How to Choose the Best Travel Credit Card or Airline Credit Card

The main types of travel credit cards are airline credit cards, hotel credit cards and more general flexible point programs. A branded credit card gives great value, so long as you remain a loyal customer. The flexible point programs are like cash back credit cards in that you sacrifice a higher rate for easier redemption, but tend to offer a better rewards rate than straight-up cash back.

Travel credit card rewards come in a variety of flavors:

• Statement credits that you can apply towards travel expenses. These are among the most flexible, because you can “redeem” them for gas, hotel stays, booking through discount sites, in-flight meals and so on. A few such cards are the Capital One Venture Rewards and Discover Miles (2% flat rewards rate).
• Points that transfer to airline or hotel loyalty programs. Each credit card has a list of partners that will accept your points at a 1:1 ratio, and many will offer you a discount if you book through the card issuer’s website. Examples include the Chase Sapphire Preferred, and the American Express Green, Gold and Platinum charge cards. Branded airline credit cards, too, will often allow a transfer (though not always at a 1:1 ratio) to their partner airlines or hotels.
• Loyalty rewards for a particular airline or hotel. A certain airline’s credit card will give you miles on that carrier. Our personal favorite is the Starwood credit card which, when used correctly, can get a rewards rate of up to 5%, and around 2.3% on average.

Major considerations when choosing a travel credit card

• Foreign transaction fees. Aside from how much you value airline miles or hotel rewards points, another important factor is the foreign transaction fee. Most credit cards will charge you 3% of the transaction if you use the card overseas, but a growing number waive this charge. International credit cards, in particular, are aimed at global travelers and tend to have no foreign transaction fees. An international traveler can easily lose $60+ a year on F/X fees.
• EMV chip compatibility. Pretty much the rest of the world uses EMV chips embedded into a credit card for verification purposes, while we Americans stick with magnetic stripes, PINs and signatures. It’s not uncommon for a traveler to try using his card overseas, only to find that the store or restaurant doesn’t have the infrastructure for an American credit card. A very small number of issuers offer EMV-compatible credit cards. The short list includes US Bank, Wells Fargo, Chase and the State Employees Credit Union, located in Raleigh, North Carolina.

Pro tip: Virgin Atlantic credit card. Virgin Atlantic’s miles transfer 1:1 to an extensive list of partners, including Starwood, Hyatt, Hilton and Marriott on the hotel side; and Air China, Virgin America, All Nippon Airways and Gulf Air on the airline side. The 1:1 transfer here is vital, because Virgin Atlantic’s plane ticket prices are heavily weighted towards taxes and fees, which miles don’t cover. In order to get the best value for your miles, you should book on an affiliate that has a plane ticket price that’s more airfare and less fees.

Pro tip: Starwood American Express. The American Express Starwood gives its best rewards rate when you redeem for hotel stays at Starwood Preferred Guest hotels, of course, but you can also trade in 20,000 Starwood rewards points (aka Starpoints) for 25,000 airline miles on many carriers. That’s equivalent to a 1.25% base rewards rate, if you redeem in that fashion.

Pro tip: Chase Ink Plus and Chase Sapphire. Points are worth 25% more on these two cards if you book through Chase’s online travel service.