While buying travel rewards credit cards, compare the best options to make the right decision. Refer to the website nextadvisor for travel rewards credit card analysis to make an informed choice.
Using travel rewards credit cards has become an easy way to collect extra flier miles and bonus points. Many credit card companies offer travel rewards to their customers as an expression of gratitude. It is also a strategy to encourage the credit card user to spend more to gain maximum points. This also ensures customer retention.
It is important that as a user, you are completely aware of the advantages and disadvantages of travel rewards credit cards before you buy them. With certain cards, you may be allowed to utilize these points not only for your traveling expenses, but also for buying gas, merchandise, etc.
However, many people lose track of their expenses and keep spending in order to gather points. However, beware, this could lead to huge bills or debt, and this can affect your credit score adversely.
Also, using your travel rewards is fine if you are traveling alone, but if you have a companion, you may not be able to accommodate him/her on the same flight or in the same hotel at the rates available. So, let us try to understand some more pros and cons of travel rewards credit cards.
Get points for each mile of travel
Travel rewards can help you get reward points for the number of miles you travel. If you are a frequent traveler owing to your job or business, you can imagine the number of points you can rack up that can be redeemed for tickets. This means that the vacation you were planning with your spouse, can be budgeted without paying for the extra flight ticket.
Earn extra points at the same cost
People who use their travel rewards credit cards to make purchases at hotels and airlines often get free flight and preferential room upgrades. If you choose their partner airline or a hotel of their choice, you may win double the points. Some cards allow you to transfer the accumulated reward points for buying merchandise, and offer a cash-back option.
Enjoy other benefits
Apart from the rewards in terms of points, you may also enjoy special access to airport lounges. Some cards also offer assistance during flight or luggage delays. If you have missed a flight, you may even be helped with a connecting flight or hotel accommodation.
You may even get special discounts on your hotel stays, luxury cruises, and flights. Other than this, some cards also offer reservation of ticket bookings for sports events, films, musical concerts, etc.
Rewards outweigh the fees
You may be charged an annual fees between USD 95 to USD 450 based on your card. When you calculate bonus points and rewards, mostly, they account for far more profit than the annual fees which you have to pay. Hence, you should resort to using travel rewards credit cards. It is worth noting that many travel rewards cards even waive off their fees.
Not suitable if you are a spendthrift
Some people have a habit of using the same card for a variety of daily expenses. If you are a spendthrift and plan to use your travel rewards credit card to pay for your other expenses, then most certainly, you will end up in debt.
Redeeming may take a long time
Remember that the purchases are not going to be equivalent to number of points added to your credit card. Hence, you will have to wait for a really long time before you can redeem those flying miles to buy an international air ticket. Don't be under the impression that you will get loads of points by buying a few air tickets or hotel stays.
Offers may have restrictions
Read the terms and conditions offered by the credit card carefully. Sometimes, there may be a validity period for redeeming the gathered points, and they may lapse if you fail to redeem them.
It may so happen that the card may promise you a certain percentage of rebate for every dollar you spend. However, in reality, this may be restricted to a total sum, for example: USD 1,500. This way, you will not be able to make too many points.
There are some cards that allow you redeeming points when if purchases are made at any hotels or airlines. Many times, you need to do specific purchases, like buying from designated hotel or airline, to redeem points or get bonus. You may not be allowed to redeem the rewards in peak periods of travel or holidays. These restrictions may not be in your favor.
Remember nothing comes for free
Exclusive travel rewards credit cards will offer excellent payouts and less restrictions. However, you will be surprised at the fewer points you will get in the bargain. While there are cards which offer frequent bonus points, some attract heavy annual fees. Some come with variable interest rates, which are initially less, but rise after sometime.
Greater rewards can mean higher APR
In all probability, if you are carrying a balance on your credit card, you will have to pay an interest to your credit card provider. Generally, credit card companies who offer more rewards also have a higher APR. So, wouldn't you rather prefer to have a credit card with fewer rewards than going for something that will charge you a higher rate of interest.
Always go for a card that comes with minimum or no annual fees. Firstly, not all credit card companies will adhere to their promise of giving you reward points. Secondly, because of blackout dates, redemption of existing points can become difficult. If you drive a lot, then opt for a rewards program which will allow you to redeem points at gas stations.
However, if you fly often, a rewards program with an airline will be far more beneficial. Also, compare the rewards points and fees to ensure that you are going to benefit from it. Now that you know about the pros and cons of travel rewards credit cards, hope you will make an informed decision.
Our verdict: If you are not a frequent flier but a frequent buyer, you do not need a credit card that offers travel reward points. Travel cards get fewer rewards, hence, if you have an option, go for a credit card that will offer reward points for making purchases.