The buzz around travel rewards credit cards is real, and if you travel frequently, can seem nearly impossible to escape from. Figuring out how they work and which ones to apply for is another story. As is the case with choosing hotels and airlines, not all rewards programs are created equal. Whether or not you have any plastic in your wallet at the moment, applying for a card that kicks back some sexy rewards makes the prospect of 20 percent interest rates and annual fees much easier to swallow. But here’s the thing, at the end of the day, a travel rewards card is still a credit card and you can still royally screw your finances if you slack off on payments or aren’t educated on how to optimize the programs. So study up, have a system in place, then get excited for the free flights and loads of other perks in your future.
The state of reward travel in 2020
The general trend in rewards cards over the past few years is that credit card issuers will generally offer enough points — between 30,000-50,000 in most cases– for a free domestic roundtrip between two major airports once a new customer meets the initial spending minimum. This is true for both airline-specific cards and general travel rewards cards. Your best way forward is to apply for one of each and take advantage of the ultimate travel hack, known as the double dip. It works like this — book a flight on the card with the airline at which you are a mileage member, but don’t use your mileage card to pay for the trip. Instead, pay with the non-airline specific rewards card. You’ll earn points on that card right away in relation to the amount of money spent on the flights.
Then, once you have the confirmation number from the airline, add the trip to your rewards account to earn miles with the airline after you fly, and to take advantage of priority boarding and the program’s other perks. By booking travel this way, you’re earning points both on your card through one purchase as well as with the airline. This hack can leave you at risk of paying for a checked bag if the airline program only offers free bags when the flight is booked on the card, such is the case with the standard United MileagePlus membership. Another common perk these days is trip protection insurance. While this isn’t a replacement for general travel insurance, it covers changes and cancellations that are beyond your control.
What to know before applying
Before you apply for any of these cards, have a firm grasp on these credit card best practices:
- Interest rates on travel cards usually hover around 20 percent, charged each month following the first billing cycle after a purchase is made, if you don’t pay it off before the statement date. Our top card, Chase’s Sapphire Reserve, charges a variable interest rate of 17.99–24.99 percent APR, for example. If you don’t pay the balance off each month, you’re looking at a markup in the ballpark of a fifth of what you already paid for every purchase made. This offsets any perks real quick, so unless there’s an emergency, don’t charge more than you can pay off each month.
- Unless you’re particularly loyal to a specific airline (perhaps their hub is at your local airport and there are frequent cheap flights, for instance), airline-specific cards on their own are often not the best option for budget-conscious travelers. Both airline-specific and non-airline affiliated travel rewards cards allow you to collect points for all purchases made. But airline cards generally don’t allow you to redeem bonus points for non-airline travel activity. In addition, they often require you to purchase further activity — namely a future flight — to redeem your points. On the other hand, the Barclaycard Arrival Plus allows you to redeem points by applying them toward offsetting travel charges already on your card, whether that be hotel, flights, or other travel costs. As we noted above, the best approach is often to have one airline specific card and one non-airline specific card.
- You must meet a minimum spending requirement in order to get that sweet sign-on bonus. This is where they get you — hoping you’ll go on a spending spree to hit the minimum and be unable to pay off the balance each month. If that happens you’ll end up racking up enough in interest charges to reimburse the company for the bonus — and then some. Keep it smart by charging things you already pay for, like your phone bill, gas, and utilities. Some people are even able to pay their rent or mortgage on the card, and then immediately pay it off through their bank. You generally have a few months to hit the minimum spend, so there’s no need to head straight to Amazon and buy your entire wishlist.
Best travel rewards credit cards to apply for this year
Chase Sapphire Reserve
Annual fee: $450
Sign-on bonus: 50,000 points when you spend $4,000 in the first three months
The Chase Sapphire Reserve card is a perennial leader among travel rewards credit cards because no other card offers perks on par with what you get here. The 50,000-point sign-on bonus will get you back and forth between many major US airports, or knock off a good chunk of the bill should you head to a far-flung destination like Southeast Asia. A standard offer by itself, Chase kicks it up by tripling your points on all travel and dining purchases AND offering an annual $300 travel credit. It also has its own in-house program for members called Chase Ultimate Rewards, essentially a cross between an online travel agency (OTA) and extended bonus program. Your points are worth more when you book and redeem through them directly. Take advantage of the credit Chase offers for Global Entry or TSA PreCheck, and the free premium membership to Priority Pass, which will get you into hundreds of airport lounges.
This is a “premium” rewards card, meaning it’s tougher to qualify for than many others. But if you travel frequently and are consistent about paying your bill off each month, you can significantly hack your travel costs with this card. Just try not to jump out of your seat when that $450 charge hits your account each year.
- Travel protection insurance up to $10,000 per trip
- An included damage waiver on auto rental insurance policies
- No foreign transaction fees
Southwest Rapid Rewards Priority Credit Card
Annual fee: $149
Sign-on bonus: 40,000 points after you spend $1,000 in the first three months, and an additional 35,000 points if you spend $5,000 in the first six months
Every rule has an exception. Southwest’s popular Rapid Rewards program is the cream of the airline credit card crop. Every year on the anniversary of your sign-up date, Southwest will say thanks with 7,500 points on the house. Southwest flight purchases kick back at two points per dollar spent and, in a sign of progress for airline cards, offers no foreign transaction fees. Redeem points for hotel stays and other travel costs with Southwest’s partners, and take advantage of the new purchase protection and coverage for incidences including lost baggage and roadside assistance.
- $75 annual travel credit
- Four upgraded boardings per year, so you can snag the prime overhead bin space that’s actually above your seat
- 20 percent back on a bunch of in-flight purchases
American Express Platinum Card
Annual fee: $550
Sign-on bonus: 70,000 points after you spend $5,000 in the first three months
American Express Platinum’s 70,000 reward is the cream of the crop, making even the high minimum spend seem worth it. The annual fee is quite high — but Amex makes up for this by hosting some of the most gorgeous airport lounges in the world, under the moniker Centurion Lounge, and giving cardholders access. Amex offsets part of the annual fee by passing you $200 per year to use on your favorite airline. Also included in the annual fee is the best purchase protection program of any travel rewards credit card, keeping you confident that you’ll get the most from both the products and experiences you buy. The downside is that American Express generally isn’t preferred by retailers, so you can’t count on using it everywhere you shop.
- Earn five times the points on flights booked with the card.
- Up to $200 in annual Uber cash
- Opportunities for hotel room upgrades and occasional credits through Amex’s Hotel Collection program
- $100 fee credit for Global Entry and $85 for TSA PreCheck
Capital One Venture Rewards
Annual fee: $95
Sign-on bonus: 50,000 miles after you spend $3,000 in the first three months
Capital One’s Venture Rewards program takes the trophy for most consistently awesome rewards program — it has remained as easy to understand as it is to join for more than a decade running. If you’re new to travel rewards credit cards, this is an ideal way to get started. The sign-on bonus offered is great considering the low annual fee. Capital One also makes it super easy to zap travel-related charges from your card. You just log in and choose the charges you want to use your points to offset from the statement it has prepared for you — the weight falls right off your shoulders instantly.
- No foreign transaction fees and easy transfer of miles to Capital One’s airline partners, meaning you optimize your points when buying future flights — in essence, this combines the perks of both airline-specific and bank-issued cards
- $100 credit for Global Entry or TSA PreCheck
- An included damage waiver on auto rental insurance policies
- Ten times the miles on hotel rooms when you book through Hotels.com
Bank of America Premium Rewards
Annual fee: $95
Sign-on bonus: 50,000 points after you spend $3,000 within 90 days
Bank of America kicked up its Premium Rewards card to include a sign-on bonus that offsets the annual fee for the first five years of membership. It also gives you $100 per year to spend on “incidentals” — defined as seat upgrades, in-flight purchases, baggage fees, or lounge access, providing the perfect excuse to splurge once all in, or just a little each time over multiple trips. That free gin and tonic is guaranteed to taste even better when sipped from an upgraded window seat with a view.
- $100 credit for TSA Precheck and Global Entry every four years
- 3.5 points per dollar spent on travel purchases
- Because it’s a bank credit card, you can use points for credit to eligible Merrill Lynch accounts or to pay off your statement balance
Editor’s note: This article was originally published in February 2019 and was updated in 2020 with new information.