We all have dreams of visiting foreign countries and seeing the world, but unfortunately, our bank accounts often impede our travel plans. Our dollars and dimes usually dictate where we go, how long we stay, and what we do once we arrive.
But with a little know-how, you can actually make your vacation dollars work for you. In that light, we asked Oliver Browne of Credit Card Insider to teach us what international travelers should know about using travel cards.
Disciplined Credit Card Use
The first thing to understand about travel cards, or any credit card for that matter, is that they are serious financial tools. In fact, according to Oliver, certain credit cards can actually cut your travel expenses through rewards, introductory offers, and sign-up bonuses.
However, it’s important to remember that any credit card purchase must be made with discipline. This means paying the card off in full and on time. If you misuse a card, you can damage your credit score and end up in a pit of expensive debt. You also don’t want your credit card interest to cancel out the rewards you’ve earned!
Why Consider a Travel Credit Card?
If you do consider yourself a responsible credit card user, a credit card with travel rewards has the potential to save you a lot of money. But with so many travel rewards cards out there, it can be confusing to figure out which card to choose. The best travel card for you depends on your everyday preferences and lifestyle.
Credit cards in the travel space can be split into two main categories. There are general travel cards — and then there are cards specific to certain airlines, hotels, or cruise lines.
According to Oliver, you should consider a general travel card if you:
- Travel often
- Don’t prefer any particular airline or hotel brand
- Have experience with credit cards
- Plan to take advantage of benefits such as airport lounge access or room upgrades
- Will use the card often enough to make the fees worthwhile
Alternatively, you should consider a brand-specific credit card if you:
- Travel often
- Stay at a particular hotel chain frequently (at least four to five times a year)
- Fly frequently with one airline (at least five to 10 times a year)
- Know how to take advantage of brand-specific benefits. (For example, branded hotel-chain credit cards can include room upgrades, free stays, and priority check-in. Branded airline credit cards can include free checked bags, free Wi-Fi, access to airport lounges, and complimentary companion tickets. )
If you can look at either list and answer yes to the majority of its stipulations, then you should think of a travel card as a tool that can make your trips more affordable and enjoyable.
What Features Make For a Great Travel Rewards Card?
All travel rewards programs feature two main aspects that you should consider. The first is how a card earns rewards. Usually, a travel rewards card earns points (or “miles,” as some companies call them). Make sure you have a good understanding of how many points or miles you’ll earn for certain types of purchases.
The second aspect to consider is how you redeem rewards points or miles with your card. Find out how much value you get per point and which redemption methods the card offers. Often, you can redeem points or miles for travel expenses through your card company, and sometimes, you can even transfer points or miles to another rewards program to get a higher value per point.
If you’re searching for a general travel card, remember to look into the following as well.
As mentioned, travel rewards cards earn points. But their value can vary, depending on how you redeem those points. Before you sign up or apply for a card, Oliver suggests learning how to redeem rewards points for the greatest value.
Different cards earn different amounts of points for spending in specific categories. For example, the JetBlue Plus card earns two points per dollar on all restaurant purchases. So, if you already spend a lot at restaurants, this card would be a great fit for your lifestyle.
Travel cards often award bonus miles or points if you spend a certain amount within a few months of opening a card. These sign-up bonuses can even be enough for you to redeem a free flight or a hotel room for a night. For example, the Chase Sapphire Preferred Card rewards 50,000 bonus points if you spend $4,000 in your first three months of signing up. This can equate to $625 in travel rewards, depending on how you redeem the points.
That said, make sure you’re not going into debt just to earn a sign-up bonus. It’s best to think of your credit card as an extension of your bank accounts. If you’re planning to go on a big trip, it’s a good idea to use one of these cards to cover part of the expenses, not to finance the entire journey.
Foreign Transaction Fees and EMV Technology
As you plan your international travels, be aware of foreign transaction fees and your card’s EMV technology.
Some cards will charge you when you buy something in a foreign currency, usually with a fee of about three percent. However, many travel cards don’t charge foreign transaction fees at all. Having at least one card that doesn’t charge this extra fee is a great way to ensure you don’t get hit with additional fees as you travel abroad. This is yet another perk to traveling with a credit card, in addition to just a debit card.
EMV technology refers to the type of “chip” the card has. There are two types of chip technology: Chip-and-PIN and Chip-and-Signature. Most cards issued in the U.S. only support Chip-and-Signature, which is why you may have to sign your name on a receipt to complete your transaction. On the other hand, some places in Europe only accept Chip-and-PIN cards, which require a PIN to complete the purchase.
As you plan to go abroad, you should research your destination and the type of credit that is most often accepted there. As a rule of thumb, it’s best to have a card that supports Chip-and-PIN, so you won’t be stuck and unable to use your card in certain situations.
One of the most overlooked aspects of travel cards is the travel-related benefits they provide. On most cards, for instance, you’ll get the benefit of rental car collision insurance. Some cards also provide automatic trip cancellation insurance, as long as you buy the plane ticket on that card. Generally, the higher your annual fee, the more benefits you’ll receive.
Airline credit cards usually focus on air-travel benefits such as priority boarding or free checked bags, whereas you might receive a free room upgrade with certain hotel cards.
Research the benefits that are important to you, and make sure to weigh them against the annual fees.
Restrictions and Blackout Dates
Certain travel card rewards programs have restrictions on how or when you can use your rewards. Sometimes, for example, you won’t be able to book flights with points on days that an airline considers “peak” travel days.
If you’d like to use your travel points as part of a trip, be sure to do your research or contact the card company to find out what sort of restrictions you might face.
Completing the Trip
While there are tons of options to consider when shopping around for travel reward cards, it’s best to look for the card that matches your habits. By identifying the features of a card that matter the most to you, you’ll be able to save money as you plan your future trips.
At the end of the day, Oliver says that the best thing you can do is list your options and compare them side by side. Pick the card that will give you the most rewards for your lifestyle, and enjoy your travels. And remember — always use your credit cards responsibly!
Have you ever used a travel rewards card? If so, which card did you use, what was your experience like, and what do you wish you had known before signing up? Let us know in the comments below, and remember to check out our how-to guide on saving up for your next journey.
Header image by Chris Lawton