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There are many reasons to bring a credit card along when you travel, and very few reasons not to. Not only do travel rewards credit cards offer important consumer protections and, in some cases, travel insurance benefits, but you can also earn points and miles for each dollar you spend, allowing you to save big on free hotel stays, flights and more. But if you don’t pay attention to the fine print, your rewards card usage may backfire.
It helps to understand the basics of travel credit cards before you sign up and start using one on vacation.
- Applying for the wrong type of card
- Not giving yourself enough time to earn the signup bonus
- Paying annual fees on card that no longer suit your needs
- Carrying a balance
- Not taking advantage of an annual travel credit
- Not charging your travel to the card with the most protections
- Not using a car offering primary car rental insurance
- Not knowing if or when points or miles expire
- The bottom line
For example, many consumers can be caught by surprise when, upon returning from vacation and reviewing their card bills, discover that their credit card purchases overseas triggered fees (usually between 2% and 3% tacked onto each purchase). You can avoid these added costs if you choose a travel credit card that does not charge a foreign transaction fee.
Before you dive into travel rewards, it helps to know about the most common do’s and don’ts. We reached out to some experts to find out which issues they see the most — and which problems you should avoid.
1. Applying for the wrong type of card
There are a dizzying array of rewards and travel credit cards available, and there are also different types of cards to choose from. There are general travel credit cards where rewards can be redeemed to cover various types of travel expenses, but you can also sign up for co-branded airline credit cards, hotel credit cards or even cashback credit cards, depending on your needs.
Unfortunately, not everyone thinks through which type of card would serve them best before they sign up, said Lee Huffman, a travel expert at BaldThoughts.com, a travel blog focused on maximizing travel rewards. Instead, they just sign up for whatever card offers the biggest bonus or one they heard about from a friend.
This can be a huge mistake.
“If those cards don’t get you to where you want to go, you’re wasting your time,” said Huffman.
Here are some pointers:
- You really need to think about the type of rewards you want before picking up a new travel credit card. For example, if you’re interested in getting an airline card for its perks, such as free checked bags and priority boarding, then a more general purpose travel rewards card won’t give you those benefits.
- Huffman explains that hotel and airline miles often have limited use. For example, he loves Southwest Airlines, but knows that this airline doesn’t fly to Europe. As a result, a co-branded Southwest credit card wouldn’t help offset the cost of someone who wants to visit Italy or France regardless of how big its sign-up bonus is.
- If you’re unsure of your travel plans, you may be better off choosing a general travel credit card affiliated with a program like Chase Ultimate Rewards®. That way, you can earn points now and decide how to redeem them later. Points can be redeemed as statement credits, for hotel or airline reservations or even gift cards.
- Some cards carry foreign transaction fees, which tack on up to 3% for each purchase made abroad. If you plan on using a card when traveling out of the country, make sure it’s one that does not charge a foreign transaction fee.
- Know which airlines or hotels a travel rewards card’s points can be transferred to. For example, the Chase Ultimate Rewards program allows you to transfer points earned with the Chase Sapphire Preferred® Card or the Chase Sapphire Reserve® to 10 airline and three hotel loyalty programs on a 1:1 basis.
- If choosing a cashback card where you’ll use the cashback earned to offset travel expenditures, choose a cashback card that fits your spending habits best and rewards you the highest cashback rate for spending in those categories. Pay attention to any rotating bonus categories that require you to opt into, as well as any spending caps within a particular category.
2. Not giving yourself enough time to earn the sign-up bonus
Most travel credit cards offer a welcome bonus if you can meet a minimum spending requirement within a few months. The thing is, you really need to plan ahead when earning a bonus if you’re hoping to spend your rewards on travel plans coming up in the short-term.
Let’s say you sign up for the Chase Sapphire Preferred® Card for its sign-up bonus: Our best offer ever! Earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,250 when you redeem through Chase Ultimate Rewards®.
While you may be able to spend $4,000 within a few weeks, Huffman says to remember that the bonus usually posts after the statement closes during the period in which you meet the minimum spending requirement. This means that, if you meet the minimum spending requirement at the beginning of a statement period, you could be waiting nearly a month to receive your points.
- Sign up for travel credit cards at least six months ahead of when you want to use the points. That way, you’ll have time to meet the minimum spending requirement, see your rewards post to your account, and (hopefully) find award availability.
- Failing to meet a minimum spending requirement is one of the “great tragedies in the miles and points community” since it happens fairly often. To avoid missing out on a big bonus, he recommends timing your application with major expenses, such as insurance payments, home repairs, childcare or a planned large purchase. Either way, do the math and make sure you can easily meet a minimum spending requirement before you sign up for a new travel credit card.
Our best offer ever! Earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,250 when you redeem through Chase Ultimate Rewards®.
2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases worldwide
Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 100,000 points are worth $1,250 toward travel.
- Our best offer ever! Earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,250 when you redeem through Chase Ultimate Rewards®.
- Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 100,000 points are worth $1,250 toward travel.
- With Pay Yourself BackSM, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
See additional details for Chase Sapphire Preferred® Card
3. Paying annual fees on cards that no longer suit your needs
Many travel rewards credit cards come with an annual fee, ranging anywhere between $95 and $550. You can often justify these fees when you factor in the first-year signup bonus and the money-saving travel perks you receive or if the annual fee is waived the first year. After the first year, however, it can be harder to justify the annual fee unless you’re earning a ton of rewards with your card or taking advantage of important travel benefits.
If you blindly keep paying an annual fee for a card you’re not really utilizing, Huffman suggests re-evaluating your credit card portfolio every year to decide whether you should keep each card.
“The sign-up bonus is once, but the annual fees are forever,” he says. “Don’t waste money on a credit card annual fee that isn’t giving you benefits that are worth at least as much in value.”
4. Carrying a balance
Most rewards and travel credit cards let you earn 1% to 3% in rewards for each dollar you spend, yet the average credit card interest rate is well over 17%. This is why the No. 1 rule in travel credit cards is to never pay interest on your purchases, said Huffman.
“No matter how many rewards you are earning, the bank will always win by charging you a higher rate of interest,” he says.
If you currently carry a lot of card debt, Huffman suggests focusing on 0% APR balance transfer credit cards or consolidation loans first, then coming back to travel credit cards once you are debt-free.
5. Not taking advantage of an annual travel credit
Some travel credit cards, like The Platinum Card® from American Express or the Chase Sapphire Reserve®, offer travel credits, such as Global Entry/TSA Precheck application credits or an annual statement credit of a few hundred dollars for travel charges. These travel credits can help you save money if you’re able to take advantage, but you need to understand how to use them and be intentional about maximizing them. Note that some benefits require enrollment — for example, to be able to use the airline fee credit offered by The Platinum Card® from American Express, you must select one qualifying airline first.
If you don’t have a plan for using whatever credits your travel card offers, you can easily forget they exist and let them expire. For example, some hotel cards offer an annual free night award that’s good for a year, but if you don’t use it within a specified period of time, you lose it.
Travel rewards expert Dan Miller of PointsWithaCrew.com says travel credits are often offered by banks in order to help you justify a card’s annual fee, but they’re only a real “discount” on travel if you use them each year.
Earn 100,000 Membership Rewards® Points after you spend $6,000 on purchases on the Card in your first 6 months of Card Membership.
Earn 10x points on eligible purchases on the Card at restaurants worldwide and when you Shop Small in the U.S., on up to $25,000 in combined purchases, during your first 6 months of Card Membership.
Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually. Uber Cash and Uber VIP status available to Basic Card Member only.
- Earn 100,000 Membership Rewards® Points after you spend $6,000 on purchases on the Card in your first 6 months of Card Membership.
- Plus, earn 10x points on eligible purchases on the Card at restaurants worldwide and when you Shop Small® in the U.S., on up to $25,000 in combined purchases, during your first 6 months of Card Membership.
- Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year.
- Earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
- $200 Hotel Credit: Get $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings with American Express Travel when you pay with your Platinum Card®.
- $240 Digital Entertainment Credit: Get up to $20 in statement credits each month when you pay for eligible purchases with the Platinum Card® at your choice of one or more of the following providers: Peacock, Audible, SiriusXM, and The New York Times. Enrollment required.
- New! American Express has expanded The Centurion® Network to include 40+ Centurion Lounge and Studio locations worldwide. Now there are even more places your Platinum Card® can get you complimentary entry and exclusive perks.
- $200 Airline Fee Credit: Get up to $200 in statement credits per calendar year in baggage fees and more at one qualifying airline.
- $200 Uber Cash: Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually. Uber Cash and Uber VIP status available to Basic Card Member only.
- $300 Equinox Credit: Get up to $25 back each month on select Equinox memberships. Enrollment required.
- $179 CLEAR® Credit: Use your Card and get up to $179 back per year on your CLEAR® membership.
- $695 annual fee.
- Terms Apply.
- See Rates & Fees
See additional details for The Platinum Card® from American Express
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants including eligible delivery services, takeout and dining out & 1 point per $1 spent on all other purchases.
$300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $900 toward travel when you redeem through Chase Ultimate Rewards®
- $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year. Through December 31, 2021, gas station & grocery store purchases will also count towards earning your Travel Credit
- 3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants including eligible delivery services, takeout and dining out & 1 point per $1 spent on all other purchases
- Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $900 toward travel
- With Pay Yourself BackSM, your points are worth 50% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
- 1:1 point transfer to leading airline and hotel loyalty programs
- Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit for Global Entry or TSA Pre✓®
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more
See additional details for Chase Sapphire Reserve®
6. Not charging travel to the card with the most protections
Many travel credit cards offer insurance protections, such as trip cancellation and interruption insurance, baggage delay insurance, and primary auto coverage. The catch is, you have to pay for the common carrier fare or rental car fee for your travel to qualify.
So, you would only have trip cancellation and interruption insurance for flights you paid for with the travel credit card that offers this coverage.
If you want the travel protections your card offers to be applicable for your travel plans, there’s only one way to make it happen. Use that credit card for your travel purchases including airfare, rental cars and more.
7. Not using a card offering primary car rental insurance
While many travel credit cards offer some sort of auto insurance coverage as a cardholder benefit, it’s important to note that some coverage is primary and others are secondary. Primary coverage protects you the most since you can utilize this coverage in place of your own insurance, whereas secondary auto insurance coverage kicks in only after other policies you have are exhausted.
Miller says he doesn’t think this is a huge deal since your personal auto insurance policy is probably sufficient to cover any rental car damage. Plus, the odds of having a car accident are relatively low. However, you should know which type of coverage your card offers and know the coverage limits before you deny coverage offered by the rental car company.
8. Not knowing if or when points or miles expire
While some points you can earn never expire (such as Delta SkyMiles®), most rewards currencies cancel out if you don’t earn or burn some of your points within 12 to 36 months. For example, American Airlines AAdvantage® miles will expire if you don’t have any posted activity for 18 months, but Air Canada Aeroplan miles expire if you don’t have any activity for 12 months.
If you’ve gone through all the trouble to earn rewards, letting them expire is such a shame, said Miller.
You may be able to get them reinstated, but banks and rewards programs tend to charge huge reinstatement fees that are rarely worth paying, said Miller.
Your best bet is knowing and understanding expiration policies for rewards you plan to earn, then taking steps to keep your points active for the long haul. Most programs let you “restart the clock” when you earn or redeem points in their program, so often a small purchase on a co-branded credit card or a small redemption of points is all that’s required to restart the expiration timeline.
However, know that you may also lose rewards with some programs for a specific statement period if you don’t pay the minimum payment on your credit card bill. With American Express Membership Rewards®, for example, this is exactly the case. You’ll lose out on points earned during any statement period in which you don’t make a minimum payment, and you’re required to pay $35 to reinstate those points after you make a payment and bring your account up to date.
The bottom line
Travel rewards can be insanely lucrative for those who want to travel the world without spending outrageous sums of money. However, there are plenty of “gotchas” to be aware of along with best practices that can help you get the most out of the experience.
By avoiding the common travel credit card mistakes we’ve outlined, you’ll have the best shot at maximizing your rewards over time.