Are travel credit cards worth it?
Key takeaways
- Travel credit cards are best for folks who can maximize their perks, redeem points for high value and don’t mind paying an annual fee.
- It’s important to pay off the balance on a travel card, as any interest you accrue will outweigh the value of your rewards.
- Those who don’t mind traveling in the off-season for better award availability can benefit from travel credit cards, while travelers who prefer peak-season travel might appreciate the flexibility of a cash-back credit card.
If you’ve ever wanted to travel like “the other half,” a travel rewards credit card can be the key to opening up an unparalleled world of luxury travel opportunities. Between the perks and value of travel rewards, these cards can make traveling in style much more attainable than your average cash back credit card.
Travel rewards cards typically earn more points on travel purchases and everyday spending categories like restaurants and supermarkets. They also provide valuable purchase and travel protections, giving you extra peace of mind and saving you money on travel insurance).
Over the past 12 years, I’ve saved thousands of dollars on travel expenses, either by redeeming points from my travel rewards cards or by taking advantage of their travel protections. It’s why I keep paying the $95 to $595 annual fees on these cards — for me, the benefits far outweigh the costs. But that’s not the case for everyone.
Many travel rewards cards have high annual fees and benefits that may be hard to maximize depending on how you travel. To help you figure out whether travel credit cards are worth it, we’ve put together this comprehensive guide. Here’s everything you need to know to decide between travel credit cards vs. cash back cards:
Travel credit card user vs. cash back card user
Travel credit cards provide tremendous flexibility and value. The points from these cards can usually be transferred to airlines and hotel programs, or they can be redeemed towards travel purchases and cash back.
With cash back cards, you can redeem rewards for anything: Statement credits, purchases or travel expenses. The downside? The rewards are worth a set amount, without the option to transfer them to airlines and hotels for elevated value. There are exceptions, but this is generally the case.
That being said, cash back has numerous advantages. You’re not restricted to redeeming your credit card rewards with a limited set of transfer partners. You’re also not limited by blackout dates and award inventory restrictions. The ability to redeem your cash back for any expense (travel or otherwise) is hugely beneficial. In some cases, it even works out more favorably than redeeming points.
To give you a better idea of which card type might be best, let’s consider the average American’s spending habits. The average annual expenditures for Americans in 2023 was about $77,280 in expenditures, according to the Bureau of Labor Statistics (BLS) Consumer Expenditures report. Of this amount, let’s say around $28,101 could reasonably be charged to a credit card.
If you put these expenses on a 2 percent cash back card like the Wells Fargo Active Cash® Card, you’d earn $562.02 in rewards.
Putting these expenses on a popular travel rewards card like the Citi Strata Premier℠ Card could generate 53,711 points. These points are worth just $537.11 when redeemed as cash back or statement credits. However, if you transfer these points to a Citi ThankYou transfer partner, you can get much more value out of your rewards. At the time of writing, here are some transfer partner deals you could snag based on your available points:
- Air France/KLM Flying Blue: A one-way business class ticket to Europe.
- Turkish Miles&Smiles: Three one-way economy class tickets to Hawaii on United Airlines.
- Virgin Atlantic Flying Club: Up to five one-way economy class flights between the East Coast and London.
- Wyndham Rewards: Up to seven nights at a Wyndham hotel property.
Citi frequently offers transfer bonuses to partners like Virgin Atlantic Flying Club and Flying Blue. So you can redeem fewer points and stretch your rewards further. If you’re keen to do the legwork, then a travel rewards card can help you stretch your rewards further. However, if you prefer to use your rewards at a flat rate, then a cash-back card is king.
Most valuable travel card benefits
Ideally, a travel card’s rewards and benefits would make up for the annual fee. But Garrett Yarbrough, a credit cards expert and writer at Bankrate, stresses the importance of actually using your benefits:
A premium card may carry hundreds of dollars worth of annual credits and travel perks, but these perks are worthless if you can’t take advantage of them — or they take more effort to utilize than it’s personally worth to you. For instance, a complimentary Delta Companion Certificate is one of the most coveted travel perks and could be worth hundreds of dollars in airfare. However, it’s worth $0 if you never fly with Delta or another person.— Garrett Yarbrough, Bankrate credit cards writer
After years of reviewing and using credit cards, Yarbrough recommends looking for cards with complimentary airport lounge memberships, travel credits, travel insurance and expedited airport security screening service credits.
Here’s a look at some of the most valuable travel card benefits you can find on the market:
Cardholders who benefit most from travel cards
Travel rewards cards are ideal for people who have good credit and pay off their balance every month. These cards tend to have high interest rates, and accruing interest will outweigh the value of your points or miles. About who would benefit most from travel cards, Yarbrough gives the following advice:
A travel card would be a perfect fit for frequent flyers and hotel guests, business travelers and students studying abroad. Depending on the individual card features, a travel card could also provide plenty of value if you drive, commute or use rideshares a lot. But it’s also important to consider whether a travel card might eventually be valuable to you — even if you’re not traveling much at the moment.— Garrett Yarbrough, Bankrate credit cards writer
Here’s a look at the cardholders who benefit most from travel rewards cards:
Frequent travelers
People who travel often will have the chance to maximize travel card perks.
Consider the co-branded Hilton Aspire Card. It carries a $550 annual fee but comes with benefits like an annual free night, top-tier Diamond status and travel credits. A frequent Hilton traveler would have no problem justifying the annual fee.
Those who don’t travel often may not redeem the free night or tap into benefits. In fact, loyalty programs often count on this to stay profitable.
Aspirational travelers
If you’ve ever scrolled through Instagram travel posts and thought, “I want that experience — without the price tag,” then a travel credit card may be a good fit for you. You can start travel hacking and redeem points for a dream destination, first-class flight or five-star hotel stay.
No travel hacks will result in truly free travel — you’ll still have to spend money to go on the trips you want, whether that’s fees and taxes from booking trips or spending on your card to get points in the first place.
Small business owners
Small business expenses can earn a stash of points with the right travel card, especially if that card doubles as a business credit card. Plus, if you travel for work, you’d be better off with a card that makes traveling as comfortable and convenient as possible. Perks like elite status with airlines and robust airport lounge access can make all the difference on a business trip.
Big spenders
Some travel cards offer annual spending bonuses for big spenders. Rewards could include additional levels of airline and hotel elite status, free hotel nights and companion passes. These perks can be worth hundreds, even thousands, of dollars in value every year.
Juggling large amounts of spending across multiple travel cards can be challenging. You don’t want to accrue interest on a balance or miss a payment, so be sure to track your cards closely and set account alerts to help you manage payments.
Is a travel rewards card right for you?
A travel rewards card is probably right for you if you want to — you guessed it — use points for travel. But while some cardholders can benefit from travel cards, others might be better off with one of the best cash back cards.
Here are some questions to ask when deciding whether a travel card is worth it for you:
What are your travel goals?
Are you looking to book aspirational travel, or do you prefer roadtripping and sleeping in a tent? The annual fee, luxury perks and redemption options of a travel card tend to be best for high-end travel.
Does a travel card match your spending habits?
“You can maximize the rewards you earn by picking at least one card that earns more than 1X points or miles on some of your biggest purchases,” Yarbrough explains.
Just make sure the value of your rewards is higher than the annual fee, and that you can pay off the card balance each month. If you’re only putting a few hundred dollars a month on your travel card, then a cash back card or a no-annual-fee card might be a better fit.
What transfer partner options do you want your card to have?
You’ll usually get more bang for your buck (or rewards) by booking with one of the card issuer’s transfer partners for more than one cent per point or mile. However, not everyone wants to research award availability across multiple airlines and figure out how to maximize their points. For those folks, a cash back card might be a better option.
For my money, Chase Ultimate Rewards cards offer the best travel perks, rewards opportunities, redemption options and transfer partners. The Chase Sapphire cards can redeem points at up to 1.5 cents apiece toward Chase Travel℠ purchases and at 1 cent each for cash back and most other options.— Garrett Yarbrough, Bankrate credit cards writer
Are there cheaper alternatives you should consider?
Just because a card is loaded with perks doesn’t mean it’s the best option out there. For example, the Amex Platinum Card comes with luxury benefits for a $695 fee. But if you don’t maximize the benefits, you may be better off with the American Express Green Card®* for a $150 annual fee or even a card with no annual fee.
The bottom line
If you’re earning enough points with a travel rewards card and using that elite status, free night or companion pass, then it’s probably worth paying an annual fee. But if a travel card is collecting dust in your wallet or you’re overspending to earn incentives, it may not be worth it.
Furthermore, if you don’t want to learn the ins and outs of loyalty programs to figure out the most high-value redemptions, you might be better off with a cash-back card. You’ll enjoy flexibility in redeeming rewards without the steppe annual fee.
Analyzing your spending habits and travel plans will help you decide whether a travel card is right for you.
*The information about the Chase Freedom Flex®, United℠ Explorer Card, Hilton Honors American Express Aspire Credit Card, The World of Hyatt Credit Card, IHG One Rewards Premier Credit Card and the American Express Green Card® has been collected independently by Bankrate. The card details have not been reviewed or approved by the card issuers.
