Travel Credit Cards: Helpful or Hurtful?
Whether it’s frequent flyer miles, hotel stays, or gas rebates… there are now hundreds of credit cards on the market which offer some type of travel rewards. But are these cards actually going to help your wallet? Before you apply, here are five important things you should know:
1. Likely To Charge An Annual Fee: More often than not, these types of cards carry an annual fee. Sometimes it can be reasonable, such as the $45 annual fee on the Starwood Preferred Guest credit card. Other times, it can be extremely high, like the $450 annual fee on the American Express Delta Reserve card. Of course there are some which do not charge an annual fee, but most of them do.
2. Usually An Above-Average APR: As the old saying goes: what they give with one hand, they take away with the other. When it comes to credit cards, this is a good analogy. They may give you rewards, but they often charge an above-average interest rate. Therefore if you’re someone that doesn’t always pay off the balance in full each month, these probably won’t be a smart idea.
3. Sometimes The Rewards Are Inferior: This is especially true for airline cards; most only give you 1% on your general spending. Your typical run-of-the-mill cash back card does the same thing, so why pay an annual fee for an airline partner card? However sometimes, the rewards are definitely enticing. For example, the Starwood Preferred Guest credit card is known to give a lucrative bonus just for getting it; up to 6 free nights at a Starwood hotel (they also own The W, Le Meridien, Sheraton, and Westin hotels). For many, that alone is worth the $45 annual fee.
4. Rewards Only Apply To Partner Airlines: For the ones that give you frequent flyer miles, it’s important to remember that you can only redeem them with partner airlines. Sometimes this is only one airline, sometimes it’s thirty. For example, the Southwest Airlines card is said to offer great rewards, but only if you fly Southwest. If don’t always fly that airline, you will want to keep that in mind when applying.
5. Not Always The Best Balance Transfer Offer: If you’re looking for the best balance transfer credit card, you will probably want to look elsewhere. Why? Because this category is geared towards those looking for rewards, not interest rate deals.