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The Pros and Cons of Travel Reward Cards

Written by: Russell Wallace | Travel Insurance Expert
Last updated: 25 March 2021 | Created: 18 September 2019

Should I Sign up to a Travel Reward Card?

If you’re holidaying a few times a year or travelling for work regularly, you may be thinking about signing up for a travel reward card – they can make it easier to book trips and the best ones can save you money and offer other perks.

CompareCards’ 2019 Summer Travel Survey finds one in five current cardholders expect rewards to cover more than half of their summer vacation costs.

But, before you sign on the dotted line, it’s important to think about the pros and cons and consider what you want from the card – here’s what you should look out for:

How Do Credit Cards with Travel Rewards Work?

There are two types of travel reward cards – co-branded (sometimes called airline or frequent flyer) and generic miles cards.

Co-branded cards encourage you to stick with one airline or travel company by giving you points for each mile flown and night booked with that company when you pay on the credit card.

With a generic card, you’ll earn points on purchases from different companies and you can redeem them against travel purchases from a number of airlines and hotels depending on the card.

Pros and Cons of Travel Reward Cards

There are plenty of pros and cons for getting a reward card and it’s important to consider them all:

Pros of Travel Reward Cards

      • Travel cards sometimes offer points for everyday spending so you can receive the benefits even if you don’t fly that frequently
      • Some reward cards include perks such as complimentary airport lounge access, seat or room upgrades as well as discounts on dining and entertainment
      • Co-branded cards can help you earn trips faster than other travel cards because they have a loyalty program as well
      • You can sometimes redeem points or miles for gift cards, merchandise or cashback
      • The best travel rewards cards offer big introductory bonuses as an incentive to sign up

Cons of Travel Reward Cards

      • Many travel cards charge an annual fee which can be well over £500 in some cases and they usually come with a higher interest rate
      • You may have to spend a certain amount in the first three months to get introductory the bonus advertised
      • Some travel cards charge foreign transaction fees, which is usually 2%-3% of the purchase. If you plan to use your card for overseas purchases regularly it may cancel out the rewards
      • Some cards restrict when and how you can redeem your rewards
      • You will usually get less value for your points if you want to redeem travel miles or points for anything other than travel (gift cards, merchandise or cashback)
      • Most cards won’t allow you to use your points to cover the taxes or fees on airline tickets.

What Else Should I Consider When Opening a Travel Card?

According to CompareCards’ 2019 Summer Travel Survey, 75%t of cardholders said their card rewards affect their summer vacation plans.  One of the most important things to consider, before signing up, is how you travel and how much you plan on spending on travel each year.

You need a card that matches your spending habits so it’s important to do plenty of research and make sure that the perks are something that you will use, and that you can meet the requirements to get the bonuses.

Is There an Alternative to Travel Cards?

If you want to save money on your trips but don’t travel a lot, then a cash-back card may be a better option. These don’t normally come with annual fees and often include higher rewards for everyday spending.

You can book your travel on a cash-back card, then redeem your reward as money credited back into your account. Cash-back cards aren’t likely to offer many travel perks and sign-up bonuses are usually smaller.

If you have a top tip for managing holiday cash and making the most of travel reward cards, let us know in the comments.