Travel credit cards allow you to earn points and miles on every purchase you make, even while you might be sticking closer to home during the pandemic. When you’re ready to get back on the road, you can then use those rewards to offset your travel expenses like flights, hotel stays, and more. While all travel cards work in the same basic way, there are different types of rewards and redemption processes.
General travel rewards credit cards are appealing because of their flexibility, but hotel and airline rewards cards can offer more value depending on how you redeem your points. Also, co-branded credit cards that carry a specific airline or hotel chain name may give you extra benefits, such as free checked bags or increased status.
» MORE: How rewards credit cards work
Many people don’t realize that you’re not limited to the travel credit cards available from your bank or credit union. You can apply for any travel credit card as long as you meet the requirements for things like credit scores and minimum household income. That opens up your options, as you’ll have dozens of cards to choose from, including some of these:
With no foreign transaction fees, free airport lounge passes, travel insurance, and an easy-to-understand rewards program, the Scotiabank Passport Visa Infinite Card is a great all-in-one travel credit card. The earn rate is a solid 2 points for every $1 spent on grocery, dining, entertainment and transit purchases. Everything else earns you 1 point per $1 spent.
The TD Aeroplan Visa Infinite Card is fantastic for people who fly Air Canada often, as the primary cardholder and up to eight travel companions can check their first bag for free. If that wasn’t enough to get you excited, the welcome bonus usually includes a buddy pass that allows a travel companion to pay just the taxes for a flight within North America.
The Marriott Bonvoy American Express Card comes packed with benefits. You get a generous welcome bonus, automatic Silver Elite status, and a free annual night. The earn rate is 5 Marriott Bonvoy points for every $1 spent at participating Marriott properties, and 2 points for every $1 spent on all other purchases.
What makes the American Express Gold Rewards Card so attractive is the flexibility of your points. The American Express Membership Rewards points you earn can be used for any type of travel or transferred to select airline and hotel loyalty programs, letting you strategically maximize the value of your rewards.
The MBNA Rewards Platinum Plus Mastercard is appealing since it’s one of very few travel credit cards without an annual fee or a high minimum income requirement. Although you won’t get any fancy perks with this card, the earn rate is respectable, and MBNA Rewards can be used to book any type of travel.
Even though the benefits of a travel credit card are obvious, it can still be challenging to decide which travel card is best for you. When it comes down to it, you need to consider a few specific criteria when choosing a card.
You usually won’t get everything you want in a single travel credit card, so you need to prioritize. The signup bonus alone is quite often worth hundreds of dollars, but that’s a one-time deal. Pay closer attention to the additional benefits since those are ongoing and can often be worth more than the annual fee. For example, a card that includes comprehensive travel insurance could save you more than $150 a year.
Understanding what your points are worth is equally important. General travel program rewards typically have a fixed value. For example, you might be able to redeem 1,000 points for $10 in travel expenses (or 1 cent a point). But if you’re earning airline or hotel rewards, you need to calculate the value of one point for each redemption to make sure you’re getting the best deal. To do this, you take the value of your reward (minus any extra fees) and multiply it by 100 to get the value in cents. Then divide that result by the number of points you would need to redeem.
Let’s say you’re deciding between two redemption options:
For flight 1, you’d calculate (400 X 100) / 25,000 = 1.6 cents per point.
For flight 2, your value is (300 X 100) / 21,000 = 1.4 cents per point. So you’ll spend slightly more points to buy flight 1, but it’s the better choice because it maximizes the value of your travel rewards.
Regardless of which travel credit card you choose, it’s essential to read the terms and conditions to understand the details. Some benefits may have specific requirements before they apply, such as a minimum spend in a certain length of time. Knowing the ins and outs of your loyalty programs will help you maximize the value of your rewards.
Barry Choi is a personal finance and travel expert. His website moneywehave.com is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.