Are you the type of person who travels a lot? If so, you may want to apply for a credit card before your next trip. Travel credit cards provide several benefits, including:
- Cashback rewards
- Air miles
- Opportunities to book five-star hotels or resorts with freebies
- Access to airport lounges
- Luxury services such as room upgrades
Travelers can take advantage of these benefits plus have the assurance of being able to pay for their trip without having to carry bundles of cash.
With the booming tourism industry, travelers now have a plethora of options when it comes to credit cards. However, choosing the best one can be a challenge if you’re unsure of what you need to be on the lookout for.
Should you apply for a credit card with air miles or cash back rewards? Will the card save you money on baggage fees, travel insurance, and in booking flights or accommodations? What other benefits are included?
Types of credit cards
Most types of travel cards fall under one of two categories: general and co-branded.
Co-branded cards feature the name of a large hotel chain or airline. General travel credit cards, on the other hand, can be used for any travel-related expenses.
Co-branded cards can only be used with a specific airline or hotel chain. These often provide cardholders exclusive perks such as free checked bags or priority boarding at the airport. In terms of hotel rooms or resorts, cardholders can avail of complimentary room upgrades or access to exclusive amenities and services such as massages.
General travel cards provide members with more options as the cards can be used on a broader range of hotels and airlines. Some credit cards can also be used to pay for other travel-related expenses such as car rentals.
If you regularly stay at the same hotel or use a particular airline for your travels, a co-branded card may offer more perks. But if not, general travel cards may be the more practical option.
Once you have decided on a type of card, it is time to check the features and benefits. Here are a few considerations you need to make:
1. Rewards and bonuses
To entice more people to sign up, some credit card companies include high signup bonuses. This could be in the form of cash back or points that can be used towards future purchases.
Some of the more popular cards may offer up to 2% cashback on purchases. Even higher rates may be offered on specific purchases such as groceries, dining, or gas.
Take note that certain conditions may apply for you to avail of these rewards and bonuses. For instance, cardholders may be required to make a minimum amount of purchases within a few weeks or months to get the cash back or reward.
2. Annual fees
Credit cards usually come with annual fees. If you intend to use your travel credit card for an extended period of time, look for credit cards with free or minimal yearly fees. Some credit cards may also offer the first year for free to get more people to sign up.
3. Insurance and protection
Emergencies can happen at any time, so you want to feel safe and protected, even while traveling internationally. This is especially important for traveling businessmen.
For instance, if you have connecting flights, you might want some insurance against any flight delays or protect your luggage during the trip. Look for cards that offer the protection or insurance you need for your trip, including health or accident insurance and emergency assistance, among others.
4. Interest rates
Before you look at the benefits, you need to consider your ability to pay back the credit charges. More significant expenses such as roundtrip tickets to exotic locations or a stay in a five-star hotel may require more time to pay back.
If you are unable to pay off the entire amount within a month, it may be more important to find a credit card with the lowest interest rate and APR than worry about the available benefits.
5. Expiration dates
Take note of the company’s conditions in the usage of points. Some credit cards encourage bigger spending sprees by offering shorter expiration dates on points. For others, the points will stay in your account for an indefinite amount of time.
If you are the type who likes to accrue and use points over cash backs, you need to check the expiration date and purchase conditions. This will allow you to plan your travel purchases more carefully.
When traveling abroad, one of the major concerns for tourists involves foreign transaction fees. A charge of up to 3% may be applied to your account each time you use your credit card.
Some travel credit cards will waive this overseas fee. This equates to a substantial amount of savings, especially if you plan on using your credit card abroad frequently.
Keep in mind that the fees can quickly pile up if you are not careful. By following the above tips, you are on your way to picking a credit card best suited for your traveling needs.
Deepak Kumar is a Co-Founder of SoulWallet, a neutral comparison portal for consumer financial services. With a team of “out of the box” thinkers and a deep understanding of the UAE consumer banking industry, the company helps customers make the best choices when shopping for financial products such as credit cards and loans.