People ask me all the time: What credit card do you use for travel? Which gives you the best rewards? The answer to that is, it depends on your travel habits and your priorities.
Overall, there are two main things travelers typically look for when choosing a credit card: Low (or no) foreign transaction fees and best reward structure. Unfortunately, the two of those do not always go hand in hand. For example, I use the Citi AAdvantage card almost exclusively, because I fly on American Airlines and their partner airlines a lot. I prefer to accumulate miles I can use through them. However, that card has foreign transaction fees, so when I actually travel, I use the Capital One Venture card.
So which card would be right for you? I’ll keep this fairly general because reward structures, perks, and sign-up bonuses change all the time. But here are the things you need to think about when you’re picking a suitable credit card.
Where do you fly?
For me, American Airlines is the best choice because the One World alliance has hubs in a lot of the cities I frequent. So the Citi card was almost a no-brainer. But if you tend to have a preference for another major airline or you live in a city that is a hub for another airline, like Atlanta is for Delta, or LAX is for United Airlines, then it might be better for you to look for a credit card that gives you rewards for the corresponding alliance. In the United States, the three major airline alliances are One World, which includes American Airlines; Star Alliance, which includes United and Air Canada; and Sky Team, which includes Delta. Obviously if there is a hub for one of these airlines in your city, there will be more frequent and cheaper flights on those airlines, which means your bonus miles will go a longer way.
Why choose?
Technically, you don’t have to. There are dozens of credit cards that offer travel rewards not linked to any one airline or alliance. In fact, the Capital One Venture card operates exactly like that. You can redeem your miles on any airline in the world. So why don’t I use it? It comes down to bang for your buck. Credit cards not linked to one particular airline’s reward structure usually operate on a fixed number of miles per dollar basis. So for example, a flight on AA from Miami to Seattle that costs $457 will require 45,700 miles using Venture miles. On the other hand, I can get that same flight on AA, using 25,000 miles (12,500 miles each way). So always remember:
The number of miles needed to redeem a flight is more important than the number of miles you earn per dollar.
The number of miles you earn per dollar usually varies from time to time, either because an airline changed its policy or because they’re running a temporary promotion. At the end of the day, you’re probably going to get anywhere from one mile to two for each dollar you spend. So before you pick one, do your research. Find out how much it costs to redeem your miles to help you decide which one truly gives you the biggest reward for your spending.
What other travel perks are important to you?
Again, this changes all the time, especially because perks are usually bundled with sign-up bonuses. But there are certain travel perks that may sway you when picking a credit card. Companies may offer priority boarding, free checked bags, airport lounge access. Those things might sound trivial, but if you’re the kind of person that regularly pays $20-30 to check a bag, then it might save you a lot of money in the long run. Another thing to consider is what else can you do with your miles besides fly. Some credit card companies have a store where you can redeem your miles for gift cards or electronics. The Capital One Venture allows you to redeem miles for travel purchases. So even though I don’t use it for flying, if I’ve made $2000 in purchases, I can use my 2000 miles to pay for a $20 train ticket I bought last month.
How much are you willing to spend on travel perks a year?
The annual fee for credit cards with travel bonuses or travel-related perks varies from $0 to over $400. Obviously, the more you pay, the more you get. So it really depends on what you want out of your card and how much you’re willing to spend to get it. Most decent credit cards have a fee of $50-60 a year, and offer you at least the ability to accrue miles for money you spend, even if it doesn’t offer much else. But there are some that will give you travel rewards for free, like the Bank of America Travel Rewards Card. Of course, your miles usually won’t take you very far with a no-fee credit card.
Always pick one.
This is not the kind of situation where diversifying your assets is advisable. Having 3500 miles on AA and 4700 miles on Capital One, and another 1000 miles on your Delta SkyMiles Amex card is going to buy you exactly zero flights. So put all your eggs in one basket. Pick the best card for you and use it constantly. If you’re the kind of person that hates using credit cards, then just pay it off at the end of each month. You won’t get charged any interest but you’ll still get a mileage reward for your purchases.
Sign up at the right time.
If you’re in the market for a credit card, sometimes it pays to wait. Almost all credit cards offer a sign-on bonus that can range from 10,000 miles to 50,000. Try to make sure you get the most out of signing up. Important: Almost without fail, this bonus is given to you only after you spend a minimum amount in qualifying purchases over the first month or two of having the card. So if you’re not ready to put a grand on that card as soon as you get it, it’s better to wait or you’ll miss out on your bonus.
Final thought: Just because you can get a flight for free doesn’t mean you should.
Once you have your credit card and you’re swiping away to earn miles, you may be tempted to use it on the first vacation you take. But you should be just as thrifty with miles as you are with money. Sometimes the only available award flights are downright horrific. So if you find yourself making a choice between a $200 non-stop flight to New York and 25,000 miles that will put you on a 13-hour trek with 3 connections each way, maybe it’s just better to pay. Remember those same 25,000 miles could buy you a direct flight to Los Angeles another time of year.
Happy flying, gnometrotters!
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