TRAVEL: The Pros and Cons of Travel Credit Cards

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I’ll be the first to admit, it’s really hard to say no to a new credit card when they offer 50,000 bonus miles as an incentive. Right off the bat, it sounds like a killer deal and we all tell ourselves we’ll pay off the balance in full to “work” the system. The next big decision is where to go first.

Hold that thought, young lady! In this day and age, we know that there is no such thing as “free.” Oh, “free bonus miles” if I spent $4,000 in 2 months? That sounds great until you realize that 50,000 bonus miles only covers $150 of your flight, you can’t fly back on a Sunday, and there’s a $100 annual fee. Who really wins in that one?

Let’s review 5 of the most popular travel-related credit cards and make sure they’re really worth it.

 Virgin America Signature Visa

Pros: $150 companion voucher every year, 20% off in-flight purchases, free checked bag, and no blackout dates.

Cons: $49 annual rate, free cancellations only if you’re a Platinum member, 10,000 bonus points upon enrollment- which is essentially $250. This break down means that you would need to spend $5,000 for another $250.

Overall: The $49 annual fee essentially covers the intro miles you get when you enroll for the next few years. The $150 companion voucher each year, however, is a big perk and makes up for the annual fee. You’ll essentially get $250 worth of flight credits for every $5,000 you spend, but you’ll get those points a lot faster if you’re a loyal Virgin customer. If you typically fly Virgin, it’s well worth it. If you’re not, you may way to consider your other options.

 Capital One Venture Card

Pros: High reward rate, 20,000 bonus miles when you sign up (equal to $200), and no blackout dates.

Cons: $59 annual rate, no priority boarding.

Overall: While the annual fee is waived or the first year, if you keep the card for the next 4 years, you’ve already paid for the “free” miles you earned when you signed up. That would typically nullify the point of enrolling, but you get 2 miles for every dollar you spend, unlike the others who typically give you 1 point per $1 spent. The reward points can be used for any travel related expense, including a checked bag. If you’re not loyal to a particular airline and can avoid carrying a balance (avoid the 13 – 20% interest rate), then this might be the card for you. It’s flexible and rewards stack up faster than with any of the other options, if you’re willing to give up priority boarding

 Southwest Airlines Rapid Rewards Visa

Pros: 25,000 bonus points, no foreign transaction fees, 6,000 bonus points every year.

Cons: $99 annual fee, all customers get free checked bags to begin with

Overall: The benefits here aren’t worth the rewards. Sure, you’ll get the occasional drink tickets, but 6,000 annual points doesn’t justify the $99 annual fee. All passengers who fly Southwest have free checked bags and don’t need to pay change fees. While this is noted as being a “perk,” I would beg to differ since it’s available to all passengers. Much like Virgin’s plan, if you’re loyal to the airline, it’s worth your consideration. However, if you’re given the option to fly Southwest or American Airlines, who would ever pick Southwest?

Starwood American Express

Pros: Great reward program, no black-out dates, and $0 introductory fee.

Cons: $65 annual fee, not all airlines are part of their point transfer program, need great credit.

Overall: This is one of the best programs I was able to find, but it comes at a price. Since it’s an American Express, you’re going to need good credit to make this card a reality. If you quality, however, it’s well worth it. The points you earn and multiple ways to redeem them (hotels and flights) are great. If you transfer the points to the airline program, you even get bonus points. How’s that for a win/win?

 Citi Platinum/AAdvantage World MasterCard

Pros: 30,000 miles, Priority Boarding, free checked bag for you and up to 4 companions, travel insurance, rental car insurance, lost luggage covered up to $3,000

Cons: $95 annual fee, need to spend $30,000 for $100 voucher, interest varied from 13.99% – 21.99%.

Overall: The mileage perks for this card aren’t the best, but the added travel benefits make it worth it. If you check a bag and it gets lost, they’ll cover up to $3,000 to make sure you’re taken care of. The Travel Assistance Services are something people tend to over look but come in handy when you’re traveling to a new town. If you’re sick and don’t know where to go, or even bump into legal issues, they’ll help refer you to someone who best meets your needs.

 

Keep in mind, for all of these cards the interest rates will vary depending on your credit. You may even be able to call and have the annual fee waived for the second year. Do what you can to avoid carrying a balance and paying interest, otherwise you might as well have just bought the points outright. Always check the conversion rates before you commit, too. 50,000 bonus miles might sound like a lot, but most of the time that only equated to about $200.

Let me know if you have a credit card that you love that I didn’t mention. I’m happy to share any additional information you can all pass along! Oh, and happy travels, stay babely!