards and benefits, but they lure you in with fantastic images of traveling to far-off places. They attempt to get you in a relaxed state of mind so you glide through the sign-up process and become another happy customer. Sounds amazing, doesn’t it?

Well, that is until you look at the dozens of different cards out there. There are a whole bunch of companies out there competing for your business, and they’ll stop at nothing to get you to sign up. Ever wonder why airlines always have flight attendants go down the aisle with the sign up forms? Or people stop you at airports telling you that you’re missing out big time? Travel credit cards are a big business, but it doesn’t mean you should use them for your advantage.

In a prior post, we discussed the benefits of using credit cards for day to day transactions. Today, I’d like to cover off on some of the key benefits of travel credit cards. Instead of listing off what I think the top cards are, I am going to lay out a couple different scenarios that you should take in to account when choosing a card. Benefits are always changing, but if you go in with the right strategy, you should be able to find one that can last you a long time.

When an Airlines Travel Credit Card Makes Sense

Let’s start with the airline credit cards. These can be incredibly valuable, but I think there are certain situations where they can make a lot of sense.

First of all, you should live in a market where you can fly that airline for most of your travels. One of the key benefits of an airline’s credit card are the perks that come with it. For example, on Delta, you pay $25 for the first checked bag. If you, your spouse, and your two children fly four times a year, that would equate to approximately $800 in baggage fees. That’s a pretty nice perk! The problem is, if you can’t fly Delta from your home market very often or it would be more expensive for you to do so, then that benefit goes away.

Second, you probably shouldn’t be a frequent business traveler. Many of the benefits that come with having a travel credit card, such as free baggage, airline points, priority boarding, etc. usually come with premier airline status. If you travel a lot for work, chances are you’re already loyal to an airline and racking up a lot of points. You lose some of the benefits of an airline’s card if you’ve already got status. In that situation, it’s probably best to look elsewhere.

In most situations, similar logic can be applied to Hotel cards as well. I tend to view these as not as valuable but depending on the particular offer and your life situation, there may be times where it is worth considering.

When a General Travel Card Makes Sense

Unlike cards tied to a specific airline or hotel, there are a variety of general travel credit cards that offer even more valuable rewards on the money you spend. Most airline cards give you a point for every dollar spent, and then some sort of multiplier when you spend money at that particular airline. For many general travel credit cards, you earn multiple points for money spend on all travel and dining and one point on everything else. Depending on the card, the multiplier can be even more enticing (and on more categories) than that.

First, a general travel card really makes sense if loyalty to a company isn’t your style. The real benefit here is that you can travel in whatever fashion is best for you, and know that you’re going to get benefits for it. When you have an airline’s card, you feel enticed to travel with them, even if it isn’t the best deal. With a travel card, you can choose the best flight time and price. The other benefit is that you often book your travel any way you want, and then you can redeem the miles (points you earn) to pay for it.

Second, if you’re the type of traveler who does a lot of traveling that doesn’t involve flying, it makes total sense to go with a general card. If you love road trips, or you just love eating out, these cards often offer a great multiplier on all travel and dining. This is a great way to rapidly build up your bank of rewards and use them whenever you see fit.

Lastly, it’s important to note that you should always be cognizant of the annual fee. There are a variety of great travel cards out there that require no annual fee. One of these cards is the Wells Fargo Propel American Express Card – you earn 3 points per dollar spent on restaurants, gas stations, ride-shares, transit, streaming media services, and travel, all for no annual fee. Some cards out there have fees as high as $500, so you should be sure the benefits outweigh the cost before you sign up for them.

Traveling is one of the most enjoyable experiences in the world but can also be incredibly expensive. If you’re the person who likes the travel, I’d advise taking the time to evaluate the criteria above and the different offers on the marketplace. You’re going to spend the money anyways, so you might as well be rewarded for it.

Eric’s Thoughts

While I don’t personally hold travel credit cards, I can’t say that I haven’t done research to understand the benefits they provide. The free checked bags, the priority boarding, extra points in certain categories – the list goes on. Every time we travel to visit family, the $25 per bag is painful. While I can’t explain it, I don’t mind paying $500 for the flight – but the add-on charge of $25 feels like nails on a chalkboard!

Having an airline credit card would help my family avoid these baggage fees and gain other advantages when it comes to travel. As Patrick points out above, this can equate to big savings depending on how often you travel.

Beyond dollars and cents, when traveling frequently, things like priority boarding or free seat upgrades go a long way in making the travel experience more manageable between gates. These perks can be difficult to put a dollar figure on, but are valuable nonetheless.

Once you can evaluate the amount of spending you can offset given your average travel and make an attempt to place a value on the intangibles such as early boarding, you can compare those benefits against both the annual fee and whether or not to add an additional card to your credit card line-up.

When our stage in life shifts to one where more frequent travel becomes a viable option for our family – having a travel credit card in our wallet will make a ton of sense and allow us to maximize the benefits offered by the various cards available. We’ll certainly have much research to do given the plethora of travel cards to choose from, but with a little comparative shopping, we’ll be able to reap the travel rewards: saving money on trips we would have taken anyway and hopefully booking some vacations on points that we wouldn’t have otherwise taken.