By Scot Finnie | American Express Credit Intel Freelance Contributor
7 Min Read | November 30, 2020 in Cards
There’s probably no such thing as the “best” rewards credit card for travel. After all, what are the odds that any one card can do everything in the way that everyone wants it to? People have different lifestyles, including different travel preferences, so they can get the most out of rewards credit cards in different ways.
As a result, your card options include a sea of rewards credit cards that don’t all work in the same way or provide the same benefits. Any one of them might be the best rewards credit card to suit your particular lifestyle and travel preferences.
To help chart a course to the best travel rewards credit card for you, this article explores:
There are three major types of travel rewards credit cards, each with its own set of characteristics:
If you frequently fly with a specific airline or stay with a specific hotel chain, a co-branded credit card may make sense for you. But if you travel with a variety of different airlines and hotel chains, you'll likely be better off with a general travel rewards credit card. With general travel cards, you typically earn points or miles that you can often redeem for travel with a list of airline and hotel partners or as cash back in the form of a statement credit.
But note: Many rewards credit cards for travel mix-and-match features from both co-branded and general travel cards. The boundaries are blurring among these three types, thanks to a growing trend toward more versatile and flexible travel cards that offer multiple reward options, such as points, miles, and cash back.
Most of these cards have an annual fee of from $95 to $450 or even more, although no-annual-fee rewards credit cards are also available. Naturally, the value of rewards benefits rises along with the fee.
Points and miles are among the chief rewards you earn from airline or hotel rewards credit cards, with the airlines typically issuing miles and the hotels issuing points. Typically, you’ll earn several points or miles for every dollar you spend on flights or hotel stays with the airline or hotel chain named on the card. With some cards, you also earn more than one point or mile per dollar for spending in additional selected categories, such as travel-related purchases from other providers. For spending outside those categories, you generally earn one point per dollar. The fastest way to earn points or miles is often by fulfilling the requirements for a sign-up bonus, if there is one. Experts suggest you take advantage of such bonuses when they’re available.
Some experts estimate that rewards points or miles in many rewards programs are worth one to two cents each, though there’s considerable variation.1 Because the number of points/miles required by one airline will differ, sometimes widely, from the points needed for a comparable flight on another airline, it can be difficult to grasp points’ value. A recent in-depth analysis reveals why this can be confusing for some people. It showed that the number of miles/points for a one-way domestic U.S. flight ranges from a low of 5,000 to a high of 147,000 – the latter for a first-class seat.2
General travel cards are more versatile but have their own complexities. You’ll often earn a higher percentage – for example, two or more points per dollar – on travel purchases and one point per dollar on other spending. Some cards also offer higher percentages for other categories, such as gas or dining and/or the option to get cash back rewards typically as a statement credit. Some cards change the higher-rewards categories each quarter – and if you don’t proactively choose a specific area for higher rewards, you don’t get the higher earnings level for that quarter.
To sum up, rewards approaches can vary significantly by card but, in general, remember that:
Your points or miles are redeemable for travel and travel-related goods and services, general merchandise, and usually also can be transferred to participating airline or hotel rewards programs. Some airline and hotel cards also let you convert points or miles into cash back statement credit.
In addition, most rewards credit cards include multiple travel-related benefits. In general, the higher your annual fee, the more – and more valuable – perks will be included. The following section illustrates this point with two real-world examples.
To give a better sense of what rewards credit cards offer, here's a comparison of one base airline card with the same firm’s top-flight airline card.
The base card has no annual fee and offers two miles per dollar spent on purchases made directly with the airline and at U.S. restaurants, and one mile per dollar on all other purchases. Among the card’s many benefits are:
The top-of-the-line airline card has an annual fee of several hundred dollars and offers two miles per dollar spent on purchases made with the airline and one mile per dollar for everything else, though no double miles for dining. Among this card’s many benefits are:
The differences between these cards show just how important it is to match your lifestyle and travel preferences to the benefits of a particular rewards credit card. If you’re a very frequent flyer, the top-flight card offers good value in return for its high fee. But the no-fee card makes more sense for less frequent flyers.
The best travel rewards credit cards provide more flexibility, with more ways to earn and redeem points. There’s often a multiplier on the points earned per dollar spent, frequently 2X to 4X for travel-related purchases – though higher is possible.
Beyond that, the best rewards credit cards for travel don’t necessarily have specific details in common. Instead, they all creatively mix and match features and perks that break the mold of the more traditional travel rewards cards. They frequently deliver value with great packages of benefits, bonuses, and multipliers on points, miles, or cash back in the form of statement credits.
One size does not fit all with rewards credit cards for travel. A little research should help you match your travel habits and preferences with the best rewards credit card for you. A good place to start is by evaluating your spending patterns so you then can look for a rewards credit card that will yield the best rewards for that spending.