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Why Credit Cards Have Replaced Cash
In the U.S. and much of Europe, cash has taken a backseat as credit cards dominate the financial scene. From purchasing high-end electronics to grabbing a quick coffee, credit cards are now the go-to payment method.
Credit card ads are everywhere—billboards, TV commercials, and online promotions. Your inbox and mailbox are probably overflowing with credit card offers, and despite requests to stop, they keep coming.
With hundreds of travel rewards credit cards available, choosing the right one can be overwhelming. Each card promises different benefits, welcome offers, and loyalty programs, making it tricky to identify the most valuable options.
Don’t settle for the first card you see or default to using a debit card. Instead, become a savvy traveler and use credit cards to earn free flights, travel perks, and hotel stays without spending extra money.
A Quick Guide to the Best Travel Rewards Cards
Pressed for time? Here’s a snapshot of top travel credit cards categorized by their best features:
Travel credit cards are a powerful tool for earning rewards that can be redeemed for airfare, hotel stays, or cash back. Credit card companies partner with travel brands or offer their own enticing cards to attract customers with welcome bonuses, loyalty points, and special discounts.
By leveraging these offers, you can earn substantial rewards, including free flights and hotel stays, or opt for cash back. Personally, I’ve amassed nearly one million points through welcome offers alone—there are so many, it would take a book to list them all!
As long as you can pay off your card balance each month, you can accumulate points and miles for free travel. The key is finding the card that aligns with your travel goals and budget.
How to Select the Perfect Travel Credit Card
Step 1: Understand That No Card Is Perfect
No single travel card fits all needs perfectly. Each card offers unique benefits suited to different lifestyles, budgets, and travel goals. I use various cards depending on my needs—American Express® for flights, Chase Sapphire Reserve® for everyday spending, and others for specific expenses like phone bills and business costs. Your ideal card depends on your personal goals and preferences.
Start by asking yourself: What are my travel goals? Are you loyal to a particular brand or seeking rewards flexibility? Do you want to earn points for free flights or avoid foreign transaction fees?
If you prefer versatile points that can be transferred to multiple airlines or hotel programs, opt for cards with transferable points. For hotel-specific rewards, choose hotel-branded cards. If cash back is more your style, consider cards like the Capital One Venture Rewards Credit Card.
Identify what matters most to you and then find a card that matches those needs. This focus will help you maximize rewards and make the most of your travel credit card.
Step 2: Key Features to Look for in a Travel Rewards Credit Card
Navigating credit card options can be daunting. Here are six crucial factors to consider when choosing a travel rewards credit card:
- Generous Welcome Offers: Look for cards with substantial introductory offers. Typically, you’ll need to meet a minimum spending requirement within the first few months to unlock these bonuses. Welcome offers can range from 40,000 to 100,000 points, often giving you a significant boost toward free flights or hotel stays.
- Low Spending Minimum: Aim for cards with reasonable spending thresholds to qualify for the bonus. I recommend cards with minimum spending requirements of $1,000–3,000 within three to six months. Avoid cards with thresholds that exceed your typical spending capacity.
- Bonus Categories: Choose cards that offer extra points for spending in specific categories like travel, dining, or airfare. This can accelerate your points accumulation. For instance, some cards offer 3x points for travel and dining or up to 5x points for airfare.
- Valuable Travel Perks: Beyond points, look for cards with valuable travel benefits, such as:
- No foreign transaction fees
- Free checked baggage
- Priority boarding
- Complimentary hotel stays
- Lounge access
- Reasonable Annual Fees: Many travel cards come with annual fees ranging from $50 to $95. These fees often provide better rewards and benefits. Premium cards with higher fees may be worthwhile if their benefits exceed the cost.
- No Foreign Transaction Fees: Avoid cards that charge foreign transaction fees. Many cards now offer no foreign transaction fees, making them ideal for international travel.
Impact of Opening Multiple Credit Cards on Your Credit Score
Opening multiple credit cards in a short period can temporarily affect your credit score due to credit inquiries. However, if you space out your applications and manage your bills responsibly, the impact on your credit will be minimal. A good credit score is built over time, and maintaining low balances and high credit limits can actually improve your score.
Improving a Poor Credit Score
If your credit score is below 650, you might struggle with credit card applications. However, there are ways to improve your credit:
- Check Your Credit Report: Obtain a free copy of your credit report from AnnualCreditReport.com and review it for errors.
- Dispute Inaccuracies: Address any incorrect information with the credit bureaus.
- Consider a Secured Credit Card: These require a cash deposit but can help build your credit history.
- Become an Authorized User: Being added as an authorized user on someone else’s account can improve your credit score.
- Pay Bills on Time: Timely bill payments and reducing existing debt can boost your credit score over time.
While you may not get the best deals right away, persistence and smart financial management will eventually lead to better credit card offers and improved scores.
Final Thoughts
With so many travel credit cards available, the choice might seem overwhelming. However, by following these steps and focusing on your travel goals, you can find the best card for you. Don’t miss out on valuable rewards—apply for a travel credit card, start collecting points, and enjoy the benefits of free travel!
