For those who spend a lot of time on the road, a travel credit card may be a smart choice. However, this is not always the case and there are special considerations to keep in mind whenever acquiring this type of card.
Airline or bank sponsored
Those considering a travel credit card first need to decide if they want to go with an airline or bank sponsored card. If the card is sponsored by an airline, it is a type of frequent flier credit card. Since this card will offer special bonuses to include double miles when tickets for that airline are purchased with it, this type of card offers the best deals to those whom often use the same airline.
A more general travel credit card will offer opportunities to earn miles on a number of airlines. This gives the user more flexibility. Regardless, both types of cards will offer more than just airline miles. Depending on the card, there will be various programs offering those using it, including special discounts, points or other incentives at hotels, car rentals as well as at merchants.
Reasons to get a travel credit card
Although credit cards are not for everyone, they do make a lot of sense for those traveling. There is no safer and surer way to pay for things on the road than with a credit card. Besides the bonuses travel cards will offer, there is also the fact that the various types of insurance that come when purchases are made with them, to include car and lost items, is much more likely to be needed when on the road.
In addition, particularly when crossing international boundaries, it becomes more important to think about security. While those using credit cards will have zero or only a very limited liability if there are unauthorized transactions, things are not so clear cut with debt cards. Furthermore, if there is a dispute about a charge made when in another country, credit cards make it easier to have the charges reversed.
Things to look for in a travel credit card
While the needs of the user will mean that there is no best card for everyone, there are things to keep in mind that will help anyone getting a travel credit card make the right decision.
- Look for long-term benefits. While signup bonuses are nice and should be considered when choosing a card, it is important to keep more long-term usage bonuses in mind when making the final decision.
- Foreign exchange transaction fees: Banks typically charge 1% of the purchase price of purchases made in foreign currencies as transactions fees. However, some banks charge 2-3% or more. People who will be making a lot of purchases overseas need to take this into account and select another card if the one they are looking at has higher fees, unless it offers enough other bonuses to offset the costs.
- Annual fees: While bonuses for card use are nice, keep in mind that they tend to add up slowly for the typical user. Although some kind of fee can be expected for awards cards, one that is too high could offset any financial gains from having the card.
- Special bonuses for select retailers: Many people tend to do the bulk of their purchasing at a limited number of merchants. If one of these merchants has a special agreement with the credit card for points, miles or other bonuses, it can really add up over time. Try to find cards that offer deals with merchants that are frequented most.
- Charges and availability: Those who will be using ATMs overseas need to check and see what the fees for overseas withdrawals are. It is also important to make sure the card has a large network that can be used where one will be going.
- Annual bonus caps: Some cards will have annual caps on points and other bonuses that can be earned.
- Expiration dates: All the points or miles in the world are not much good if one cannot utilize them before they expire. Check to see the card policy on this before deciding.
Other things to keep in mind when looking for a travel credit card
Never forget that travel credit cards are not for everyone and other types of credit cards may offer better deals in many cases. For example, with cash back credit cards, annual fees can be avoided while earning cash back on every purchase as well as other bonuses. Avoid marketing hype and carefully look at the whole, long-range picture when deciding on a credit card.
In addition, to get the most financial benefit out of any credit card, it is important to periodically review the card, be aware of everything it offers and compare it to what else may be available. Many people use cards for years without even knowing they could have earned many points from a merchant they had been shopping with.
Finally, use a travel credit card as carefully as any other card. When the balance is not paid off in full, credit card purchases become high-interest loans, and this interest will wipe out all the bonuses the card offers.