Here’s how travel rewards credit cards work
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We get it. The world of travel reward credit cards can be confusing and extensive with hundreds of options to understand. Here at Million Mile Secrets, we’re constantly tracking the best cards and easiest ways to earn points and miles. So, let us break down how a travel reward credit card really works. We promise you’ll be on your way to being an expert by the end of this article.
What is a travel reward credit card?
Short Answer: A credit card that earns you rewards on purchases; you can then use the rewards on travel-related expenses.
Long Answer: A travel rewards credit card will earn you points or miles when you use it to make any purchase. Every credit card has its own rewards structure, so different purchases earn different amounts of points or miles. Typically, you earn the most rewards for making travel-related purchases, but you can also earn for buying groceries, grabbing an Uber, dining out and more. Some cards come with travel perks too, like airport lounge access, hotel elite status or free checked bags.
Once you’ve accumulated a number of points and/or miles by making purchases on your card, you can redeem them. This can mean free or discounted flights, stays at hotels, cash back or even the ability to erase travel-related expenses from your statement.
Sounds pretty good, right?
Now lets take a look at the different types of travel rewards credit cards.
Airline credit cards
If you’re a frequent flyer, considering an airline credit card could be the right move for you. These types of reward credit cards are co-branded, meaning the issuer and the airline have partnered together to offer the card.
By staying loyal to a particular airline and opening up a credit card with them, you’ll earn miles every time you use your card. For example, the United℠ Explorer Card allows you to earn 2x miles for every $1 spent on United, food and hotels, and 1x mile for every $1 spent on all other purchases.
These cards normally come with big sign-up bonuses for spending a minimum amount, which is usually enough for a free flight (or two)!
Additionally, airline credit card holders often get extra perks when flying with the airline — things like free checked bags, access to complimentary upgrades, priority boarding, lounge access and more.
For example, anyone who holds the Delta SkyMiles® Platinum American Express Card will get priority boarding and a free checked bag for the cardholder and up to eight travel companions on the same reservation. That can easily mean hundreds in savings on a round-trip flight if you’re traveling with a larger group of family or friends!
Hotel credit cards
A similar option to airline credit cards, but for those who frequent hotels, are hotel credit cards. These function much the same way as co-branded airline cards do, except when you spend money on one of these cards, you get hotel points instead of airline miles.
For example, The World Of Hyatt Credit Card earns 9x total points per $1 spent on Hyatt stays, 2x points for transportation, flights, dining out and gym memberships and 1x point for all other purchases. With systems like this, it’s easy to earn free nights at your favorite hotel.
These cards also come with perks like elite status and annual free nights. Plus, the welcome bonuses with these cards can earn you multiple free nights all on their own.
Flexible points-earning credit cards
If you’re not particularly loyal to a certain airline or hotel, consider getting a flexible points-earning card. These cards will earn you bank points for purchases you make, which can then be transferred to a variety of airline and hotel partners.
For example, the Chase Sapphire Preferred® Card earns 2x Chase Ultimate Rewards points (some of our favorite flexible points!) for travel and dining purchases and 1x Ultimate Rewards points on all other purchases. In addition, new cardholders have the opportunity to earn a 80,000 point welcome bonus after spending $4,000 on purchases in the first three months of account opening.
The great thing about flexible points programs is that they provide you with lots of options when it comes to using your rewards. Flexible points programs include:
- Amex Membership Rewards points
- Chase Ultimate Rewards
- Citi ThankYou Points
- Capital One miles
- Marriott points
Flexible points earning cards also often offer perks like hotel elite status or statement credits for travel. But, the main attraction in these kinds of cards is their versatility and flexibility.
How to apply for a travel rewards credit card
If you’ve decided a travel rewards credit card is for you, the next step is applying for one. There are a lot of options, so it’s important to understand your needs and think about which card is the best fit for your travel goals and spending habits.
Check out Million Mile Secrets’ picks of the best travel reward credit cards and start researching! Pay special attention to the annual fees and our opinions on what the card is best for. The goal is to find a card that fits best into your lifestyle, so you can accumulate rewards without changing your day to day life.
Important questions to ask yourself are:
- Do I want flexible rewards or am I ok with staying loyal to one airline/hotel and it’s partners?
- Do I value cash back over hotel points or airline miles?
- What hotel chains are located in places I want to visit? What airlines (and their partners) fly to where I want to visit?
- Will the perks I get from the card outweigh the card’s annual fee, and will I actually be able to use those perks?
It’s important to remember that travel rewards cards are the same as any other credit card — your credit score will be impacted when you apply, you’ll (sometimes) have to pay an annual fee and you’ll need to make sure you pay off your bills on time and in full every month.
That last point is key, as any interest you pay to a bank will negate the value of any rewards you earn.
But with all of the responsibility comes big rewards! So, once you’ve narrowed down your options and made a selection for which card you’ll apply for, follow the link to the card you want, and begin the application process.
The bank you’ve chosen will process your application and determine if you’re eligible. Once you’re approved and have your new card, you can start racking up those rewards!
How to use a travel reward credit card
After you’ve officially added a travel card to your wallet, then comes the fun part — using it!
The best way to accumulate points and miles is to swap out your debit card and cash for your reward credit card. Most cards have a pretty straightforward system, but as mentioned before, many cards have bonus categories when making purchases in certain categories like groceries, dining, transit and more.
If you begin making all your normal purchases with your travel reward card, you’ll start earning benefits you otherwise wouldn’t get with other payment methods.
Plus, many travel reward credit cards have no foreign transaction fees, so you won’t get charged extra when you’re actually traveling abroad and putting those hard-earned rewards to good use.
As your rewards accumulate, keep track of them! Is there a big trip you want to save up for? Are you waiting to take a spur of the moment flight to visit family?
Keep track of your points and miles and create travel goals you can put them toward. When you’re ready to use your rewards, book a flight through a bank’s travel portal or complete an award search on an airline’s or hotel’s website and book directly with the travel provider.
Just make sure you know which points you’re getting and using!
For inspiration on awesome award redemptions, read our guides on the best ways to use:
- American Airlines miles
- Delta SkyMiles
- United miles
- American Express Membership Rewards points
- Chase Ultimate Rewards points
- Citi ThankYou points
- Capital One Miles
Insider Secret: With a lot of cards you can earn a welcome bonus when you sign-up and spend a certain amount on your card in a certain amount of time. Take advantage of those extra rewards! For example, the Chase Sapphire Preferred® Card earns 80,000 Ultimate Rewards points after spending meeting minimum spend requirements.
The points and miles hobby is one that pays to get into — literally. A travel rewards credit card is a card that will earn you points, miles, flexible rewards or cash back every time you make a purchase, that you can then use to book free travel.
It’s important to research different cards and determine which one fits your lifestyle. Once you apply and get approved, you can start using your rewards card to make all your purchases.
When you switch your regular payment method to a rewards credit card, you’ll see the benefits come pouring in. Free flights, discounted hotels and erased travel purchases are waiting for you!
Featured image by Jacob Lund/Shutterstock.
Chase Sapphire Preferred® CardAPPLY NOW
Chase Sapphire Preferred® Card
Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 80,000 points are worth $1,000 toward travel.
Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash’s subscription service. Activate by 12/31/21.
Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
Either $5 or 5% of the amount of each transfer, whichever is greater.
Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)