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How Credit Card Annual Travel Credits Work

Jan. 14, 2020
Credit Card Basics, Credit Cards, Travel Credit Cards
How Credit Card Annual Travel Credits Work
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Annual travel credits have become a common feature on premium credit cards with high annual fees. Because these credits erase hundreds of dollars’ worth of expenses, they can take much of the sting out of annual fees of $450 or more.

Here’s how these credits work and how you can use them to your advantage.

» MORE: NerdWallet’s best travel credit cards

What are annual travel credits?

Annual travel credits are reimbursements for certain travel expenses. They take the form of credits on the cardholder’s statement.

The Chase Sapphire Reserve®, for example, offers $300 per year in travel credit. When a cardholder uses the card to pay for travel — either by booking through Chase or making a purchase from a travel-related merchant — the issuer automatically credits the account. Once a cardholder exceeds $300 in travel spending, the credit is used up for the year.

Say your first travel expense of the year is a $250 plane ticket. You buy the ticket with your Chase Sapphire Reserve®, and you later see on your statement that the $250 has been reimbursed. Now you have $50 worth of credit. If you pay for a $160 hotel stay, Chase will reimburse $50, leaving the last $110 as your obligation. At this point, you’re out of credit until next year.

Assuming you use them, travel credits substantially reduce the cost of carrying a premium credit card. The Chase Sapphire Reserve® has an annual fee of $550. If you get $300 back in travel credit, that knocks the annual cost down to $250.

» MORE: How to choose a travel credit card

A sampling of cards with travel credits

Chase Sapphire Reserve®$300
Most travel expenses
$550Automatically applied on qualifying purchases
The Platinum Card® from American Express$200
Incidentals on a single airline; does not include tickets
$550Cardholder chooses an airline each year; credits are automatically applied to purchases from that airline
American Express® Gold Card$100
Incidentals on a single airline; does not include tickets
$250Cardholder chooses an airline each year; credits are automatically applied to purchases from that airline
Ritz-Carlton® Rewards Credit Card$300
Airline incidental charges: Lounge passes or memberships, baggage fees, seat upgrades, and in-flight entertainment, meals and internet service
$450Cardholder must call customer service after making an eligible purchase
U.S. Bank Altitude™ Reserve Visa Infinite® Card$325
Purchases made directly from airlines, hotels, car rental companies, taxis, limousines, passenger trains and cruise lines
$400Automatically applied on qualifying purchases

What expenses are eligible for travel credits?

Each card has its own rules about which expenses can be reimbursed through travel credits. Some cards limit the credits to spending on flights, while others apply them more broadly, including spending on hotels, cruises and travel agency bookings. Other cards even extend the credits to local transportation costs — including taxis, Uber and Lyft — and spending on tolls and parking fees.

Card issuers commonly identify purchases for reimbursement by looking at the merchant category code, or MCC, of the business where you made the purchase. Payment networks, such as Visa and Mastercard, assign businesses these codes to define their industry. Your card agreement should identify the types of purchases, as defined by MCC, that qualify for travel credits. Once your purchase appears on your statement, the issuer will begin the reimbursement process.

Keep in mind that some issuers are quicker than others to apply credits. Some do so in a day or two, while others can take one or more billing cycles — so you may have to make a payment while you wait for reimbursement. Other cards require extra effort: Users of the Ritz-Carlton® Rewards Credit Card have to call the issuer after they’ve made a qualifying purchase.  

» MORE: How your credit card can help you save on travel

Information related to the Ritz-Carlton® Rewards Credit Card has been collected by NerdWallet and has not been reviewed or provided by the issuer of these cards.

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