5 questions to ask when choosing a travel credit card

December 26, 2022

In our last article, we covered types of travel credit cards you can get, kinds of rewards you can get, sign-up bonuses, and other travel card perks. Now, let’s look at these 5 questions that will help you narrow down what kind of travel credit card might be most suitable for you.

How much do you spend in an average month?

This may be the most important question to answer, because how many points you’ll earn is based on how much you spend with the card. If you’re a low spender, it’s usually best to stick with no-annual-fee credit cards like Bank of America Travel Rewards or Capital One VentureOne.

Only consider premium cards like the Chase Sapphire Reserve if your yearly rewards would be more valuable than the annual fee.

Let’s do some quick math. Let’s say a travel card gives you 3 points per dollar toward travel, with a value of 1 cent per point — and it has an annual fee of $100 per year.

  • If you spend $250 per month on average with the card, you’ll only earn $90 in rewards over a year, which means you’re actually losing $10.
  • If you spend $1000 per month, you’ll earn $360 in a year (and thus make enough of a profit to justify the fee).

Of course, sign-up bonuses can balance this out as well. A card with a $400-value sign-up bonus might “pay for itself” for years, even for a low spender.

What perks are most important or useful to you?

Other than financial benefits, what do you want from a travel card? Built-in travel insurance? A company with well-reviewed customer service? No foreign transaction fee? Included roadside assistance?

Do you often fly with the same airline or stay at one hotel chain?

If you are loyal to a particular brand, it’s well worth looking into its rewards programs and investigating co-branded credit cards. This way, you can continue enjoying your favorite lifestyle (just a little more cheaply)! Examples include the no-fee Alaska Airlines Visa Signature, Southwest Rapid Rewards Plus, and Hilton Honors.

Do you want one card or several?

If you prefer the simplicity of having just one card that you use for everything, it would likely be better to choose an all-purpose travel card that isn’t restricted to rewards at one single hotel or airline.

However, if you’re able to keep track of a variety of different cards, then you’ll be able to earn multiple bonuses and accumulate several different types of points. You could have one hotel card, one airline card, one all-purpose card, etc.

If you do sign up for multiple cards, you may find it beneficial to create a spreadsheet to keep track of details like annual fees and what rewards the card offers.

How long is a card worth keeping?

Many cards have no annual fees, so there’s no harm in keeping those open forever. However, if a card does have an annual fee, you may find that eventually, you’re paying more in fees than you’re earning in rewards value. In this case, it’s usually best to cancel.

When you cancel a card, your credit score may temporarily drop a little, but it will recover, and it’s better than losing money every year. Make sure to do a yearly audit of your cards to calculate whether they’re still valuable to you.

These questions are a great starting point to give you a sense of what travel card will be best for your own needs. As a next step, you can use FINMATEX — a free virtual financial assistant through Facebook Messenger — to chat about your options.

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