From the Mint team: As you know, Mint is a free product you can use to help stay on top of your finances. So, how do we make money? We get paid by the advertisers on our site. This compensation may affect how and where products appear on the site (and in what order). Mint.com does not include all products or all available offers. Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
If you aren’t using travel credit cards to your advantage, you are missing out on tons of money in savings. Many people, myself included, use credit card points to travel for free. Of course, using credit cards always comes with the following warning: Always use credit cards responsibly. Never spend money you don’t have. Always pay your credit cards off, in full, at the end of the month.
If you do decide to sign up for a new credit card, specifically for the travel rewards, here are the perks you should look for in your card.
When it comes to big savings, and using a credit card to travel for free, the real money maker is the sign-up bonus. These bonuses award you free points, that you can then use on travel expenses, just for using their card.
There is a small catch. Each card is different but most of them come with a stipulation: you must spend X dollars in X months to get the bonus. Always consider the purchase minimum when signing up for a card. Can you reach it easily without overspending? At the end of the day, spending money just to reach a points bonus is counterintuitive.
How You Earn Points
Once you get your big sign-up bonus, how you earn your points is a huge determining factor. You will want to look for a card that at least gives you 1% return on purchases. Rotating categories is a popular way to earn points quickly, but make sure the categories fit your lifestyle. Let’s say, one of the categories is 5% back on gas for 3 months. For most Americans that is a great bonus. But, if you live somewhere without a car, those three months are wasted and that card probably isn’t the one for you.
While you probably think I am going to say always sign up for a card with no annual fee, I’m here to surprise you. Don’t be afraid of a high annual fee. A lot of times, the perks and credits included with the card pay for the annual fee multiple times over.
Let’s take the Chase Sapphire Reserve. This card has a hefty $450 annual fee. I know, that seems like way too much to spend a year just for a travel credit card. But, let’s take a look at the perks and credits. First, you get $300 credit towards anything travel related. That means if you book a flight or pay for a hotel your card automatically reimburses you $300. Your fee is already down to $150. Next, the current sign up bonus is 50,000 points, which equals $750 in travel expenses. As long as you take one domestic flight in the next year the rest of that $150 fee is taken care of. Now, add in free lounge access, saving you money on food and water at airports and a $100 global entry fee credit and that $450 annual fee is basically gone.
PS: If you haven’t applied for Global Entry you should sign up for it ASAP. Here’s why.
Travel Statement Credits vs Portal Purchasing
This is more of a personal preference, but I really do believe it saves you money. I prefer travel statement credits because then you can buy any flight (or hotel, or excursion) and pay yourself after the fact with points. This way, you can book the cheapest or best budget option instead of being tied to what flight (and what price) is on your credit cards portal.
Do note, I have found most portals charging higher prices, but this is personal experience and isn’t always the case. Before signing up for a credit card, don’t be afraid to inquire about how their portal works, where they source prices, and if they will honor prices found online.
Foreign Transaction Fees
Almost every travel card I have ever encountered includes a perk guaranteeing no foreign transaction fees. These pesky fees are a huge hidden cost of traveling, so always double check the card you picked includes it. Paying 3% extra for every purchase abroad adds up fast.
Think about your Lifestyle
At the end of the day, you are going to save the most money if you choose a card whose perks compliment your lifestyle. If you tend to be a heavy packer, look for a card that reimburses you for airlines fees. If you travel a lot and work on the road, you might want a card that gives you lounge access.
In my next article, I will continue talking about credit cards and show you specific ways they help you consistently save money.
Be sure to follow on Mint and follow me on Instagram so you don’t miss an article.