Let me start by saying there is absolutely no tool that is more powerful for accomplishing the task of adventuring for free then the good old fashion travel credit card.
I grew up hearing about the danger of credit cards and over the years I have to admit I have fallen into the web of credit card debt. Mrs. Sedar is still mad about that.
Here is the cardinal RULE that you have to religiously follow if it’s your desire to use the credit card travel tool: NEVER, NEVER spend more then you can pay at the end of the month on your card and NEVER, NEVER fail to pay your card off in full every month.
OK I know were all grownups and I said NEVER 4 times but in my mind credit cards are the nuclear fission of free travel; a great tool but devastating if abused.
If you have credit card debt now that you are paying interest on pay that debt off before you use credit cards to build travel assets. If you don’t the massive credit card interest you are paying will destroy any hope of this tool actually moving you closer to your travel dreams.
If you are credit card debt free and only plan to spend what you intend to pay off each month you are ready to use this powerful tool to start building your travel dreams.
Picking your first travel credit card will be a lot like picking your first power saw. When you bought your first power saw you might have read reviews to see which saw was best. Travel Credit cards are also reviewed. The difference is everyone and their dog has an opinion on which travel card is best and many of these opinions are biased by the fact that the website or blog that is making the recommendation is getting a kick back from the credit card companies if you use their site to access the card application. Some sites that I’ve found that give good travel credit card reviews are: nerdwallet.com, comparecards.com and wallethub.com.
Back to the power saw analogy, when you buy your first power saw you looked for one that fit your needs. Why pay big bucks for a power say you’ll only use three times a year to cut a couple of boards, when a good quality inexpensive saw will meet your needs? A travel credit card is no different, we all have different travel needs and you should consider how you would use your travel credit card tool before you get that first credit card. If you’re a one airline person a branded card that gives you benefits like early boarding, upgrades and airport lounge privileges along with air miles base on your purchases makes sense.
If you’ve read some travel credit card reviews you have seen some of the criteria the review sites use to differentiate different cards. Factors like bonuses, yearly fees, and reward value for dollar spent on the card are often major factors in these reviewer’s decisions. These factors should be important to you too, lets face it the fee you have to pay each year to have this card is a big deal especially when some cards cost up to $450 a year and some are free.
I think the sites that review travel cards are a good start but in order to make an informed decision there are a lot of other factors. Some factors you might want to consider are:
Are there concierge services?; Some cards like the American Express Platinum and the Barclay Arrival Plus. You’re probably saying, “I don’t need no, concierge?” but when you need a ticket to a ball game, a reservation to a restaurant or a last minute room reservation these guys are golden. Charlene has our concierge service on speed dial, over the years we have used our American Express Concierge service dozens of times and are always amazed by what they can accomplish.
Which airlines accept your rewards?; If you have a branded card such as the American Airlines Advantage card you won’t be able to use your points for carriers not partnered with American. This includes, large carriers like Delta and United but also most small discount carriers like Spirit. If you have a point for dollar credit card like the Citi Prestige or the Chase Sapphire you will be able to use your points with most major carriers but may be limited in using smaller discount carriers. If your card uses a statement credit system to redeem your miles you will have maximum flexibility and be able to use your points to get free flight on virtually every airline in the market place. An example of a card that uses the statement credit system of redemption would be the Barclay Advantage Plus card.
Do the rewards expire?; This can be a big deal. If you want to have a bad day wake up and find out that a hundred thousand miles you got in a bonus last year just expired. With most card you miles will not expire if you use the card once in a while but this can be a factor in you decision.
Are there airport lounge privileges?; If you fly a lot airport lounge privileges are huge. I love free beer and a nice hot bowl of soup but some of the more expensive card are offering lounges where it free showers, messages and even free manicures. See my blog on my six hour layover at DFW a few months ago.
Do you get free luggage?; Free luggage adds up bags can cost as much as a cheap flight if you don’t watch your step. Most of the branded credit cards will offer some form of free luggage.
Do you get priority boarding?; Priority boarding is nice because you always have room for your carry on.
Does the card have a shopping portal?; Shopping portals are a huge deal. Check out my blog, A Shopping Portal Primer, to see how you can use these internet portals to increase reward points.
How do you claim your rewards?
If you claim your reward thru airline points, the common method for travel cards that are branded to specific airlines like the Mileage Plus Explorer Visa for United airlines of the Gold Delta SkyMiles card you will be getting airline reward miles for your loyalty purchases which can be redeemed at the primary airlines reservation website or at their partner airlines websites. These airline miles can be good deals and many travel professionals will value them at between 1.2 and 1.6 cents the problem with these types of miles is you lack flexibility and may find blackout dates.
There are two types of “point for dollar” based travel credit cards. Point for dollar cards base their loyalty programs on the dollar value of the travel products in the open market. With the first point for dollar type of card you got to their website and search for a flight and then when you find the flight that works you purchase it with points base on the dollar value of the ticket you found. These card have the advantage of giving you the flexibility of buying form all major carriers and finding the best value flight. The second type of point for dollar travel card is the “statement credit”, credit card this card will credit you cards statement after you make your purchase for your travel costs. The advantage of this system of redemption is you can find the absolute cheapest flights for your points using discount carriers and you get all of the additional loyalty advantages from you travel purchase because you are for all intent and purpose a cash customer to the travel vendor.
I think you get the point. The value of a card is hard to calculate and no card is perfect for everyone. To be able to really understand the cards your looking at you will have to be willing to read the small print. Every card will have a frequently asked question page and it might not be a bad idea to ask a few of these questions before you choose your first travel credit card.
If your dream is to fly for free almost every dollar you spend right now can be paid for by a credit card that earns you loyalty rewards and those rewards equal free travel. If you spend $30,000 a year with the most basic credit card that’s 35000 air mile points if you add that to a 50,000 dollar bonus your receive when you get the card that 80,000 air miles will get you a round trip ticket for you and your significant other to Europe.
I don’t want to confuse things but I do want to say that with some additional tools like shopping portals and discount carriers you could easily turn your 50,000 point bonus and your $30,000 in credit card purchases into two or even three round trip tickets. The message being travel credit cards are extremely powerful free tools for Geezers with Passports.