The right credit card can make or break your travel budget and costs, regardless of whether you are planning an annual family trip or are a regular business traveler.
Your credit card should not give you a nagging worry of losing out a significant amount on foreign transaction fees and currency conversions while paying for hotels, flight tickets, and other things.
This comprehensive guide will walk you through the key elements that need to be considered when you are comparing various credit card options for your next travel.
You should be aware that most travel cards come with an annual fee. This can range anywhere from $90 to $100 for regular travel cards and even in a strong economy with stellar tax cuts these fees should not be ignored.
But the fees can go up to $450 or more for premium cards that come with a host of perks and rewards. You need to weigh these perks against the annual fee to make sure that it evens out.
If you are wondering whether there are any good travel credit cards without the unnecessary annual fee, then you are in luck. There are many no-fee travel cards, but then they have a few drawbacks, like rewards of lower value, reduced perks, and a smaller sign-up bonus.
Rewards can be primarily segregated into the following two categories:
Burn rate is the value you receive for the miles or points when you go in to redeem them. The standard industry burn rate is 1 cent for every mile or point. However, some cards, especially hotel cards offer a lower value on the ‘burn’ end, but make up for it by offering more points for every dollar spent on the earning side.
Earn rate signifies the number of miles or points you receive on every dollar spent. There are some standard travel credit cards that only offer rewards on a flat-rate. This means that you get the same type of rewards on all kinds of purchases, such as 3 miles per dollar or 2.5 points per dollar.
Co-branded cards and others offer a base rate (say a point per dollar) and then raise the stakes for certain categories. For instance, you may be paid a higher reward rate for hotel stays, airline tickets, restaurant meals, and other general travel expenses.
Don’t just blindly look at the numbers while comparing reward rates. You need to take a closer look at the category those numbers apply to and find a travel card that best matches your spending pattern.
It may seem great to receive 5 points every dollar. But, if those 5 points only come with purchasing office supplies and you don’t intend to use your travel card in an office supply store, then you may just end up getting a lousy deal.
Foreign Transaction Fee
Foreign transaction fee is never charged by a good travel card. These fees refer to the surcharges on purchases that are made outside the United States. The industry standard where foreign transaction fee is concerned is 3%, which is just enough to wipe out all the rewards you may have earned during your travel.
This is not of much concern if you don’t travel outside the US much. But, anyone who leaves US frequently should invest in a travel card with no foreign transaction fee. There are many issuers, like Capital One and Discover that offer cards without foreign transaction fee.
Reputation of the Issuer
You need to make sure that your travel card is backed by a reliable international company, especially if you are a globe-trotter. All credit cards don’t make for dependable travel companions.
MasterCard and Visa are used pretty much worldwide. But you may encounter trouble with acceptance in some countries where American Express and Discover are concerned.
However, this is very destination specific and you should not dismiss Discover and Amex outright. Just make sure that you take a back-up card along when you intend to use these. In fact, having a back-up card for your travels within the U.S. is also a prudent thing to do.
You should compare various cards on the basis of the travel protection they offer. You can pick from trip cancellation coverage, car rental insurance, and lost baggage protection, among others. No, there’s no card that can protect you from the Patriots cheating in the NFL!
It can be difficult to find a travel card that offers everything you require. There will always be minor disappointments because no issuer offers high reward rates, top-notch perks, generous sign-up bonuses, and no annual fee in a single card.
However, by being smart about the features listed in this guide and carefully choosing the right combination, you can find the ideal credit card that suits your unique travel needs.