Pros and Cons of Travel Rewards Credit Cards

You should opt for travel reward cards only if they are beneficial for you. This Buzzle article lists out the pros and cons of travel rewards credit cards.
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Pros and cons of travel rewards credit cards
Quick Tip
While buying travel rewards credit cards, compare the best options to make the right decision. Refer to the website nextadvisor for travel rewards credit card analysis to make an informed choice.
Using travel rewards credit cards has become an easy way to collect extra flier miles and bonus points. Many credit card companies offer travel rewards to their customers as an expression of gratitude. It is also a strategy to encourage the credit card user to spend more to gain maximum points. This also ensures customer retention. It is important that as a user, you are completely aware of the advantages and disadvantages of travel rewards credit cards before you buy them. With certain cards, you may be allowed to utilize these points not only for your traveling expenses, but also for buying gas, merchandise, etc.

However, many people lose track of their expenses and keep spending in order to gather points. However, beware, this could lead to huge bills or debt, and this can affect your credit score adversely. Also, using your travel rewards is fine if you are traveling alone, but if you have a companion, you may not be able to accommodate him/her on the same flight or in the same hotel at the rates available. So, let us try to understand some more pros and cons of travel rewards credit cards.

Pros

Get points for each mile of travel

Travel rewards can help you get reward points for the number of miles you travel. If you are a frequent traveler owing to your job or business, you can imagine the number of points you can rack up that can be redeemed for tickets. This means that the vacation you were planning with your spouse, can be budgeted without paying for the extra flight ticket.

Earn extra points at the same cost

People who use their travel rewards credit cards to make purchases at hotels and airlines often get free flight and preferential room upgrades. Not only this, but if you choose their partner airline or a hotel of their choice, you may even win double the points. In fact, some cards also allow you to transfer the accumulated reward points for buying merchandise, and even offer a cash-back option.

Enjoy other benefits

Apart from the rewards in terms of points, you may also enjoy special access to airport lounges. Some cards also offer assistance during flight or luggage delays. If you have missed a flight, you may even be helped with a connecting flight or hotel accommodation. You may even get special discounts on your hotel stays, luxury cruises, and flights. Other than this, some cards also offer reservation of ticket bookings for sports events, films, musical concerts, etc.

Rewards outweigh the fees

You may be charged with an annual fees which can range between USD 50 to USD 75 based on your card. However, when you calculate the bonus points and rewards, in most cases, they account for far more profit than the annual fees which you have to part with. Hence, you should resort to using travel rewards credit cards. It is worth noting that many travel rewards cards even waive off their fees.

Cons

Not suitable if you are a spendthrift

Some people have a habit of using the same card for a variety of daily expenses. If you are a spendthrift and plan to use your travel rewards credit card to pay for your other expenses, then most certainly, you will end up in debt.

Redeeming may take a long time

Remember that the purchases you make are not going to be equivalent to the number of points that will be added to your credit card. Hence, you will have to wait for a really long time before you can redeem those flying miles to buy an international air ticket. Don't be under the impression that you will get loads of points by buying a few air tickets or hotel stays.

Offers may have restrictions

Read the terms and conditions offered by the credit card carefully. Sometimes, there may be a validity period for redeeming the gathered points, and they may lapse if you fail to redeem them. It may so happen that the card may promise you a certain percentage of rebate for every dollar you spend. However, in reality, this may be restricted to a total sum, for example: USD 1,500. This way, you will not be able to make too many points.

There are some travel cards that allow you to redeem points when purchases are made at any hotels or airlines. Moreover, many times, you will have to make specific purchases, like buying from a designated hotel or airline, to redeem points or gain bonus points. Also, you may not be allowed to redeem these rewards during peak periods of travel or holidays. These restrictions may not work in your favor.

Remember nothing comes for free

Exclusive travel rewards credit cards will offer you excellent payouts and lesser restrictions. However, you will be surprised at the fewer number of points that you will get in the bargain. While there are cards which will offer frequent bonus points, some also attract heavy annual fees. Some even come with variable interest rates, which are initially on the lower side, but rise after sometime.

Greater rewards can mean higher APR

In all probability, if you are carrying a balance on your credit card, you will have to pay an interest to your credit card provider. Generally, credit card companies who offer more rewards also have a higher APR. So, wouldn't you rather prefer to have a credit card with fewer rewards than going for something that will charge you a higher rate of interest.

Remember, always go for a card that comes with minimum or no annual fees. Firstly, not all credit card companies will adhere to their promise of giving you reward points. Secondly, because of blackout dates, redemption of existing points can become difficult. If you drive a lot, then opt for a rewards program which will allow you to redeem points at gas stations. However, if you fly often, a rewards program with an airline will be far more beneficial. Also, compare the rewards points and fees to ensure that you are going to benefit from it. Now that you know about the pros and cons of travel rewards credit cards, hope you will make an informed decision.

Our verdict: If you are not a frequent flier but a frequent buyer, you do not need a credit card that offers travel reward points. Travel cards get fewer rewards, hence, if you have an option, go for a credit card that will offer reward points for making purchases.
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Published: March 6, 2014
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