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Credit cards have become quite the integral part of today’s society. Given the popularity of air travel, it only makes sense that a travel rewards credit card would become reality sooner or later. These travel credit cards are basically identical to other rewards cards in function, but they are geared towards traveling of course. Many of them have rewards programs that allow people to build up “miles” towards redemptions. Many of these mile rewards are even doubled when making airliner purchases. The end result is usually a discounted vacation which is more than enough to get people signed up for a travel rewards credit card.
Despite the seemingly awesome perk of a vacation discount, there are several mistakes that people make with their travel rewards cards. Some of these mistakes devalue the card, and some end up costing the card holder more money. Here are five of the most common travel rewards credit card mistakes.
Cashing in Miles for Something Other Than Airfare
In order to seem more competitive with other credit card types, many travel rewards card offer merchandise and cash redemptions through there miles reward programs. This is an enticing offer, but there is a huge catch to it. Redemption miles lose considerable value when being redeemed for merchandise and cash. You can extract the most dollar value from redemption miles when they are used for airfare. Since they are originally meant for airfare, redemption miles achieve their greatest value for that purpose.
Neglecting the Loyalty Program
Most travel reward credit cards are accompanied by a loyalty program. These programs allow card holders to get double miles when going through airlines and hotels. In a nut shell, there are more opportunities to extract more value from the travel rewards card. If you have a airline credit card, then you most likely need to join their loyalty program.
Getting Tricked by the Reward Program
Before signing up for a travel rewards program, a good deal of research can go a long way. Every single credit card’s reward miles have a certain value. 50,000 miles sounds like a pretty sweet introductory deal for a rewards card, but if these are valued at $0.01, then that introductory deal is only worth $500. it is a simple trick. These card companies inflate the numbers to look extremely valuable, but in reality, they are only of fractional value.
Carrying a Balance
Travel rewards credit cards have characteristically high annual percentage rates. This means that carrying a balance is risky and expensive. If you do not pay off your bill each month, then you are going to rack up interest fees relentlessly.
Picking Cards with Foreign Transaction Fees
While some travel rewards cards do not try this scheme, many of them throw in a foreign transaction fee. These fees normally run between 2% and 3%. Since these are travel rewards cards, it is pretty feasible that you will make purchases abroad, so it is an easy way for these companies to make an extra dollar through fees. If you want to avoid paying out extra, then you would do well to pick a card without the foreign transaction fee.
Author: Jeff Gitlen
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