THE BEST TRAVEL CREDIT CARDS FOR EARNING MILES AND POINTS
People use credit cards to pay for everything. Travel credit cards offer free points that can be redeemed for airfares, hotels or cold hard cash. In the competition to get customers, credit card companies entice consumers with sign up bonuses, loyalty points, special discounts, and more. Their desire to get you, the consumer, is really your gain.
It’s hard to know which card is the best out there. There is no perfect travel card – they all offer different benefits that fit different people. What follows is very Americacentric.
WHAT TO LOOK FOR in a TRAVEL REWARDS CARD
A huge sign-up bonus. Most of the time, the points are worth at least a free domestic flight. Don’t sign up for a card that doesn’t give at least 30,000 points.
Points per dollar. Most credit cards offer one point for every dollar spent. However, the good credit cards will give you extra points when you shop at specific retailers, or, if it is a branded credit card, with a particular brand. This will help you earn points a lot quicker. You want the ability to get two or three points for every dollar spent.
Low spending minimum. In order to get the great bonuses, there is usually a required minimum spending. Ideally, you want to be able to get the bonus using your normal, day to day spending. Try cards that have a spending requirement of less than $1,000 USD.
Individual Perks. Many will give you elite loyalty status or other extra perks to earn points faster, free upgrades or priority benefits. They encourage loyalty. Some give extra miles for opening bank accounts or shopping at advertised brands.
Annual fees. No one likes paying annual fees for credit cards. Many of the fees for company branded credit cards range from $50-$130 per year. I pay an annual fee and for those who travel a lot and fly a lot, it is worth it to get a card with a fee. Fee-based cards tend to give you a better rewards scheme, where you can accumulate points faster, get better access to services and special offers, and get better travel protection like trip cancellation, baggage loss and medical coverage. With these cards, you will save more money on travel than spent on fees.
Foreign conversion fees. The majority of credit cards charge a 3% fee when you use them overseas. Credit cards give a good exchange rate but paying a fee every time is expensive. The best card for avoiding foreign fees is the Capital One No Hassle Card (this card has none). You get some rewards (one point for every dollar spent) with it but the rewards structure is really, really awful. Between this card and my Charles Schwab ATM card, you never pay any bank fees when traveling outside the United States. Some other good cards that don’t have overseas fees are the American Express Platinum card, United Mileage Plus Card, and the Chase Sapphire Preferred or Ink Cards.
WILL THIS HURT YOUR CREDIT?
While it’s true that “churning and burning” i.e. opening an closing a lot of credit cards at once can hurt your credit, applying for a few credit cards over a period of time won’t kill your credit score. Your credit score will slightly dip every time there is an inquiry into whether that is a credit card or home loan or car loan. But so long as you space out your applications and maintain good credit, you won’t find any long-term damages to your credit. Your credit rating rises over time as long as you maintain it.
NOT SURE IF YOU QUALIFY?
Earning miles and points in bulk relies on credit cards with big sign-up bonuses. That requires an excellent credit rating. If you have bad credit, no credit, or are simply rebuilding your credit, it is difficult to obtain these cards.
First, break down how your credit score determined. If you want to be accepted,
you need to know your credit history and to continue earning miles and points in
the future, it is critical to maintain healthy and strong credit.
Understanding Your Credit Score
FICO (ifico.com) is used by U.S. lenders to decide whether to offer you the best interest rates, loans, rebates & premium credit cards. A FICO score comes from both positive and negative information about your credit. Five categories are used in your FICO score. Factors such as limited credit history can put emphasis on particular categories so it can vary slightly.
1. Payment History (35%) – The first thing lenders want to know is if you have made your past credit card payments on time.
2. Amounts Owed (30%) – Having multiple credit accounts open and owing money does not necessarily mean you are a high-risk borrower with a low FICO Score.
3. Length of Credit History (15%) – The longer your credit history the better – as long as it is a good history. FICO will look at the age of your oldest account and how long it has been since certain accounts have been used.
4. Types of Credit in Use (10%) – This score will look at all the types of credit in use – credit cards, retail accounts, loans, and mortgages.
5. New Credit (10%) – Opening several credit accounts in a short period of time represents a greater risk – especially for people who don’t have a long credit history.
If you have been denied for a travel credit card that you want, find out why. Don’t speculate or keep applying without learning the details. Knowing your credit history is the first step to being accepted for all of the best travel credit cards. A three-month trial with FICO costs $4.95. After that it is $14.95 per three-month period.
What Is A Good Credit Score?
FICO’s scoring system is between 300-850. Good credit is usually over 700. Credit scores ranging between 720-850 usually won’t matter too much when applying for credit cards – you will likely be accepted without any issues. Scores in the mid-600s to the high-600s can be approved for great travel credit cards. There is not a magic number you need to reach and the threshold for credit companies is not public anyway.
Does Applying For Credit Cards Hurt My Credit Rating?
Many people make a common mistake of applying for cards over an over despite repeated denials. Applying for a new card will only lower your score 2-5 points. This is small when the total is out of 850 but FICO still considers this “risky.” Many people do have success opening multiple cards at once and earning hundreds of thousands of miles in a couple of months. Those minor hits will rebound quickly as long as you maintain healthy credit. However, if you are rebuilding credit this is not the best plan.
Repairing And Building Credit
Once you find out your score from FICO it is time to start building your credit again. This will take some time but will be very rewarding in the end.
Credit Cards To Build, Repair, Or Rebuild Credit
These cards may not be your first choice and the card you need may vary depending if you are a student with no credit, or someone looking to rebuild or repair their credit. Secured cards are a great way to establish or rebuild your credit history. Unlike prepaid cards, secured credit cards give you a credit line. This means your payment activity will be reported to all of the major consumer reporting agencies. Until you have established good credit, apply for some of the cards that don’t offer all of the travel rewards. Build your credit and track it on FICO and soon enough you will be able to apply for the best cards and start travel hacking with credit cards. USAA Secured Platinum American Express Card is one card to start with.
TRAVEL HACKING WITHOUT CREDIT CARDS
There are a lot of way to earn miles without credit cards: dining programs, Netflix promos, shopping portals, paying your utilities, car rentals, hotels, and many more. Take advantage of mileage offers when you can. Depending on where you live will determine the number of airlines you have access to. Sometimes it is better to pay for a dirt cheap fare than redeem miles on an airline you fly a lot. Travel hacking is more than miles and points, it is about saving money.
HOW TO CHOOSE A TRAVEL CREDIT CARD
To answer that question you need to think about why you want to use the card. Are you interested in loyalty to a brand, free rewards, or avoiding fees? Do you want to milk the rewards and bonus system to get free flights or do you just want a card that won’t charge you a fee for using it at that restaurant in Brazil? Is elite status the most important perk for you? Start with a goal and get the two or three cards that help you reach it. You’ll never run out of cards, always be flush in frequent flier points and travel for free. Cards and promotions change constantly so review each individual card. These cards are all American.
1. Chase Sapphire Preferred Card. Earn 40,000 points when you spend a total of $4,000 in the first three months as well as a one-time bonus of 5,000 points when you add the first authorized user (that’s $500 in travel when you redeem through Chase Ultimate Rewards™). Earn two points per every dollar spent on travel and dining at restaurants and one point for every dollar spent on other purchases. These points have a 1:1 transfer rate, enabling you to transfer them to leading frequent travel programs and hotels for their full value. Chip-enabled for enhanced security, has no foreign transaction fees, and has a $0 introductory annual fee for the first year ($95 after that). The 40,000 sign-up bonus can be transferred to airlines. This is a good card to use when overseas.
2. Starwood Preferred Guest from American Express. If you travel for business a lot in the United States, getting a hotel card has advantages and this is the best of them. You can earn up to 30,000 bonus points when you get the card (10,000 after your first purchase, 15,000 more after you spend $5,000 in 6 months) as well as a 20% transfer bonus when you move 20,000 to over 30 participating airlines. In addition to hotel points, free stays, discounts at other retailers, there’s no annual fee the first year ($65 per year after that).
3. American Express Premier Rewards Gold Card. For every dollar spent on a Premier Gold card, you are able to earn either one, two, or three Membership Points, depending upon the purchase (2x points on groceries and gas and 3x points on airline flights). Earn a one-time bonus of 25,000 points if you spend $2,000 within the first three months and a $0 intro fee for the first year of this card. Points can be redeemed for a large variety of products and services at over 500 participating brands. You are able to transfer these points at any time to a number of American Express’s other rewards programs. Highly recommended.
4. American Express Platinum Card. With an annual fee of $450 this card isn’t cheap but it comes with some great perks: a priority lounge pass and $200 annual credit that can be redeemed on flights. It also will reimburse the $100 global entry application fees. 25,000 mile sign-up bonus and high-end rewards make this card for serious travelers.
5. Gold Delta SkyMiles Credit Card from American Express. Earn 30,000 miles after $1,000 in the first three months. The annual fee is waived the first year. Check your bags free on all Delta flights.
6. US Airways Premier World MasterCard (from Barclaycard) presently comes with 40,000 Dividend Miles after first purchase, setting it apart from many other credit card offers that require thousands of dollars of spending to earn bonuses. Though the card carries an $89 annual fee that is not waived the first year, it offers an impressive array of perks and benefits, including free checked bags, a yearly $99 companion pass (good for up to two guests), discounts on US Airways award redemptions and more.
The card itself will transition into the American Airlines AAdvantage MasterCard from Barclaycard in 2015, and while your account may survive into the new year, some of the existing benefits will not. As of 2015, the following benefits will no longer be available: Annual $99 companion pass, First Class check-in, free annual club pass and $75 discount toward US Airways Club membership, 5,000 mile rebate for US Airways award redemptions, 10,000 Preferred Qualifying Miles after $25,000 in spending on eligible purchases. The news isn’t all bad, as some new benefits will be introduced: 10% discount on award redemptions, 25% off in-flight purchases, annual $100 flight discount after $30,000 in spending on eligible purchases, one-way and upgrade redemptions
7. Citi Platinum Select / AAdvantage World MasterCard. Earn 30,000 AAdvantage miles with $1,000 miles in the first three months. Other perks include first bag checked free, Group 1 boarding, and $100 American Airlines flight discount annually.
8. BankAmericard Travel Rewards Card
Offering 1.5 points for every dollar spent, the BankAmericard offers more points and less restrictions than most any other travel rewards card available today. One-time bonus of 10,000 points if you make at least $500 worth of purchases in the first 90 days. Anyone with a Bank of America checking or savings account can earn an additional 10% bonus points on every purchase, making this an especially lucrative card to consider if you are already a Bank of America customer. Number of travel rewards with no blackout dates, the BankAmericard offers 0% introductory APR for the first twelve billing cycles.
9. Barclaycard Arrival Plus World Elite Card
Earn two miles per dollar spent. Plus every mile redeemed through the program comes with a 10% bonus giving 2.2% rewards. It comes with a large bonus of 40,000 miles if you spend $3,000 within 90 days of first opening your account. Also: $0 first year fee, $0 foreign transaction fee, and pin and chip technology that renders the card safe and secure.
10. Capital One Venture Rewards Credit Card. This card is as simple as it gets. Earn two miles for every dollar spent on every purchase and redeem them for free flights. Earn a 10,000 mile sign-up bonus after a $1,000 minimum spend. Also offers a one-time bonus of 40,000 miles if you spend a total of $3,000 in the first three months. These miles never expire and there are no blackout dates. There is no annual fee the first year and it is $59 after that.
MORE GREAT CREDIT CARDS
1. Barclay Arrival Mastercard. You aren’t going to earn points and miles the same way you will with some of these other cards but you will receive great perks. Earn $400 cash back on travel purchases (hotel and airlines) after spending $1,000 in 3 months. You will earn 40,000 bonus miles that really equals $400.
2. British Airways Visa Signature Card. Earn 50,000 Avios with a low minimum spend of $2,000 in the first three months. You can earn up to 100,000 Avios a year with this card..
3. United Explorer Card. Earn 30,000 Mileage Plus miles after a $1,000 minimum spend. You can earn an additional 5,000 miles by adding another user to the card. Other perks include first bag checked free and no foreign transaction fees.
4. Chase Freedom Card. Earn 1% cash back on every purchase you make, and 1.5% cash back on products bought from certain restaurants and retailers. Beyond this, however, Chase offers the ability to earn 5% cash back on various rotating categories that change with each quarter. With no annual fee, rewards that never expire so long as your account is open, and 0% APR for the first fifteen months, it is popular.
5. Discover It Card. Offers many of the same benefits and advantages of the Chase Freedom card: no annual fee, no overlimit fee, no foreign transaction fee, and paying late won’t raise your APR. Like the Chase Freedom card, the Discover it card allows you to earn 5% cash back on categories that rotate quarterly, as well as 1% cash back on all other purchases. Very high levels of security.
6. Citi Double Cash Card. Earn 1% cash back on every purchase at the time the purchase is made as well as an additional 1% once you pay them off. Can be redeemed in either the form of a gift card, credit, or a check sent through the mail. Along with a high cash-back earnings potential, the Double Cash card also offers 0% APR for purchases made in the first fifteen months and then a relatively low APR of 12.99% – 22.99% for every purchase after this date.
7. American Express Blue Cash Preferred Card. If you spend a lot of money at the grocery store then the Blue Cash Preferred card is the best choice for you. Every time you purchase groceries on this card, earn an impressive 6% cash back and 3% cash-back on gas station purchases. Along with these rates, you will be able to receive a one-time bonus of $150 after you spend $1,000 within the first three months. The Blue Cash Preferred card has a $75 annual fee, and while there is a version of the card that has no annual fee, the cash-back rates of the Blue Cash card make it the better option of the two.
8. American Airlines Citi Card. Loyal to American Airlines? Get their credit card. You get up to 30,000 bonus miles when you sign up, priority access, and free checked bags.
9. United Mileage Plus Chase Card. Loyal to United? Get their credit card. You get with 30,000 bonus miles after you spend $1,000 in the first 3 months, free checked bags, no foreign transaction fees, priority boarding, and two United club passes. There is a $0 intro annual fee for the first year, then $95 each year after.
10. Chase Ink Bold. The best business card to have. You earn 50,000 bonus points after you spend $5,000 in the first 3 months. You can earn 5X points per $1 on the first $50,000 spent annually at office supply stores, and on cellular phone, landline, internet, and cable TV services. There’s no foreign transaction fees, you can transfer the Chase points to various travel partners and the $95 fee is waived the first year.
11. The Hawaiian Airlines® World Elite MasterCard®. 35,000 points sign-up bonus plus a 50% companion ticket. Use for domestic flights, as they partner with lots of airlines. It’s worth keeping in your arsenal.
HOTEL TRAVEL CREDIT CARDS
1. Starwood Preferred Guest Credit Card from American Express. This card is already listed above but it is a great card for hotels as well as airlines. Earn up to 25,000 points. 10,000 points after your first purchase and 15,000 more points after you spend $5,000 in the first 6 months. No annual fee the first year and $65 after that.
2. Starwood Preferred Guest Business Credit Card from American Express. Earn 10,000 Starpoints after your first purchase on the Card and another 15,000 after you spend $5,000 in purchases on the Card within the first 6 months.
3. Marriott Rewards Premier Credit Card. Earn 50,000 bonus points after spending $1,000 in your first 3 months from account opening.
4. Citi Hilton HHonor Reserve Card. This Visa earns you two weekend nights at any Hilton property and automatic Hilton Gold status. No foreign transaction fees.