Here’s what you need to know about travel rewards credit cards and when they’re a smart choice.
1) Earning travel rewards
Generally, travel rewards credit cards offer bonus miles or points for spending in travel-related categories such as:
- Hotel accommodations
- Car rentals
2) Determining the value of travel rewards
Travel rewards credit cards offer cardholders the opportunity to receive a higher value on each mile or point earned. The actual value is determined by what the earned rewards are used for at the time of redemption. For example, travel rewards are most valuable when redeemed for expensive, last-minute flights, business-class international flights, and luxury hotels and resorts. The earned miles or points have less value when redeemed for economy-class domestic flights.
For card members who know how to strategically redeem rewards for high-value flights and/or luxury hotel stays, the redemption value of each point or mile earned can be as much as 3-5 cents – a great return!
3) Redeeming travel rewards
Every rewards credit card (and the loyalty program it may be associated with) has its own terms and conditions when it comes to redeeming earned miles or points for travel rewards. You’ve probably seen advertisements where a famous spokesperson talks about “no blackout dates” or “no restrictions”. Other rewards programs offer limited seat availability or hotel stays. Occasionally, a program will simply give a statement credit for any travel-related purchases you make on the card. You need to look at your own travel habits and determine which program is the best fit.
Co-branded hotel or airline credit cards allow you to redeem your earned miles or points directly for award stays or flights. Often there are partner airlines or hotel chains available that you can book with as well.
4) Factors to consider
There are some situations which make redeeming travel rewards nearly impossible or just not worth it:
- Traveling during peak travel seasons with rewards programs that have limited seats/stays or blackout dates.
- Frequently flying on shorter routes where the ticket costs are $300 or less. Redeeming 25,000 miles for an award seat has no real value here.
- Needing to book more than two award seats for the same flight. For large families, this could present a problem.
- Preferring not to stay in large, chain hotels- they usually have the rewards programs.
5) Other travel perks
Besides award seats or stays, travel rewards credit cards also offer frequent travelers other great perks. These can include the following:
- Priority boarding
- Lounge access
- Free checked bags
- Status upgrades
- Late check-out
- Complimentary breakfast
- Discounted spa services