What is a travel rewards card?

One way credit card providers incentivize users to make purchases with their cards is through rewards. These rewards – often in the form of points or airline miles, or through cash paid to the cardholder – accumulate over time as a customer uses their card, and can then be redeemed for different types of benefits. Travel rewards cards, in particular, offer rewards focused on travel-related expenses, such as flights, hotel stays, dining, and similar purchases.

These programs are very popular for good reason. However, keep in mind that many of these cards carry hefty annual fees, and there are usually other restrictions and conditions related to the rewards themselves that you should be aware of.

What is a travel rewards card?

A travel rewards card is a special type of rewards credit or debit card. Rewards points or miles are accumulated over time when the cardholder makes transactions, often at a percentage of the amount spent which may vary based on the category of purchase. For travel rewards cards, interest sometimes accrues at a higher rate for travel or dining-related charges, for example.

Travel rewards cards often also offer a sign-up bonus, which can be a big plus. The card may provide users with a significant amount of points or miles when a certain spending limit is reached within a specified period of time after the card is opened, for example.

Points vs. Miles

Most travel rewards cards offer benefits based on units of value, such as points or miles. Typically, points or miles can be redeemed for benefits such as airline tickets, hotel stays, gift cards, dining, or other similar options.

The value of each point or mile may vary depending on the reward you select. For example, a Chase-branded credit card may, in theory, offer a more favorable redemption rate when users redeem their rewards through the Chase Travel reservation system.

Basic mechanics of a travel rewards card

Often, a travel rewards card will offer a fixed rate at which users accumulate points or miles (for example, one point worth one cent per dollar spent). Points or miles can be held for an extended period of time and later redeemed for applicable rewards.

However, the value of points or miles may decrease over time, and in many cases, these rewards may expire if not redeemed by a certain deadline.

Types of travel rewards cards

General purpose travel cards

Cards like the Chase Sapphire or Capital One Venture card are general-purpose travel cards, meaning they’re not tied to a specific brand or company other than the provider. Cards in this category generally provide points for all purchases, and they also have a wide range of rewards available to users. They may also offer additional travel-related perks such as access to airport lounges, membership in TSA PreCheck, and more.

Airline cards

Airline cards like Delta AmEx and United Explorer are tied to specific airlines and often offer big rewards for booking with those providers. Users can usually redeem these rewards for additional perks and services from the carrier itself.

Hotel cards

The third category of travel rewards cards is tied to a specific hotel chain. These cards, including Marriott Bonvoy and Hilton Honors, are similar to airline cards except with a focus on rewards specifically related to those hotels.

How travel rewards work

Travel rewards cards offer points or miles on spending, and will likely provide rewards based on the spending category itself or related to account opening as a sign-up feature.

When it comes to redeeming these rewards, users usually must meet a minimum score to be eligible. Sometimes, users redeem rewards directly through the travel portal, allowing them to make direct purchases of flights, hotels or other benefits using points or miles. In other cases, users can apply their points to purchases that qualify for statement credit — a reduction in their credit card bill — in the amount of that purchase.

Sometimes, the most beneficial use of rewards points is through a transfer partner. Some airline or hotel loyalty programs partner with credit card providers to allow users to transfer their points or miles directly into the program platform. These methods may offer a reasonable price compared to other recovery methods, but there is more work involved, which can lead to user frustration.

Perks and features to consider

The benefits of travel rewards cards are varied and may include access to airport lounges, free checked bags, priority boarding for flights, hotel upgrades, free night awards, and even things like travel insurance or trip protection. Other rewards include zero or reduced foreign transaction fees and other travel-related perks.

To access these benefits, users should expect to spend up to $900 or more in annual fees, depending on the card tier. There are plenty of options for less than this premium rate, including free cards like the Chase Freedom Unlimited or the Capital One VentureOne Rewards Card. Mid-tier cards include those with an annual fee of around $100, such as the Chase Sapphire Preferred Card or the Emirates Skywards Rewards Card.

Pros and cons of travel rewards cards

Pros explained:

• Potential rewards: Travel rewards cards can be a game-changer for frequent travelers.
• access: Rewards cards provide access to unique experiences, products and services that are often not available to other customers.
• Offset expenses: Rewards cards can help offset expenses, both travel-related and otherwise.

Cons explained:

• Annual fees: Those who don’t travel frequently may find that the annual fees of some travel rewards cards aren’t worthwhile compared to the benefits they offer.
• Recovery issues: Redemption can be complicated or restricted.
• Rewards expiry: Rewards can expire or lose value if not used.
• Blackout dates: Most travel rewards have blackout dates, which are very common times of the year when users may not redeem their rewards.

Is a travel rewards card right for you?

A travel rewards card may be a great option if you travel regularly (and therefore have significant travel expenses) and especially if you can pay your credit card statement in full each month. They are less ideal for those who prefer a simple approach to booking travel or who do not want to use points portals. Likewise, if you only travel during very popular travel times – which may be subject to blackouts by reward providers – the card may not benefit you as much.

Bottom line

Travel rewards cards can help offset expenses for those who travel frequently, thanks to their points or miles systems, which can be redeemed for everything from flights and hotels to airport lounge access and even insurance. The terms of these programs vary greatly depending on the card, as do the fees. It’s helpful to compare and contrast the best travel rewards cards to find the right option for you.