Hey there, it's Ernest from Trip Astute.
Today we're reviewing a complex topic: travel rewards cards
(light chiming music)
One of the questions I get asked a lot is, "what is the best travel card for me?"
It's a tough question to answer because it really depends on a
lot of factors. In this video, we'll cover some of the questions you may want to
ask yourself to determine which card is right for you.
To start off, most travel reward cards have the following features:
Number one is travel benefits. Most of these cards have some kind of travel
benefit associated with them. Things like bag or trip protection are standard on
most of these travel reward cards. Number two is no foreign transaction fees. This
is a big one. It allows you to use your card abroad without racking up any
additional fees, which is usually charged to regular credit cards. Number three is
the EMV chip. This is now standard in the US, but has been the standard around the
world the past couple of years. It's basically the chip that's on the front
side of your card that allows you to pay for things without having to swipe. For
simplicity's sake, I basically break down travel cards into three major categories:
Number one is co-branded loyalty cards. Number two is flexible points program
cards. And number three is flat rate cards. We'll start with the co-branded
loyalty cards. These include cards that are generally associated with an airline
or hotel brand. There are basically credit cards for every major hotel and
airline brand out there. These cards allow you to earn points and miles which
you can then redeem for that brand. So, if you were to use the Hilton card and earn
points, you could then redeem the points for a stay at one of Hilton's many
hotels in their portfolio, which includes: the Embassy Suites, the Hampton Inn,
Doubletree Hotel, Garden Inn, etc. Examples of co-branded loyalty cards include the
Chase Southwest Rapid Rewards card, the Citi American Airlines AAdvantage cards,
the American Express Delta cards, the Chase Hyatt Rewards card, the Citi Hilton
HHonors card, the American Express Hilton Suprass card, and the US Bank Club
Carlson Rewards card. There are actually plenty more to list,
but those are just some examples. So what are some of the pros with these cards?
For one, there is simplicity in redemptions since you're focused on a
specific hotel or airline brand. It becomes less overwhelming than having to
consider all your options. Number two is great perks. These cards often come
with some pretty incredible perks. Things like late check-out, early check-in,
priority boarding, discounts on in-flight purchases, and lounge passes. Some will
even give you a special annual bonus like a free hotel stay or a companion
pass. These can be an incredible deal. And three: higher earning rates. You'll
typically get earn more points if you use a card with that specific brand. So
in the case of Hilton, if you have the Hilton card, using it at the Hilton will
earn you the most points. So what are some of the cons? With these cards, the
big one is the restriction on redemptions. You're basically limited on
where you can redeem your points and miles. While some of these cards will
allow you to redeem for non-travel items like gift cards or Amazon credit, it's
typically not a good idea in terms of value. You can also transfer the points
to other vendors, however, you're often sacrificing point value again by doing
so. So what type of traveler benefits from a co-branded loyalty card? One would
be travelers who go to the same destination and stay at the same place.
For example, someone who goes to Hawaii and stays in the same hotel every year.
Number two would be business travelers who are restricted on where they can
stay and what airlines they can use. Or three are folks who are looking for
loyalty status or specific perks, like the free night or priority boarding. So
what's my conclusion? I actually have a few loyalty cards that I don't use but
did I keep paying the annual fee. Why? Because I get perks like free nights
stays or priority boarding. For example, I have the IHG card from Chase which has a
$45 annual fee. Now I barely use the card. However, every year
they send me a annual free night certificate that I can
use at any IHG hotel. Last year, I used it for stay in Vietnam in a $400 a night
room. It was an incredible deal and it motivates me to pay the annual fee every
year. The next type of card that we're going to discuss is the flexible points
program card. These include cards that belong to one of
the following programs: the Chase Ultimate Rewards program, the American
Express Membership Rewards program, the Citi Thank You program, and the Starwood
Preferred Guest program. Examples of these cards include the Chase Sapphire
Preferred and Reserve card, the American Express charge cards including the
Platinum, Gold, and Green card, as well as the Everyday cards, the Citi Prestige and
Thank You Preferred and Premier card, and the American Express Starwood Preferred
Guest card. I did a separate video on the Chase Ultimate Rewards program and how I
maximize my points using a variety of Chase cards. You should definitely check
it out if you're interested in the program. It gives a fairly comprehensive
review of how I earn and redeem points in the program. These programs allow you
to earn points through a variety of cards and then allow you to redeem them
through multiple channels. The most popular being transferring points to one
of their airline or hotel partners. Since these points are flexible, you can redeem
them in a variety of ways, from full travel experiences like a cooking lesson
with a celebrity chef, to gift cards from major retailers. Some of these programs
even allow you to book travel through a portal, much like you would through
Expedia or Kayak, except that you can redeem points to pay for the trip. Though
much like the co-branded loyalty cards, you'll often sacrifice value if you
redeem it for non-travel items. One more note: the Starwood Preferred Guest
program is technically a hotel loyalty program, so you might be wondering why
I've lumped it into this category. The reason is even though it's
associated with a specific hotel brand, it has many of the features of a
flexible point program such as the ability to transfer points to airlines
with a bonus. I actually know several folks who use
their Starwood Preferred Guest card for rewards other than hotel stays. And
for a lot of folks, Starwood points are considered to be one of the most
valuable reward currencies out there. So what are the pros of using these cards?
One would be the multiple redemption methods. These points offer the most
flexibility when it comes to redemption options. For example, with the Chase Ultimate
Rewards program, I'll often compare the cost of booking an airline ticket
through the Chase portal versus transferring the points and booking
through the airline. I know that I can earn at least 1.5 cents per
point using the portal, so I'll compare to see if transferring gives me a higher
value. Another benefit are the multiple cards that can earn points. With the
exception of the Starwood Preferred Guest card, the other programs allow you
to earn points through multiple cards and accounts. This allows you to earn
points quicker. Another benefit is the bonus categories. These cards often have
bonus categories for certain types of spending like travel, dining, or fuel
purchases, allowing you to build up your points faster. And lastly, these cards
often have very strong travel protection perks. Perks like primary car rental
insurance, baggage insurance, global entry fee reimbursements, and lounge passes are
some of the valuable perks associated with these type of cards. So what are
some of the cons with these cards? One would be the confusing earning and
redemption structures. With all the options comes confusion. These programs
can be quite complex and definitely require a certain passion for
researching and understanding the various redemption options. Another
negative is the changing partnerships. It's not uncommon for some of these
programs to lose travel partnerships with certain companies. A couple years
ago, Chase loss Amtrak as one of its travel partners, so many folks were upset
that they couldn't redeem points for train travel. So what type of traveler
benefits from a flexible points program card? I would recommend these cards to
luxury travelers who are looking for top-tier benefits and high-end travel.
The second group of travelers that I would recommend this to are point & miles
collectors. These are folks who are looking to earn as many
points as possible through their daily spend and bonus categories. The third
type of traveler are folks who like a lot of options when traveling. These are
folks who value flexibility over simplicity. So what's my conclusion on
these cards? Well, I won't lie. These programs are my favorites and are
the ones that I spend the most time researching and building. Though keep in
mind that I'm a total nerd when it comes to this stuff.
The last category of cards are the flat rate cards. These cards earn points that
can be redeemed at a fixed rate for travel expenses. It's very similar to a
cash back card, but instead of getting cash back, you get reimbursed for travel
expenses. For example, you might book an airline ticket and then login to the
credit card website and use points to then clear the charge. Keep in mind that
these programs often refer to their points as miles which is different from
the miles that you might earn from a co-branded loyalty card. Since you can't
transfer the points to another program, these are really points, which can be
really confusing for new folks who are getting into this hobby. Some of the
popular cards in this category include the Barclaycard Arrival cards, the
Capital One Venture cards, the Discover Miles card, and the new US Bank Altitude
Reserve card. So what are some of the pros for this category of cards? One is
that they tend to offer general travel protections and perks. These cards tend to
have similar perks to other travel cards, including no foreign transaction fees,
global entry fee reimbursements, Wi-Fi passes, and many more. Another benefit is
the simple earning and redemption structures. Since you're dealing with
flat rate redemptions, it's easy to understand and utilize your redemptions.
And lastly, you'll earn loyalty points since you're purchasing the travel then
reimbursing yourself afterwards. You'll be earning points and miles from those
airline and hotel programs. So what are some of the cons? One is the lack of
redemption options. This actually might be more of a pro than a con to you. With
simplicity comes less options when redeeming points for travel. For example,
on some of my flexible point programs, I've been able to squeeze more than
three cents per point on redemptions. Granted, it took me a lot of time and
effort to maximize my redemption. So what type of traveler
benefits from a flat rate card? I would say these cards really appeal to folks
we're looking for simplicity when earning and redeeming points. Not
everyone wants to spend time researching how to maximize their point redemptions.
These cards offer a great way to get better than average redemptions on your
travel expenses. These cards are also very appealing to travelers already
invested in a flexible point program. These cards allow you to have another
option when covering miscellaneous travel charges. So what's my experience
with these cards? I think these cards are great. A lot of
my friends and family use these cards, and they seem to offer a good balance
between earning rewards and great perks for travel. The top cards in this
category have great benefits and I often use them to supplement my flexible point
program cards. An example is paying for smaller boutique hotels or train passes.
For those types of expenses, I will often use a flat rate card since it's the
easiest way to redeem points. Several years ago, I went to a convention and I
was eating at the hotel's restaurant for several days. What I found was that the
charges were marked as travel on my credit card since they came from the
hotel, so I could actually redeem points toward my meals even though they weren't
technically travel expenses. I was able to clear the charges with my Capital One
Venture card. So given all the options, which card is right for you? Well, it
depends, and I suggest asking yourself a couple of questions. One: how important
are the travel perks and benefits? If you're not planning to take advantage of
the travel benefits or perks, or already have a car that has all the travel
benefits that you need, it might make more sense to get a flat cash back card
that can get you two percent without an annual fee. That way, you can just take
the two percent that you get back and put it toward your travel savings. Examples
of these cards would be the Citi Double Cash card and the Fidelity Rewards Visa.
Number two is how invested are you in the points hobby?
If you're not looking to get too nerdy into credit card rewards, then I highly
suggest getting a flat rate card. Number three: how often do you travel? Many
flexible points program cards reward you for spending on travel expenses. However
if this isn't important to you, then I highly
suggest getting a flat rate card or a co-branded loyalty card. Number four: where
do you like to travel? if you like to travel overseas, then you're probably
better served with a Visa or MasterCard, rather than an American Express or
Discover. Number five: how do you like to travel? Do you prefer to travel in luxury? I
guess the question becomes would you rather spend your points on upgraded
travel or for more trips? Kind of a quality versus quantity question. If
you're someone targeting luxury travel, then you probably want a loyalty or
flexible points program card. For me, I'm in the latter category. I would rather be
able to go to more places than to travel comfortably with my points, so a mix of
flexible point program cards and flat rate cards works really well for me. And
lastly, what are the current promotions available? Credit card promotions change
all the time, but there are often incredible deals available. I suggest
doing a Google search before you actually apply for a card. Some of the
top bloggers will often post direct links to promotions that aren't shown on
the issuers website. It definitely pays to do some research before you apply.
Lastly, before venturing too deep into the world of credit card points, I highly
suggest that you take some time to organize your finances. I did a video on
this a while back called "Before starting the points hobby". I've included a link in
this video, and I suggest you watch it. This is an awesome hobby that's been
very lucrative to a lot of folks, but it's also an easy way to fall in the
hole if your finances aren't in order. What card programs do you like to use?
Please share your experiences with us. If you enjoyed this video and found it
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and you'll get notifications of any updates to our channel. Until next time,
travel safe and travel smart.