With some of the year’s busiest travel dates fast approaching, the personal-finance website WalletHub today announced its selections for Winter 2016’s Best Travel Credit Cards, plus key money-saving tips for domestic and international travelers. This gives the roughly 38% of Americans who have excellent credit plenty of time to compare, apply and give themselves the gift of $1,000+ in free travel.
Below you can find a sample of our picks, chosen from more than 1,000 total offers given their unique ability to produce travel-borne savings.
Best Initial Bonus: Chase Sapphire Reserve – $1,500 in travel for spending $4,000 in the first three months; $300 annual travel credit; $450 annual fee.
Best All-Around Travel Rewards:Barclaycard Arrival Plus – $525 travel statement credit for spending $3,000 in the first three months; 2.1% back on all purchases when you redeem for travel; no annual fee in the first year ($89 thereafter).
Best Airline Rewards: Frontier Airlines Credit Card – 2 round-trip domestic tickets for spending $500 in the first 90 days; 2 miles per $1 spent on flyfrontier.com and 1 point per $1 spent on everything else; $69 annual fee.
Best Hotel Rewards: Club Carlson Premier Rewards – 50,000 bonus points after first purchase and 30,000 points for spending $2,500 within 90 days of account opening, redeemable for up to 9 free nights; 40,000 bonus points on account anniversary, worth up to 4 free nights; $75 annual fee.
FILE - In this Tuesday, Dec. 31, 2013, file photo, a paddleboarder looks our over the Pacific Ocean... Read more
(AP) — Many frequent fliers are buzzing about the latest travel rewards credit card — one that comes with a hefty $450 annual fee but offers a juicy 100,000 point bonus at sign-up.
Rewards cards lure us in with dreams of a free trip to some warm tropical beach. You're going to spend money — why not get a vacation out of it.
The truth is, these cards make sense only for those who spend lots of money, and quickly. The better value for most travelers — especially those flying domestic coach — is a cash back credit card.
There are a number of factors to consider when choosing a credit card. First, a major caveat: None of these cards — rewards or cash back — make sense unless you pay your bill in full each month. If you don't, any rewards earned will be washed away by interest payments.
CASH VS POINTS
The beauty of cash is that there are no restrictions. Forget desperately hoping that the airline opens up enough mileage seats on the flight you want. Or worse, locking yourself into one airline — just because you have miles — that requires a connection when there is a cheap, nonstop flight on another carrier.
The Citi Double Cash card and the Fidelity Rewards Visa Signature Card both offer 2 percent cash back on all spending.
Why is this better than frequent flier miles?
A typical domestic roundtrip ticket costs 25,000 miles on American Airlines, Delta Air Lines and United Airlines.
Having a credit card with one of those airlines earns you one mile for every dollar spent — more for purchases with the airline. That means you would have to spend about $25,000 on a credit card to get a free ticket.
That same $25,000 spent on a cash-back card would earn you $500. The average domestic roundtrip ticket last year cost $363.98
If you charge less than $25,000 a year, cash back makes even more sense. You might only earn $150 or $200 in rewards a year. But you can stash that money away to pay for part of your next flight instead of hoping to eventually have enough miles for that trip.
ANNUAL FEES
There are cards with higher cash back rates in certain categories as well as many travel cards but they come with sometimes steep annual fees. For many families, that fee can wipe away any savings.
Let's compare a no-fee, 2-percent cash-back card with a card that has a $95 annual fee. It takes $4,750 in charges on that 2-percent cash-back credit card just to earn $95 in rebates. If you are earning miles or some other currency with that annual fee card, your first $5,000 in charges basically cover the fee. For somebody who charges $80,000 a year, that might not be an issue. But for somebody charging $10,000, they are paying a fee and won't even get enough miles for a free trip.
But don't necessarily dismiss a card just because it carries an annual fee.
Most of the major airline credit cards offer free checked bags for the primary cardholder and some of the people traveling with them — as long as everybody is on the same reservation. Since checking a bag typically costs $25 — each way — that $95 annual fee could pay for itself if three bags are checked roundtrip a year. You don't even have to make other charges on the card, sticking to your cash-back card for everyday spending.
Amtrak's credit card, with a $79 fee, comes with a free companion ticket, potentially making it worthwhile for frequent train riders. A roundtrip ticket from Boston to New York could easily top $200.
And the IHG Rewards Club comes with a free night at any InterContinental hotel in the world for its $49 annual fee. That's anything from the fanciest InterContinental down to a Holiday Inn Express next to the highway.
SIGNUP BONUSES
Finally, there are those eye-popping signup bonuses.
The Chase Sapphire Reserve Card made headlines recently for its 100,000 point signup bonus after spending $4,000. Those points can be worth up to $1,500 in travel rewards. It carries a $450 annual fee but $300 of that is refunded for spending on travel.
Other cards routinely offer anywhere between 30,000 to 50,000 miles in signup bonuses.
So, if you have good credit and can meet the minimum spend within the short time period, you can quickly pad your frequent flier balances.
In other words: get the card for the signup bonus and then cancel it before the next annual fee hits.
Just be warned, credit card companies are starting to cap the number of cards you can have and are putting lifetime limits on signup bonuses.
Up to $625 in travel rewards await the roughly 75% of Americans planning a summer getaway via one of 2016's Best Credit Cards for Summer Travel, while the 20% of people headed abroad can save an additional 11% by taking advantage of the favorable exchange rates offered by ano-foreign-fee credit card or debit card, according to a pair of studies released today by the personal-finance websites WalletHub and CardHub.
Highlights from both reports can be found below.
Best Currency-Exchange Option: Using a no-foreign-transaction-fee credit card or a no-foreign-fee debit card is the least expensive way to convert currency, saving international travelers 10.84% relative to Travelex, 6.41% compared to banks and credit unions.
Best All-Around: Barclaycard Arrival Plus: 40,000 bonus miles = $400 in travel rewards; 2.1% back on all purchases when you redeem for travel; $89 annual fee ($0 the first year).
Best Initial Bonus: Chase Sapphire Preferred Card: 50,00 bonus miles = up to $625 in travel; $95 annual fee ($0 the first year).
Best Airline Rewards:Frontier Airlines World MasterCard: 40,000 bonus miles = 2 free round-trip domestic flights; 2 miles per $1 spent on FlyFrontier.com; $69 annual fee.
Best Hotel Rewards:Club Carlson Premier Rewards: 85,000 bonus points + 40,000-point anniversary bonus = up to 13 free nights; 10 points per $1 spent at Carlson properties; $75 annual fee.
Best Road-Trip Rewards: PenFed Platinum Rewards Credit Card: 5 points per $1 on gas at any station; 3 points per $1 on groceries; potential $15 membership fee.
The Credit Card That Gets You a Free Night at Any Hotel
By
Brian Kelly, www.travelandleasure.com
(c) Matthew Wakem
The Citi Prestige costs $450 a year, but the perks are worth much more.
In On Points, Brian Kelly, founder of The Points Guy, shares his strategies for getting the most out of your points and miles.
There’s a saying, “cheap is expensive.” And it definitely applies to
credit cards. Often, cards with no or low annual fees offer few perks.
It can make sense to pay an annual fee—even a hefty one—for certain
cards, because their benefits make up for the cost many times over.
I devoted an entire column to the Southwest Companion Pass, which can save travelers thousands of dollars a year. Here’s another weapon for your travel arsenal: the Citi Prestige card.
The Prestige was launched in the U.S. in 2014 to compete with the
American Express Platinum card. Like the Amex, it has a $450 annual fee.
Off the bat, Citi Prestige gives cardholders $250 in airfare rebates,
American Airlines Admirals Club access (a $500 value), three points per
dollar spent on airfare and hotels, and two points on dining and
entertainment. But by far the most valuable benefit is the fourth night
free on hotel stays. That perk has already saved me thousands of dollars
this year.
This benefit is ridiculously generous, especially if you like luxury
hotels. It’s easy to use, too: book your hotel stay through the Citi
Travel Concierge, put the charge on your card, and the fourth night is
free, even if it is more expensive than the first three.
I was skeptical at first, figuring that Citi inflated hotel rates to
make up for the bonus, but they don’t. Citi uses Carson Wagonlit to book
hotel stays for Prestige cardholders, so you can check rates on their website. The concierge should quote you the same price.
If you have a AAA membership or see a better rate somewhere online,
you can request that price—in many cases the concierge can book
discounted rates that don’t show up in the system. The fourth night gets
refunded after the stay as a statement credit. You can also add your
loyalty program details and in most cases get loyalty points and elite
credits. And since the fourth night free shows up as a statement credit,
if someone else pays for your stay (like a reimbursement for business
travel) you can basically make money on your hotel stay.
Note that you can only earn one free night per reservation, so for an
eight-night trip you’ll only get one free. If you book two four-night
reservations you’ll probably get two separate statement credits unless
the hotel combines the reservations.
I just got the Citi Prestige in January, but I’ve already put it to
the test on two trips. The first was a four-night stay at the Dean
Street Townhouse in London where the room rate for the first two nights
was 255 GBP and the last two were 360 GBP (about $505). Two weeks later I
got a credit for $505 to my account—more than the annual fee in a
single stay!
This summer I’m staying at the chic Belvedere Hotel in Mykonos,
Greece, where I’m splurging for a special occasion. My total for the
stay is €3,800 (a little over $4,000); the fourth-night credit
(including taxes) is $1,054, bringing the total down to $3,134.28.
In both cases I checked online rates and the Citi Concierge was able
to book me the absolute lowest rate available for the room type I
wanted.
Considering all the perks—I didn’t even get into the three free golf games
a year—and the current 50,000 point sign-up bonus (worth $800 in
American Airlines airfare), the Citi Prestige is earning its keep in my
wallet.
See this year's top picks for frequent fliers and road warriors.
MONEY and NerdWallet have picked the best credit cards in five different categories: cash back, borrowing, travel rewards, student, and small business cards. Most of our picks assume you are using cards strategically to maximize rewards, and paying off your bill each month to avoid fees and finance charges. MONEY also went one step further this year to add an “easy choice”—the best no-muss, no-fuss, no-annual-fee option.
Easy Choice: Barclaycard Arrival World
APR: 16% to 24%
Annual fee: $0
Rewards:
Two miles for every $1 spent on travel and dining
One mile for every $1 spent on anything else
A 5% bonus when redeeming miles for travel spending
Sign-up bonus: 20,000 miles after spending $1,000 in the first 90 days
Why it’s a winner: Cost-conscious cardholders who are modest spenders but want some travel rewards should look to this card. There’s no annual fee, no foreign-transaction fees, and even a yearlong 0% APR period on balance transfers made within 45 days of opening the card. You’ll earn solid rewards, including double miles for every dollar you spend on travel or at a restaurant; those miles will go even further when you redeem them for travel purchases.
Caveat: Earning miles on this card is tougher than with some of the other travel winners. If you expect to spend more than $1,000 a month, this card’s cousin—the Barclaycard Arrival Plus World Elite—will be worth the $89 annual fee.
Best for Frequent Fliers (Tie): Chase Sapphire Preferred
APR: 16% variable
Annual fee: $0 the first year, then $95
Sign-up bonus: 40,000 points after spending $4,000 in the first three months
Rewards:
Two points for every $1 spent on travel and dining
One point for every $1 spent on anything else
5,000 points when you add an authorized user who makes a purchase within three months
20% off travel when redeeming points for airfare, hotel stays, car rentals, and cruises through Chase Ultimate Rewards
Why it’s a winner: Valuable points and integration with partner programs make Chase Sapphire Preferred the best choice for those who want the most travel flexibility. You have a few options: You can redeem points against charges on your statement—getting 1¢ per mile—or get an extra 20% bonus if you use Chase’s platform to buy travel. Or you can transfer points directly to Sapphire’s travel partners: airlines (such as United and British Airways), hotels (Hyatt, Marriott), or trains (Amtrak). Those programs can be more generous or flexible, letting you use points to pay for upgrades or book business-class tickets.
Caveat: Chase has upped the amount you must spend in the first three months to earn a sign-up bonus.
Best for Frequent Fliers (Tie): Barclaycard Arrival Plus World Elite
APR: 16% to 20%
Annual fee: $0 the first year, then $89
Sign-up bonus: 40,000 miles after spending $3,000 in 90 days
Rewards:
Two miles for every $1 spent
A 5% bonus when redeeming miles for travel spending
Why it’s a winner: Like the Sapphire, this card offers top rewards without entangling you in an airline’s loyalty program, but it allows big spenders to rack up miles more quickly. The sign-up bonus itself nets you $420 worth of travel spending, but even after that first year you can recoup the annual fee with about $750 in monthly spending. Other benefits: There are no foreign-transaction fees, and you can get your credit score from TransUnion for free via the Barclaycard website.
Caveat: This card doesn’t let you transfer miles to airline or hotel programs.
Best for Hotel Aficionados: Starwood Preferred Guest
APR: 15% to 19%
Annual fee: $0 the first year, then $95
Sign-up bonus: 25,000 points after spending $3,000 in 90 days
Rewards:
Up to five points for every $1 spent on Starwood hotels
One point per $1 for everything else
Why it’s a winner: When it comes to hotel rewards, not all points are created equal. Other programs may offer more points per purchase (as does Citi Hilton HHonors card) or a greater sign-up bonus (IHG Rewards Club Select)—but the quants at NerdWallet say a Starwood Preferred Guest point is about five times as valuable as those offered by Hilton and more than three times as great as IHG’s. Why? Because these points go further. Starwood’s are worth about 2.2¢ to 2.4¢ each when they’re redeemed for hotel stays—far in excess of what you’ll get through rival programs. You can also transfer points to about 30 frequent-flier programs; you’ll even get a 5,000-point bonus when you transfer 20,000. And Starwood recently nixed its foreign-transaction fee, making overseas travel less costly.
Caveat: To reap the card’s benefits, you’ll have to stay in one of Starwood’s 1,200 hotels. But the company’s portfolio includes brands such as Westin, W, and the St. Regis, so it’s hardly a sacrifice.
