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Living in Southeast Asia, I’ve barely used a credit card for the past several years. Now that I’m back in the States for a while and planning trips to Europe I’m in the market for a new credit card that I can start racking up points on. I absolutely hate researching these kinds of things though and quickly get overwhelmed by the choices and different programs out there.
That’s why I asked Ryan Lile, from Frequent Flyer Academy, for suggestions and advice on what card to get – what are the best credit cards for travel? He also was kind enough to write up a beginner’s guide to choosing a credit card and rewards program for travelers who are just starting out with gaining points. Check it out!
One of the most common questions I’m asked is which credit card is best for earning rewards in the travel industry. While there’s a fair amount of debate in the frequent flyer community about this, the answer is fairly straightforward. Bottom line:
Any rewards program that allows you to transfer points into an airline frequent flyer account is a winner. (Assuming the conversion rate is reasonable, of course.)
Why is this? And why do I pan programs like Capital One’s “No Hassle” Rewards? The answer lies in the value you can get from each point – if you know what you’re doing.
Essentially there are three types of travel rewards credit cards:
The kind where the airline partners with a bank (like American Airlines and Citibank, or United and Chase). Your spending translates into miles deposited directly into your airline frequent flyer account.
These types of cards are good for loyalists to specific airlines. If you’re flying 50,000 miles a year or more on AA and have earned mid-tier elite status, you’re going to want to consolidate most of your mileage earning with that airline, making this card a good bet. These types of cards also come with some ancillary benefits, such as free checked bags and priority boarding. That’s not relevant if you’re already elite, but if you’re just starting out it’s a nice bridge to frequent flyer benefits until you earn status.
Included in this category are hotel rewards programs such as the Starwood Preferred Guest card by American Express.
These are programs (often run by banks) where you earn points for your purchases, just like with the airline co-branded cards. The difference is that your points don’t end up in an airline frequent flyer account; they end up in your account with whichever company is running the program.
In this category are rewards cards such as Chase Ultimate Rewards and Citibank’s Thank You card. These programs offer a variety of ways to spend your points, including transferring to airline mileage accounts. For example, Chase Ultimate Rewards points are transferable to United’s MileagePlus program.
These cards are good for travelers who want flexibility. Chase Ultimate Rewards points are transferable not only to United, but also to British Airways. If you don’t want to be locked into a specific mileage program or airline, one of these cards might work well for you. And remember to leverage the global airline alliances: United miles enable you to book award flights on any Star Alliance airline, just as British Airways miles enable you to book award flights on any Oneworld airline. Just these two transfer options alone unlock award ticket possibilities on dozens of major airlines around the world.
Also included in this category would be the American Express Membership Rewards program.
These are programs, such as Capital One’s Rewards program, where you earn points and must redeem them in the same program – transfers to other programs are not permitted.
These programs tend to have great marketing hype (“No blackout dates!” “Book any flight!”) but there’s a catch: The value of your points is fixed at a low level – usually one cent per point. That means that if a flight you want costs $1,000 it will take 100,000 points to book it. In contrast, 100,000 miles in a frequent flyer program would be enough (or close to it) to book a business class ticket to Europe, a value of $4,000 – $8,000.
This is why your credit card strategy should focus transferring any points you earn over to airline programs to redeem them. Here’s why: Most airline frequent flyer programs don’t tie specific value to award tickets. Whether a ticket costs $4,000 or $8,000, the award will cost 100,000 miles either way. Exploiting this system can help you receive five to 10 cents per mile or point in value, especially if you’re using your miles for business or first class tickets.
So what’s best for the occasional traveler, or even a frequent traveler who isn’t loyal to one airline? I recommend the following cards mainly because of their flexibility – they’ve been serving my clients well for years:
Unless you’re loyal to a single airline, use one or more of the cards above to stay flexible in your point earning. American may have the award you want this time, and Emirates may have it next time. By keeping your options open, you’ll expand the possibilities to use your points in the most valuable way possible.
Ryan has traveled extensively throughout the United States and to more than 60 other countries. Through his travels, he has built a formidable knowledge about airlines, airfares, hotels, miles, points and upgrades. He specializes in traveling well on a budget, flying in coach as infrequently as possible, and keeping updated on the most current and effective strategies to get the most travel out of every dollar. Learn more about Ryan here and check out his Frequent Flyer Academy at http://frequentflyeracademy.com/.