The next time you plan a vacation, a travel credit card with the right incentives can help cover some or all of the costs. Cards with higher annual fees typically offer the most value, offering perks like ongoing benefits, free checked bags, airport lounge access, and other perks. However, even cards with low or no annual fees can still get you some value for your trip if you qualify.
These cards typically require good credit (score of 690 or higher). Even if you qualify, if you can't pay off your credit card bill in full every month to avoid high interest charges, the card isn't worth it. Also, if you're working on paying off existing debt, it might not be worth chasing points and miles until you make progress on that front.
But as long as a travel credit card aligns with your financial goals, the potential savings are worth considering, even if you only travel once or twice a year. Experience the flexibility of a versatile travel credit card that lets you book travel anywhere, or a branded credit card that lets you book travel with your favorite hotels and airlines. Whichever option you choose, you could potentially save money on your next trip.
Valuable features can reduce costs
Offers vary between general-purpose travel credit cards and airline- or hotel-branded credit cards, but here are some savings opportunities:
Benefits
If your credit card comes with tons of perks, its value can add up quickly. Here are some features to be aware of:
- Sign up offer: Travel credit cards typically come with great sign-up offers that allow new cardholders to earn a ton of points and miles by meeting minimum spend requirements. If you can strategically time your credit card application to align with purchases scheduled during high-spending months or seasons, you'll be more likely to get caught.
- Free checked baggage: Some airline credit cards offer free checked baggage, which can mean real savings when applied per person round trip. This is one of the ways Doug Figueroa, creator of the YouTube channel Zorito y Doug, makes up for the $150 annual fee on his airline credit card. “For each passenger registered on the same reservation, he saves $70 round trip,” he says.
- TSA or Global Entry Credit: Some travel cards will issue you a credit (up to $100) when you use it to pay for your TSA or Global Entry application fee. These expedited airport security screening programs will save you time while traveling.
- Travel credits: Depending on your card's terms, you may be able to use travel credits to save on a variety of travel expenses, including rideshare services, airfare, and accommodations.
- Airport lounge access: Skip expensive airport meals with a travel credit card that gives you free airport lounge access. Austin Maxwell, content creator for South Carolina-based blog The Maxwells Travel, uses a travel credit card to avoid these costs. “He saves $20 to $30 every time he goes to the airport because he doesn't have to buy food or drinks before a layover or flight,” he says.
- Companion ticket: Some airline credit cards can even cover the cost of a friend or family member's flight. Depending on the terms of your Card, you may have to pay taxes and fees on your fare, the accompanying ticket may have an expiration date, and/or spend requirements may apply.
- Automatic elite status: With some hotel brand credit cards, you may be able to achieve elite status with little effort. Elite status can lead to valuable savings if your program offers free meals, bonus points, or suite upgrades.
- Free stay: If your favorite hotel has a branded credit card that offers annual free night rewards, your vacation budget could bulge.
Protection and other benefits
Travel credit cards that offer trip delay and cancellation insurance, lost baggage insurance, rental car coverage, and other protections may also be worth it. To qualify for these benefits, you generally must pay for your trip or qualifying purchase with an eligible credit card. Please read the terms carefully to understand the extent of your coverage.
Figueroa says she saved $90 over three days on her trip to Miami using her card's primary car rental coverage.
“Once you have made your online reservation, you must decline all insurance provided by the rental company and pay the full amount on the rental car. [card]” he says.
Redeem high value rewards
Points and miles on some travel credit cards can lose value when used for non-travel benefits, such as cash back, gift cards, and other options. Travel rewards typically offer the best value, but you can squeeze even more value out of it with a versatile travel card that allows you to transfer points to airline or hotel partners. This is a strategy that Maxwell often uses to his advantage.
“It's even better if there's a transfer bonus associated with it. Credit card companies offer transfer bonuses (15%, 20%, 30% bonuses) when you transfer points to certain airlines,” he says. says.
He also said he has transferred points to hotel partners to book hotel rooms. “This is the equivalent of him getting a hotel room for $120 that is actually worth $500,” he added.
To decide whether to redeem your rewards for travel or transfer them to a partner, check your credit card booking platform and partner website to compare costs. Also consider whether benefits transfer at a ratio of at least 1:1. This means points or miles of equivalent value will be transferred.
NerdWallet Details
The article “How a travel credit card can be your ticket to big savings” originally appeared on NerdWallet.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
