A Beginner’s Guide to Travel Points Credit Cards

Whether you’re looking for a lower cost way to satisfy your wanderlust or you want to offset the cost of your next family vacation, a travel points credit card is a great tool to have in your wallet. Use your credit card enough, and you can stash away enough points to cover the cost of your next trip. Here’s what you need to know about using travel points credit cards.

How to Earn Rewards

Travel credit cards all have different rewards structures, but they have one thing in common—you earn points or miles for making purchases. Knowing your card’s rewards structure is key to maximizing your rewards. Many travel credit cards pay higher rewards on travel purchases and a base rewards rate on all other purchases. For instance, a card may pay three points for every dollar you spend on travel purchases and one point for every dollar you spend on all other purchases.

Tip:

Some cards have a flat-rate reward structure, e.g. two points for every dollar you spend on all purchases. The flat-rate rewards structure is a better option if you want a simpler way to earn rewards.

You can maximize your rewards by using your travel card primarily for purchases in the categories that pay a higher rewards rate and using another rewards card that pays a higher rate on in other categories. But if your goal is to earn travel rewards as quickly as possible, you can speed up the process by using your travel points credit card for all purchases—even bills, as long as there’s no additional fee.

Bonus for New Customers

Many travel points credit cards pay a one-time, lump-sum sign up bonus. Earning the bonus is fairly simple—spend a minimum amount on purchases in the first few months of opening your credit card and you automatically receive the bonus. For example, a credit card may offer 50,000 bonus points after you spend $3,000 on purchases in the first three months of opening your credit card. While the spending amount and bonus points vary by credit card, most credit cards give you three months or 90 days to earn the bonus.

Important:

Balance transfers and cash advances typically don’t count toward the signup bonus. Credit card issuers also require a minimum net spend, meaning returns or refunds will be deducted from your purchases amount.

Combining With Other Loyalty Programs

Most airlines and hotels have loyalty programs that give you points each time you fly or book a hotel stay. Some credit cards even allow you to transfer your travel rewards to airline and hotel partners, meaning you can more quickly earn free travel or even loyalty status. Even if your travel rewards credit card doesn’t have hotel or airline transfer partners, you can still strategically book travel to maximize your credit card and loyalty rewards.

For example: You can use your card to book all your air travel with the same airline, and you’ll not only rack up credit cards rewards, you can earn frequent flyer miles with that carrier. Then you could potentially pay for a flight with the airline rewards you’ve earned and redeem your credit card rewards for another portion of the trip, like lodging or a car rental.

Biggest Credit Card Fees to Watch For

Many travel points credit cards come with an annual fee, but fee isn’t necessarily a dealbreaker. Whether you choose a credit card with an annual fee depends on if you’re able to earn enough rewards to offset the annual fee and still benefit from the credit card. Some light spenders will be better off choosing a credit card that doesn’t charge an annual fee.

If there’s an international trip on your bucket list, look for a travel points credit card that doesn’t charge a fee on foreign transactions. This will save you the typical 3% surcharge on purchases you make in a non-U.S. currency.

Qualifying for the Best Credit Card

To qualify for the best travel credit cards, you’ll typically need to have a good credit score. So before you shop around, it helps to know your credit standing to have an idea of the type of credit card you can qualify for. You can check your credit for free using a tool like Discover’s FICO Credit Score Card or Credit Karma.

You should also regularly review your credit reports—that’s what your credit scores are based on. Everyone is entitled to a free credit report every year from each of the three major credit reporting agencies, which you can get by visiting AnnualCreditReport.com. See if there’s any inaccurate information that’s potentially hurting your credit score. You can dispute credit report errors by writing to the credit bureaus and providing any proof you have of the errors.

Note:

Cleaning up credit report errors can take a few weeks, but monitor your credit score in the meantime for upward movement.

Redeeming Travel Points

Once you’re ready to use your points for a trip, you’ll have several redemption options depending on your credit card. Some credit card issuers have their own online booking tool where you can make travel arrangements and use your points right away. You may even get a better redemption rate when you use your points with certain travel partners. However, you may have to book your trip around blackout dates and flight availability.

Other credit cards allow you to redeem your points as a statement credit toward travel purchases made on your credit card. That means you’ll have to book your travel first, then redeem the points.

In some cases, you can transfer your points between loyalty programs. Points don’t always transfer 1:1 between programs, so it may not be the strategy for making the most out of your rewards. Still, it’s nice to have the option if you need to combine points from different programs to fund your trip.