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As the COVID-19 vaccination era makes it safer to travel, many people who stayed home during pandemic shutdowns are vacationing again. Airport checkpoint numbers have increased about 20% from January through mid-June, 2021, compared with the same time frame in 2020, according to Transportation Security Administration data.
Rewards like points and miles earned from a travel credit card can help you get to a long-awaited dream destination, especially as a new cardholder. Currently, there’s no shortage of generous sign-up offers for those with good credit (a FICO score of 690 or higher), but before accepting one, consider whether a aligns with your spending.
Even for globe-trotters, a travel credit card might not be compatible with habits or financial circumstances. Weigh these factors to determine what’s right for you.
Travel credit card options are abundant. There are general travel credit cards that allow flexible redemptions and co-branded travel credit cards allow travel redemptions with certain hotel brands, airlines or third-party travel websites.
These types of credit cards may be useful if you travel regularly, have no debt and pay the bill in full each month to avoid interest charges. Otherwise, the high interest rate on these cards chips away at the value of rewards. If you check off these boxes, then you could consider a travel credit card.
Teaming a travel card up with a travel savings fund can also prevent unwanted budget surprises like costs that aren't covered by credit card rewards. If you want to go somewhere in six to 12 months, then set aside money from each paycheck to avoid debt, says Kelly Luethje, a certified financial planner and founder of the Willow Planning Group in New Hampshire.
“You might not have accumulated the points you need to cover a whole trip, so I do like a travel fund to help supplement what you don’t have accumulated on the credit card,” she says.
A travel credit card should make traveling easier and less expensive. Depending on where and how often you travel, the desirable features may vary.
For Christine Lozada — creator of the YouTube channel “Where In The World is CL” — a travel credit card and its perks were essential for her jet-setting lifestyle.
She says the access her travel credit card allows at airport lounges is “huge for me.”
Your priorities might differ, but here are some factors to consider:
Read the terms carefully to make the most of your benefits.
This article was written by NerdWallet and was originally published by The Associated Press.