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Understanding Travel Credit Cards: A Guide by O1ne Mortgage

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding travel credit cards. For any mortgage-related needs, feel free to call us at 213-732-3074.

What Is a Travel Credit Card?

Travel credit cards are rewards cards that allow you to earn points or miles. There are three common types of travel credit cards, and the value of the rewards can depend on the card and the rewards program it’s part of.

General Travel Credit Card

General travel rewards credit cards are part of a card issuer’s rewards program. These programs often give you several options for redeeming your rewards:

• Book travel through the card issuer’s travel portal
• Offset travel costs paid with your card
• Transfer rewards to partner airline and hotel loyalty programs

Premium general travel credit cards have annual fees and come with travel-related perks, such as statement credits for Global Entry or TSA PreCheck, airport lounge access, and status in select partner loyalty programs.

Airline Credit Card

Airline credit cards are specific to one airline. You earn miles or points in the airline’s loyalty program when you use your card, and you can redeem them according to the frequent-flier program’s rules. Perks may include priority boarding, free checked bags, and discounts on in-flight purchases.

Hotel Credit Card

Hotel credit cards are specific to a hotel chain. You earn points in the loyalty program and can use them to book a hotel stay, upgrade your booking, or other options the program allows. Cardholders might receive status in the hotel’s loyalty program, which could include early check-ins, late check-outs, free upgrades, and dining credits.

Pros and Cons of Travel Credit Cards

Travel credit cards are popular, but they may not be right for everyone. Here are some pros and cons to consider:

Pros

• Lower travel costs: Benefits like free checked bags can save you money.
• Enhanced travel experience: Perks like airport lounge access and loyalty status can make travel more pleasant.
• Travel insurance benefits: Coverage for trip delays, cancellations, lost bags, and medical emergencies.

Cons

• Annual fees: Many travel credit cards have annual fees, which can be high for premium cards.
• High credit score requirement: You may need a good to excellent credit score to qualify.
• Restrictions: Airline and hotel cards are best when you regularly book with the same company.

Is a Travel Card’s Annual Fee Worth It?

Annual fees can range from around $50 to over $500. Whether the fee is worth it depends on whether you can afford it, get value from the card’s benefits, and have the time to manage the card’s perks.

Should You Get a Travel Credit Card?

Consider whether a travel credit card is a better fit than alternatives. For example, a cash back card might offer a higher rewards rate or lower annual fee. However, some travel cards let you transfer miles or points to partner loyalty programs, potentially offering more value.

How to Choose a Travel Card

Once you decide to get a travel card, narrow down your options to a general purpose, airline, or hotel card. Consider the following:

• Intro offers: A large intro offer can help jumpstart your rewards account.
• Rewards rates: Look for cards with bonus categories that align with your spending habits.
• Redemption options: Review the redemption and transfer options for good value.
• Cardholder perks and benefits: Assess the card’s value based on the perks you’ll regularly use.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make informed financial decisions.

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