How Do Hotel Credit Cards Work?

Travel credit cards can earn points and miles that lead to free or reduced-cost trips and vacations. But what’s the difference between general travel credit cards and hotel credit cards? Discover how these cards can save you cash and bring a host of free perks on your next hotel stay.

An overview of hotel credit cards

If you’re new to hotel credit cards, don’t fret. They are easy to understand, and you just might be surprised by the number of benefits available.

For every dollar you spend, you earn hotel points, and the points accrue in your card's affiliated hotel loyalty program. Each hotel credit card awards points at different rates, generally 1 point per dollar spent for most purchases. In addition, you can earn bonus points in certain spending categories, and almost always, you earn the most bonus points when using the card at that hotel company’s properties.

For example, the World of Hyatt Credit Card generally earns 1 point per dollar spent. But it has some bonus-earning categories. Cardholders earn double points when using the card:

• At restaurants.

• For local transit and commuting services.

• For gym memberships.

• For airline tickets purchased directly from airlines.

Meanwhile, paying with the card at Hyatt family properties yields 9 points per dollar spent.

You can then take those points that you earn and redeem them for hotel stays or room upgrades, which can save you big bucks. While many cards do have an annual fee, the potential savings from hotel stays can far outweigh it.

» Learn more: The best hotel credit cards right now

Possible benefits of hotel credit cards

In addition to earning points toward almost-free award stays, there are some benefits that come immediately after being approved for the card. Other perks can show up after holding the card for a full year.

Here are some examples of what many hotel credit cards give cardholders.

• Automatic elite status: Hotel loyalty programs have various elite status tiers. These are typically awarded based on how many nights you spend annually at the hotel chain's properties. The more you spend or stay with a hotel brand, the higher the status you can earn. A shortcut to hotel status is via hotel credit cards. Elite status can bring potential room upgrades, free breakfast, welcome amenities or waived resort fees, among other things.

• Free night awards: Some cards provide a free hotel night as an enticement for you to apply for the card. This benefit is sometimes available right away, but more often, you'll receive the free night certificate after a full year of having the card (also known as your card anniversary).

• Airport lounge access: Even before you reach your hotel, some hotel credit cards begin the benefits at the airport. This can include airport lounge access through programs like Priority Pass.

• Statement credits: Just for holding the card, some premium hotel credit cards give a statement credit providing a rebate when using it at certain hotel brands.

• Trip cancellation or trip delay insurance: Travel insurance can be a lifesaver if you have to change or cancel your trip. It can also help with travel disruptions like delayed or canceled flights.

• Baggage delay or lost baggage insurance: It’s not just about your travel plans. Many credit cards also offer travel insurance benefits so if your bag is lost or delayed, you may be eligible for reimbursement for your missing items.

» Learn more: Are hotel credit cards worth it?

How do hotel credit card rewards work?

When you sign-up for a hotel credit card, you link your hotel loyalty account with that credit card. Loyalty programs are free to join, and this allows you to earn points in that affiliated hotel program for every dollar you spend.

You can earn the most points when using a hotel credit card at a hotel, but at-home spending can lead to a nice pile of points, too. When you have enough points, you can redeem them for a hotel stay or room upgrade. Some hotel programs have also created portals, like Marriott Bonvoy Moments, where you can redeem points for experiences such as VIP tickets to concerts or sports games.

» Learn more: Travel loyalty program reviews

Examples of how redemptions and earning rates vary

Hotel loyalty programs can vary, which means that the value of a point in one program is not equal to one in another. That’s why some of the redemption prices in certain programs may seem higher than others, but it really depends on the way programs calculate their awards. Check NerdWallet's valuations to find out how much value you can expect for your hotel points when you redeem them for stays.

It also might be easier to earn more points in some hotel programs than others. Here are some examples of how many points you can expect to earn from affiliated credit cards.

• IHG One Rewards Premier Credit Card. When using this card at participating IHG hotels, you could earn up to 26x points depending on your elite status. Earn 5x points on travel, dining out and gas stations and 3 points everywhere else.

• Hilton Honors American Express Aspire Card. When using this card at participating Hilton Honors family hotels, you earn 14x points. Earn 7x points at U.S. restaurants and on car rentals and flights booked directly with the car or airline company (or via AmEx Travel). On other eligible purchases, cardholders earn 3x points. Terms apply.

• Marriott Bonvoy Boundless® Credit Card. When using this card at participating Marriott Bonvoy hotels, you can earn as many as 17x points. All other charges earn 2x points per dollar.

As you can see, each hotel program and individual credit card has its own earning structure, but each follows a similar pattern. This includes giving the most points per dollar spent when using it at a hotel followed by bonus points in certain spending categories.

» Learn more: Avoid these common hotel credit card mistakes

What to look for in a hotel credit card

When choosing a hotel credit card that is best for you, it all comes down to what you’re looking for in travel planning. Do you travel a lot already and want to accelerate earning more points in one program? Or do you travel less frequently, but want to earn hotel points with everyday spending to save up for a big vacation redemption? Whatever your goals, consider the following benefits that come with each card and weigh them against the annual fee of the card.

• Bonus offer: When choosing a new card, be sure to review the various sign-up offers for new cardholders. You'll want to calculate how much the sign-up bonus is worth (just multiply NerdWallet's valuation of the hotel loyalty program's points with the number of points awarded if you earn the bonus) and compare across cards. The sign-up bonus is a great way to score a nice stash of points in a flash.

• Earning potential: Earning a lot of points is important, but make sure you are earning in a program that is most valuable for you. Even if a bonus offer is higher with one program over another, it won’t be helpful if you do not stay often with that particular brand’s properties. Review a card’s bonus-earning categories, too. If most of your spending is at grocery stores or restaurants, be sure to sign-up for a card that rewards you for that.

• Perks: What goodies come with the card? Some have statement credits that provide a rebate for staying at certain hotels while others offer a free night certificate each year on your card anniversary. Some hotel travel cards include airport lounge access, fee waivers for TSA PreCheck and Global Entry, or travel and baggage insurance policies. These are all worth considering when signing up for a card.

• No foreign transaction fees: If most of your spending is done internationally, choose a card that avoids charging foreign transaction fees.

• Annual fee: An important thing to consider is how much you spend on a card’s annual fee. Even cards with a pricey annual fee can return more value in the benefits they include. If you won’t use those benefits, then opt for a card with a low annual fee.

» Learn more: The best travel credit card welcome bonuses right now

If you’re considering a hotel credit card

Weigh the cost of an annual fee with the potential benefits you can enjoy from a card. The goal is to maximize the points earned with your favorite hotel program. In doing so, you can get to that dream hotel redemption that saves major cash and possibly adds travel benefits along the way.