Tuesday, 18 January 2022

Travel Rewards Credit Cards 101 | How to Pick the Best Credit Card for Free Travel

Travel Rewards Credit Cards 101 | How to Pick the Best Credit Card for Free Travel
30 Aug

Hey there, it's Ernest from Trip Astute Today we're reviewing a complex topic: travel rewards cards (light chiming music) One of the questions I get asked a lot is, "what is the best travel card for me?" It's a tough question to answer because it really depends on a lot of factors

In this video, we'll cover some of the questions you may want to ask yourself to determine which card is right for you To start off, most travel reward cards have the following features: Number one is travel benefits Most of these cards have some kind of travel benefit associated with them Things like bag or trip protection are standard on most of these travel reward cards Number two is no foreign transaction fees

This is a big one It allows you to use your card abroad without racking up any additional fees, which is usually charged to regular credit cards Number three is the EMV chip This is now standard in the US, but has been the standard around the world the past couple of years It's basically the chip that's on the front side of your card that allows you to pay for things without having to swipe

For simplicity's sake, I basically break down travel cards into three major categories: Number one is co-branded loyalty cards Number two is flexible points program cards And number three is flat rate cards We'll start with the co-branded loyalty cards These include cards that are generally associated with an airline or hotel brand

There are basically credit cards for every major hotel and airline brand out there These cards allow you to earn points and miles which you can then redeem for that brand So, if you were to use the Hilton card and earn points, you could then redeem the points for a stay at one of Hilton's many hotels in their portfolio, which includes: the Embassy Suites, the Hampton Inn, Doubletree Hotel, Garden Inn, etc Examples of co-branded loyalty cards include the Chase Southwest Rapid Rewards card, the Citi American Airlines AAdvantage cards, the American Express Delta cards, the Chase Hyatt Rewards card, the Citi Hilton HHonors card, the American Express Hilton Suprass card, and the US Bank Club Carlson Rewards card There are actually plenty more to list, but those are just some examples

So what are some of the pros with these cards? For one, there is simplicity in redemptions since you're focused on a specific hotel or airline brand It becomes less overwhelming than having to consider all your options Number two is great perks These cards often come with some pretty incredible perks Things like late check-out, early check-in, priority boarding, discounts on in-flight purchases, and lounge passes

Some will even give you a special annual bonus like a free hotel stay or a companion pass These can be an incredible deal And three: higher earning rates You'll typically get earn more points if you use a card with that specific brand So in the case of Hilton, if you have the Hilton card, using it at the Hilton will earn you the most points

So what are some of the cons? With these cards, the big one is the restriction on redemptions You're basically limited on where you can redeem your points and miles While some of these cards will allow you to redeem for non-travel items like gift cards or Amazon credit, it's typically not a good idea in terms of value You can also transfer the points to other vendors, however, you're often sacrificing point value again by doing so So what type of traveler benefits from a co-branded loyalty card? One would be travelers who go to the same destination and stay at the same place

For example, someone who goes to Hawaii and stays in the same hotel every year Number two would be business travelers who are restricted on where they can stay and what airlines they can use Or three are folks who are looking for loyalty status or specific perks, like the free night or priority boarding So what's my conclusion? I actually have a few loyalty cards that I don't use but did I keep paying the annual fee Why? Because I get perks like free nights stays or priority boarding

For example, I have the IHG card from Chase which has a $45 annual fee Now I barely use the card However, every year they send me a annual free night certificate that I can use at any IHG hotel Last year, I used it for stay in Vietnam in a $400 a night room It was an incredible deal and it motivates me to pay the annual fee every year

The next type of card that we're going to discuss is the flexible points program card These include cards that belong to one of the following programs: the Chase Ultimate Rewards program, the American Express Membership Rewards program, the Citi Thank You program, and the Starwood Preferred Guest program Examples of these cards include the Chase Sapphire Preferred and Reserve card, the American Express charge cards including the Platinum, Gold, and Green card, as well as the Everyday cards, the Citi Prestige and Thank You Preferred and Premier card, and the American Express Starwood Preferred Guest card I did a separate video on the Chase Ultimate Rewards program and how I maximize my points using a variety of Chase cards You should definitely check it out if you're interested in the program

It gives a fairly comprehensive review of how I earn and redeem points in the program These programs allow you to earn points through a variety of cards and then allow you to redeem them through multiple channels The most popular being transferring points to one of their airline or hotel partners Since these points are flexible, you can redeem them in a variety of ways, from full travel experiences like a cooking lesson with a celebrity chef, to gift cards from major retailers Some of these programs even allow you to book travel through a portal, much like you would through Expedia or Kayak, except that you can redeem points to pay for the trip

Though much like the co-branded loyalty cards, you'll often sacrifice value if you redeem it for non-travel items One more note: the Starwood Preferred Guest program is technically a hotel loyalty program, so you might be wondering why I've lumped it into this category The reason is even though it's associated with a specific hotel brand, it has many of the features of a flexible point program such as the ability to transfer points to airlines with a bonus I actually know several folks who use their Starwood Preferred Guest card for rewards other than hotel stays And for a lot of folks, Starwood points are considered to be one of the most valuable reward currencies out there

So what are the pros of using these cards? One would be the multiple redemption methods These points offer the most flexibility when it comes to redemption options For example, with the Chase Ultimate Rewards program, I'll often compare the cost of booking an airline ticket through the Chase portal versus transferring the points and booking through the airline I know that I can earn at least 15 cents per point using the portal, so I'll compare to see if transferring gives me a higher value

Another benefit are the multiple cards that can earn points With the exception of the Starwood Preferred Guest card, the other programs allow you to earn points through multiple cards and accounts This allows you to earn points quicker Another benefit is the bonus categories These cards often have bonus categories for certain types of spending like travel, dining, or fuel purchases, allowing you to build up your points faster

And lastly, these cards often have very strong travel protection perks Perks like primary car rental insurance, baggage insurance, global entry fee reimbursements, and lounge passes are some of the valuable perks associated with these type of cards So what are some of the cons with these cards? One would be the confusing earning and redemption structures With all the options comes confusion These programs can be quite complex and definitely require a certain passion for researching and understanding the various redemption options

Another negative is the changing partnerships It's not uncommon for some of these programs to lose travel partnerships with certain companies A couple years ago, Chase loss Amtrak as one of its travel partners, so many folks were upset that they couldn't redeem points for train travel So what type of traveler benefits from a flexible points program card? I would recommend these cards to luxury travelers who are looking for top-tier benefits and high-end travel The second group of travelers that I would recommend this to are point & miles collectors

These are folks who are looking to earn as many points as possible through their daily spend and bonus categories The third type of traveler are folks who like a lot of options when traveling These are folks who value flexibility over simplicity So what's my conclusion on these cards? Well, I won't lie These programs are my favorites and are the ones that I spend the most time researching and building

Though keep in mind that I'm a total nerd when it comes to this stuff The last category of cards are the flat rate cards These cards earn points that can be redeemed at a fixed rate for travel expenses It's very similar to a cash back card, but instead of getting cash back, you get reimbursed for travel expenses For example, you might book an airline ticket and then login to the credit card website and use points to then clear the charge

Keep in mind that these programs often refer to their points as miles which is different from the miles that you might earn from a co-branded loyalty card Since you can't transfer the points to another program, these are really points, which can be really confusing for new folks who are getting into this hobby Some of the popular cards in this category include the Barclaycard Arrival cards, the Capital One Venture cards, the Discover Miles card, and the new US Bank Altitude Reserve card So what are some of the pros for this category of cards? One is that they tend to offer general travel protections and perks These cards tend to have similar perks to other travel cards, including no foreign transaction fees, global entry fee reimbursements, Wi-Fi passes, and many more

Another benefit is the simple earning and redemption structures Since you're dealing with flat rate redemptions, it's easy to understand and utilize your redemptions And lastly, you'll earn loyalty points since you're purchasing the travel then reimbursing yourself afterwards You'll be earning points and miles from those airline and hotel programs So what are some of the cons? One is the lack of redemption options

This actually might be more of a pro than a con to you With simplicity comes less options when redeeming points for travel For example, on some of my flexible point programs, I've been able to squeeze more than three cents per point on redemptions Granted, it took me a lot of time and effort to maximize my redemption So what type of traveler benefits from a flat rate card? I would say these cards really appeal to folks we're looking for simplicity when earning and redeeming points

Not everyone wants to spend time researching how to maximize their point redemptions These cards offer a great way to get better than average redemptions on your travel expenses These cards are also very appealing to travelers already invested in a flexible point program These cards allow you to have another option when covering miscellaneous travel charges So what's my experience with these cards? I think these cards are great

A lot of my friends and family use these cards, and they seem to offer a good balance between earning rewards and great perks for travel The top cards in this category have great benefits and I often use them to supplement my flexible point program cards An example is paying for smaller boutique hotels or train passes For those types of expenses, I will often use a flat rate card since it's the easiest way to redeem points Several years ago, I went to a convention and I was eating at the hotel's restaurant for several days

What I found was that the charges were marked as travel on my credit card since they came from the hotel, so I could actually redeem points toward my meals even though they weren't technically travel expenses I was able to clear the charges with my Capital One Venture card So given all the options, which card is right for you? Well, it depends, and I suggest asking yourself a couple of questions One: how important are the travel perks and benefits? If you're not planning to take advantage of the travel benefits or perks, or already have a car that has all the travel benefits that you need, it might make more sense to get a flat cash back card that can get you two percent without an annual fee That way, you can just take the two percent that you get back and put it toward your travel savings

Examples of these cards would be the Citi Double Cash card and the Fidelity Rewards Visa Number two is how invested are you in the points hobby? If you're not looking to get too nerdy into credit card rewards, then I highly suggest getting a flat rate card Number three: how often do you travel? Many flexible points program cards reward you for spending on travel expenses However if this isn't important to you, then I highly suggest getting a flat rate card or a co-branded loyalty card Number four: where do you like to travel? if you like to travel overseas, then you're probably better served with a Visa or MasterCard, rather than an American Express or Discover

Number five: how do you like to travel? Do you prefer to travel in luxury? I guess the question becomes would you rather spend your points on upgraded travel or for more trips? Kind of a quality versus quantity question If you're someone targeting luxury travel, then you probably want a loyalty or flexible points program card For me, I'm in the latter category I would rather be able to go to more places than to travel comfortably with my points, so a mix of flexible point program cards and flat rate cards works really well for me And lastly, what are the current promotions available? Credit card promotions change all the time, but there are often incredible deals available

I suggest doing a Google search before you actually apply for a card Some of the top bloggers will often post direct links to promotions that aren't shown on the issuers website It definitely pays to do some research before you apply Lastly, before venturing too deep into the world of credit card points, I highly suggest that you take some time to organize your finances I did a video on this a while back called "Before starting the points hobby"

I've included a link in this video, and I suggest you watch it This is an awesome hobby that's been very lucrative to a lot of folks, but it's also an easy way to fall in the hole if your finances aren't in order What card programs do you like to use? Please share your experiences with us If you enjoyed this video and found it useful, please hit the "like" button Also, please consider subscribing

It's free and you'll get notifications of any updates to our channel Until next time, travel safe and travel smart

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