Credit Cards and Travel

11.June 2013

Our Journey

Credit cards and travel have become intertwined. There is no avoiding having a credit card these days. Whether it is to make a reservation online or even to book a flight. As the entire business of travel moves online, the only way to get anywhere efficiently is to use a little plastic. Having said that, there are about as many credit cards as there are destinations to travel. It doesn’t matter if you are just starting out in life and trying to pick a first credit card or an old hand at the game, it is important to compare credit cards on a regular basis because they are always changing.

Photo Credit: mueritz

When it comes to travel and credit cards, most people think of collecting travel points with their favourite airline or some type of reward program is the best way to go. This is why it is important to compare. Collecting travel points may seem like a good idea but will you be able to collect enough points to book a flight before the travel points expire? Personally, I tend to favour a more general reward credit card because there is more flexibility to use the points at lower thresholds. If you choose the right card, then you may be able to use it for other things on your travels such as an upgrade at a hotel.

Photo Credit: Dorli Photography

One of the important points I look for in a credit card are a reasonable yearly fee. The fee should match with what I expect to be able to redeem in rewards each year. It doesn’t make sense to pay $200 a year for a credit card that offers points when I will only be able to redeem for $100 worth in the same time period. There is an exception to that simple math. If your plan is to redeem in a few years for a big trip then the math spreads out over a number of years. Regardless of time span, it is important to make sure you are able to redeem more than the card is costing you. Otherwise the “free” trip may have just cost you more in fees than it would have cost to buy the trip outright or you are constrained to not the right location or dates you were hoping to use.

Another important thing with credit cards in general is to use them only when you have the cash to pay the bill as a convenience rather than a very expensive loan. Credit card interest rates will pile up quickly if you start rolling a balance from month to month and you will never be able to get away on your travels. If this is unavoidable because of the nature of your income flow, look for a low interest credit card to minimize the charges from month to month. This can be a much bigger payback in the long run than collect points that are funded by interest payments. Try to keep as much of your money in your wallet saving for the trip instead of paying interest and fees you don’t need. Research may be hard but there is a very real financial reward when it comes to credit card comparison.

Photo Credit: ‘No Matter’ Project

 

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