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How to Select the Top and Best Travel Credit Card

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How to Select the Top and Best Travel Credit Card

A credit card is different from a charge card, which requires the balance to be repaid in full each month.[4] In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like currency by the owner of the card.

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A credit card differs from a charge card also in that a credit card typically involves a third-party entity that pays the seller and is reimbursed by the buyer, whereas a charge card simply defers payment by the buyer until a later date.

So, of course, you want to get yourself a travel credit card! After all, who wouldn’t want to tour the world at little to no cost? But being the credit card novice that you are, you aren’t quite sure how to go about getting the perfect travel credit card.

Everyone you know and their uncle has probably told you that you should get a travel credit card. You have probably heard a number of people talking about how a travel credit card can help you earn air miles and then you can redeem it for free flight tickets! Even your neighbours were featured in one of those “how this couple travelled the world for free articles.

Well, help is right here. Here is a guide to help you choose the best travel credit card.

 

1. Your Travel Goals

The first step towards choosing a travel credit card that is right for you is determining your travel goals. Do your travel plans include business class flights and luxury hotels? Or are you more likely to rough it out and stay in hostels?

Additionally, think about how often you want to travel and whom you want to travel with. Do you want to travel every year with your family or do your travel plans mostly involve solo trips? Also, think about how much you are willing to spend for every holiday.

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The answers to all of these questions will help you determine your travel goals and consequently will help you decide on the right credit card. For instance, if you are someone who is looking to rough it out by backpacking, then getting a card that offers luxury hotel benefits won’t be of any use. You will instead be paying for benefits you aren’t even likely to use.

2. Your Spending Habits

The biggest myth surrounding credit cards is that they only reward you when you book air tickets. While you do get rewards on these spends, even card companies know that people don’t travel every single day. Which is why they reward other type of spending as well. So maximising the rewards on your travel credit card involves getting a card that rewards your highest or more frequent spends more than they do other spending.

So, how do you go about doing that? Well, look at your expenses for the last few months and see where a major portion of your money is going towards. If you realise that you spend most of your monthly income on online transactions, then a get a card that rewards online transactions. This way you will earn the highest points for transactions that you actually make on a daily basis and convert them to air miles that you can redeem on your next trip.

3. Look for Travel Perks and Protections

A good travel credit card won’t just offer you air miles, but will also give you travel perks or protections. For instance, most credit cards will offer complimentary travel insurance provided you book your entire holiday with your credit card. Some will even have affiliations with car rental companies along with free upgrades, so you can be assured of being able to rent a car when you are in a foreign location.

Other perks such as a 24-hour concierge service or emergency assistance services will come in handy especially when you are overseas.

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The tricky part is deciding which perk is a must-have. If you don’t have a stand-alone travel insurance policy, then a credit card that provides you with coverage should be on top of your list. And if you are looking for one with perks at luxury hotels, then go for a card that caters to luxury travel.

4. Fees and Charges

If you follow steps 1 to 3, you have probably already shortlisted a few travel credit cards. The next step is to look at the fees and charges that each card has. Important things to look for are:

  • The effective interest rate (EIR).
  • The annual fee payable on the card and if there is an annual fee waiver. Most cards will offer you an annual fee waiver of 1 to 2 years. You may even find ones that will waive the annual fee for the first 3 years as well. However, some cards that offer added benefits and privileges might not waive the annual fee.
  • Other than American Express and KrisFlyer co-branded cards, all travel cards reward you with points. These points are then converted to air miles. And they usually charge you a fee for each conversion. Comparing the fees and the minimum points required to convert to miles can help you further shortlist these credit cards.
  • Also, look at what the foreign currency transaction fees are.

5. Determine Miles per Dollar (MPD)

It is extremely easy to get carried away by brochures and bank advertisements about their card being the best in the market. But it always helps to do your own calculations. One way to truly understand if your credit card is indeed value for money is to determine its miles per dollar.

How do you that? Well, let’s take HSBC’s Revolution Credit Card as an example. You earn 5x Rewards points for every S$1 that you spend on select categories. Now, according to HSBC, you can convert 10,000 points to 4,000 air miles.

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This means that the earning rate of this card is 2 miles per dollar.

With some simple mathematics, you can determine the MPD for the travel credit cards you have shortlisted so you know that you are getting the most for your money.

6. Sign-Up Bonus

Here is a secret not many people will tell you. Sign-up bonuses are the way most people earn large amounts of miles on their travel credit cards. Every bank wants you to choose their credit card over that of another bank. And to make sure that you do apply for their card, they sweeten the deal with some great sign-up offers.

One card may offer you 20,000 air miles just for having your credit card approved, while the other would probably let you earn bonus air miles on all of your spending for the first 6 months or so. This way, you end up earning air miles just by your application being approved!

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Once you follow steps 1 to 6, you will be able to select a travel credit card that suits your needs. If you find that you do not fit the eligibility criteria in terms of the minimum income required, don’t worry. If you have a good credit score, you can always go to the bank and see if they are willing to give you the card. If that doesn’t work, look for a card that fulfills most of what you want from a travel credit card.

While this entire process may seem like a daunting task, in the beginning, it really is the easiest way to ensure that your card works for you!

So, what do you think about this? Simply share all your views and thoughts in the comment section below. For the latest tech,social media news and reviews, follow firebebble.com on Twitter, Facebook and Instagram

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