This blog post was updated on August 2, 2019.
Travel rewards credit cards always look and sound so appealing, lending us miles to travel the world simply by spending money on everyday items like gas and groceries. I like the fact that I can get a free trip to Europe thanks to my credit card company. However not all travel rewards credit cards are made equally. If you are shopping around for a good travel rewards credit card, be sure to ask these five questions before you sign on the dotted line.
How much is the annual fee?: Many travel rewards credit cards have an annual fee attached to them. Before you commit to one, you need to be sure that the annual fee is worth the price. A card with a high annual fee isn’t always the best choice. Consider your finances and just how much you want to get out of the card while still paying a flat fee each year.
How many miles do I get?: I have two travel rewards credit cards, one that lends me a three miles for every dollar I spend and another that only yields one mile for every dollar that I spend. As you can imagine, I end up acquiring more miles on the card that gives me three miles for every dollar. The other card ends up taking forever to acquire any short of mileage worth writing home about. When shopping for a travel rewards credit card, you need to make sure that you are getting the most out of it. Some offer more miles on certain types of purchases, while others don’t. You need to be sure that you are actually getting miles out of the credit card and not just sitting around waiting for miles to collect dust.
How much is the yearly and sign up bonus?: One of the big advantages to a travel rewards credit card are its bonuses. Sign up bonuses can sometimes lend round trip plane tickets instantly. Yearly bonuses can add a boost to your mileage collection when you least expect it. If a card offers no bonuses for signing up but has a steep annual fee, you have to wonder what are the perks of the card besides the miles that you receive on purchases.
Will I even be able to cash in these miles?: Some travel rewards credit cards offer miles for a specific airline. You also want to be careful when you select a card based on the airline that it will give you miles for at the end of the day. If a card is giving you American Airlines miles but you live a city with very few American Airlines flights that might be a hard card to take advantage of in the end. Also, you need to research just how hard it is to cash in your miles with these airlines once you get them. Do the math and figure out how much you will need to spend to get a round trip ticket domestically and internationally.
Can I afford the interest rate?: Sometimes we look at these travel rewards credit card offers with rose colored glasses. We become clouded by the fact that they are going to give us that trip to Tahiti that we forget to check what price we will pay in interest payments. Just because it is a reward credit card doesn’t mean that you should overlook the practicalities and penalties of acquiring another credit card.
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