Travel Credit Cards
Travel Credit Cards: Hassle-free travels
If you are a frequent flyer then travel credit cards can help you avail discounted airline tickets, rent cars for free and even stay at hotels at a discount! These types of cards are best for people who travel extensively as the card necessitates substantial usage before you can rake up the minimum rewards. Just think of all the befit that one of these credit cards could offer you. However, like any credit card, there are some things that must be considered before obtaining one.
What's the catch?
In the world of business, every good thing comes at a price. It’s the same with travel credit cards. While they may promise you the world – free airline tickets, double reward points, and miles, even free car rentals, etc. – they will more than recover these costs. How? Through increased interest rates and Annual fees. While most competitively priced regular credit cards are offering low-interest rates and zero annual fees, the travel credit card charges unusually higher than even average! This is to recover the costs of giving away miles and points for free.
Three things to look out for
If you’re planning to get a travel credit card, make sure you watch out for these 3 things:
1. Airline sponsored cards:
These cards are associated with one particular airline. This makes it easy to plan travel routes while also getting significant savings while using the card. This is especially useful if the airline has a major center in your city.
2. Bank-sponsored travel card:
These cards are meant for multiple airlines and help if there is no central hub of any particular airline in your city. Another benefit of these cards is that the minimum mileage points needed are significantly lower than the airline sponsored cards.
3. Check the offers:
No matter if its an airline sponsored or bank-sponsored card. You need to check out some of the salient features of the travel card. Only if these conditions are met, can you consider it to be a good deal:
- Expiry date of mileage: Some cards will provide mileage with no expiration attached. Others will offer an expiry term of up to 5 years or more. However, if you do not travel very often, having an expiry date associated can mean losing out on redeeming the miles.
- Low interest: Many travel credit cards will offer a low rate of interest – sometimes even 0%! However, this is during the holiday season or some festival season. Always make sure to check the default rate and the duration of the promotional period.
- Annual fees: Almost every travel credit card is going to carry an annual fee with it. That’s so as to recover the costs of free miles and rewards points. However, just in case a card offers a zero annual fee, it will usually be only for one year. After this, it’s back to the default fee.
- Minimum miles: In the earlier days, you needed to travel a lot and spend a lot on the card before you could earn the minimum amount of points. However, nowadays banks have relaxed the limit a bit.
4. Eligibility criteria:
Be sure to check the criteria needed to qualify for a travel credit card. Usually, you will need an annual income of at least 15000 USD as well as a good credit rating. If the entry criteria are too stringent, chances are you may not qualify for the card.
5. Payment in full:
Most of the time, a travel credit card will require you to pay the amount in full. This means you need to have enough money at hand to be able to pay off the outstanding balance in full. If you make a part payment, your account might suffer delinquency. That could, in turn, impact your credit score.
Credit cards can be a useful tool if used wisely. However, all too often they are abused and debt spirals out of control. My advice is simple. Never charge more than you can afford to pay at the end of the credit card payment cycle, and follow the terms of the card. If you do that then you should stay ahead of the game. That means NO interest, and still reaping the benefits of the card.
All in all, there are a lot of terms and conditions associated with travel credit cards – just make sure you’re aware of them.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2019 Jason Nicolosi