You might be wondering why anyone would want to get a travel credit card while we’re fighting СOVID-19 and staying at home. However, if you think in the long term, you can switch to using a travel credit card or a rewards credit card to earn rewards that you can use when the crisis is gone.
Think of your new travel credit card as an investment in or preparation for your future travel. Once it is safe to travel again, you will be all ready for great redemptions.
Consider general-purpose credit cards or travel credit cards that will reward you for things you need to buy anyway, like food, meds, and other basic needs, and will allow you to redeem earned rewards towards travel or as cash. The point is to earn and save miles or points today for a trip in the summer or fall.
Best Travel Credit Cards
Whether you choose an airline co-branded credit card or a regular credit card with travel rewards, look for sign-up or welcome bonuses. A sign-up bonus will give you a windfall of miles or point rewards for meeting spending requirements in the first few months (usually 3 or 4 months).
For example, the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® offers 50,000 American Airlines AAdvantage bonus miles, which you can get after spending $2,500 in purchases within the first 3 months of account opening.
The next thing to look at is ongoing rewards. Since you will be using the card for everyday purchases, make sure the card offers a high earning rate per dollar spent. It may not offer increased rewards on all purchases, but you can find a card that offers increased points or miles in specific shopping categories like restaurants or gas stations. Thus, the AAdvantage Platinum Select card from the above example allows you to earn 2 AAdvantage® miles for every dollar spent at gas stations, restaurants, and on eligible American Airlines purchases.
General travel credit cards are issued by a bank (such as Citi or Chase) and are not tied to any airline. These cards allow earning points or miles on every purchase – usually 1 to 2 points or miles per dollar. And they also come with big sign-up bonuses. Travel credit cards do not limit you to which airline you can redeem earned points with. So, you are basically free to fly any airline using earned points or miles.
Airline credit cards earn miles on purchases as well – usually 2 miles on purchases with the airline and 1 mile per dollar on all other purchases. And since airline cards are tied to a particular airline, earned miles go to your frequent flyer account you have with that airline.
Co-branded airline cards also offer welcome bonuses and various travel perks like preferred boarding or free checked bags.
For example, the Citi® / AAdvantage® Executive World Elite Mastercard® comes with a sign-up bonus of 50,000 bonus miles after spending $5,000 in purchases within the first 3 months of account opening and allows earning 2 miles per dollar spent on eligible American Airlines purchases. The card’s benefits include complimentary Admirals Club membership (value of up to $650), Global Entry or TSA Pre Check application fee credit, free first checked bag, priority boarding on American Airlines flights, and some other travel perks.
How To Compare Travel Credit Cards
It’s hardly possible to find a travel rewards credit card that would give you everything you want. Do not expect a card to have everything – a high rewards rate, a generous sign-up bonus, travel perks, no annual fee, and a 0% introductory rate. Find your own combination of features and benefits that will work for you best.
If you do not travel a lot or do not spend much, you may want to compare based on annual fees and everyday rewards. If you are looking for a quick rewards boost, or want to save on checked bags, focus on welcome bonuses or travel benefits. Or you are a frequent traveler and often visit different countries, then you should pay attention to foreign transaction fees and international acceptance. Thus, when you prioritize a couple of features for yourself, it will be easier to compare travel credit cards.
Travel Cards VS Cash Back Cards
In some cases, you might wonder whether you need a travel credit card at all. Will a cash back credit card work better? Travel rewards credit cards, especially airline credit cards, work perfectly well when you travel a lot. If you are a frequent traveler, you most likely get enough value from rewards and benefits to cover the annual fees of the best airline credit cards.
However, if you travel only occasionally (once a year or even less), you most likely won’t be able to make up for the annual fees or accumulate points fast enough for your next trip. In this case, a cash back credit card might work better as you may get better rewards from it. Many cash back credit cards do not charge annual fees and foreign transaction fees.
For example, the Citi Rewards+® Card can be a good option for someone who does not travel a lot. The card allows earning points on everyday purchases and allows redeeming them towards travel. Plus, it offers 20,000 bonus points for spending $1,500 in purchases within the first 3 months of account opening, and has an exclusive round-up feature – the points you earn will be automatically round up to the nearest 10 points on every purchase. Since the card is a part of the ThankYou® program, you will have plenty of redemption options, including points transfer to participating loyalty programs.
Another example is a pure cash back credit card – the Citi® Double Cash Card – 18 month BT offer. This card offers 2% cash back on all purchases. You will earn unlimited 1% cash back when you make a purchase and an additional 1% as you pay for your purchases. You only need to pay a minimum monthly payment to earn 2% back, but if you want to maximize your rewards, you’d better pay off the card balance in full each month. Once you are ready to redeem earned cash back, meaning you have at least $25 in a cash rewards balance, you have several redemption options. You can receive your cash back as a statement credit, direct deposit, or check. Or, if you need more flexibility, you can convert your cash back into ThankYou Points starting at $1 in your cash rewards balance. ThankYou rewards portal offers more redemption options, including points transfer to participating loyalty programs.
In limes like the coronavirus pandemic, it is important to consider all your financial decisions carefully. Using a credit card, you should remember that interest can build up rapidly and you will have to pay it anyway sometime in the future. More than that, if you cannot maintain zero balance on your travel rewards credit card, all rewards you’ve earned will be eaten up by interest. Therefore, you’d better get a new credit card, especially a travel credit card, only when you are absolutely sure you will be able to manage it responsibly and won’t accrue debt.
If you’ve lost income because of the coronavirus pandemic, don’t consider credit cards first. There are many other resources available to you right now. If you get a new credit card and start accruing balance, you will only add fire to the flames.