Don’t believe the hype – not all credit cards are bad. In fact, some offer specific benefits that cannot be rivaled by conventional debit cards. This is especially true in the case of travel credit cards.
In a nutshell, these travel-specific credit cards allow you to reduce the adverse effects of foreign exchange rates. In fact, some cards allow you to avoid them in their entirety. Not only this, but you might even benefit from additional rewards when you use your travel credit card to make travel-related purchases.
With that being said, we have created the ultimate guide to travel credit cards. We cover everything that you need to know, such as how a travel credit card works, who they are suitable for, what perks you are likely to get, and how much money you can save by using one.
Best 5 Travel Credit Cards
- 1 Best 5 Travel Credit Cards
- 2 What are Travel Credit Cards?
- 3 The Woes of Foreign Exchange Fees
- 4 ATM Withdrawals
- 5 Using Your Card at a Physical Location
- 6 How can a Travel Credit Card Reduce Foreign Transaction Fees?
- 7 Travel Credit Card Rewards
- 8 How to Take Full Advantage of a Travel Credit Card
- 9 Compare Travel Credit Cards
Before we get into the details about Travel Cards, we are now going to discuss the best 5 cards currently in the market.
Capital One® Venture® Rewards Credit Card
The first travel rewards card that we would like to discuss is that of the Capital One Venture Rewards Credit Card (not to be confused with the VentureOne card offered by the same provider). In a nutshell, the card is perfect if you spend a lot of money on travel-related purchases. In fact, if you find yourself spending a lot on hotels, then you can earn yourself 10x air miles for every purchase.
Take note, the purchase must be made via Hotels.com. Although the online platform is super-competitive, you might be able to find a cheaper deal elsewhere. If you do, you need to weigh up whether or not the air miles are worth paying more for. Nevertheless, the Capital One Venture Rewards Credit Card will also offer you 2x miles on all other purchases. This is pretty good, as it includes any spending category.
This means that core purchases such as gas and groceries will always earn you points. What we really like about the card is that it comes with a super competitive introductory offer. By spending $3,000 within the first 90 days of receiving the card, you will earn a whopping 50,000 air miles. When we unravelled the terms and conditions in closer detail, we found that this amounts to a real-world spending credit of $500.
As an added bonus, the card does not come with any foreign transaction fees, so you can use your card overseas without worrying about expensive charges. Furthermore, the points that you earn will never expire, and there is no limit to the amount that you can earn.
In terms of the fundamentals, the card doesn’t come with any 0% interest offers on balance transfers or purchases. As such, you will instantly be put on to the standard APR plan of between 17.49% and 24.74%. Moreover, the card comes with an annual fee of $95, although this is waived for the first 12 months.
Capital One® VentureOne® Rewards Credit Card
As noted above, Capital One has a very similar travel rewards card in the shape of its VentureOne credit card. Although there are some clear similarities between the two cards, it is important to break this down in more detail. First and foremost, the card still pays a whopping 10x air miles when you make purchases via Hotels.com. However, while the Venture credit card pays 2x air miles on all other purchases, the VentureOne pays just 1.25x.
Nevertheless, the VentureOne card is also ideal to take with you when travelling as you will benefit from zero-fee foreign transactions. Don’t forget, you will still need to pay a local ATM fee if one is charged, as Capital One has no control over this. When it comes to the introductory bonus, the VentureOne Rewards Credit Card will offer you 20,000 air miles when you spend $1,000 in the first 90 days.
This works out at around $200 in travel-related spending, which is still very competitive. Although the VentureOne card offers a lower cashback rate on non-Hotels.com purchases, it doesn’t come with any annual fees whatsoever. Moreover, and perhaps most importantly, you will get to enjoy 12 months of 0% interest on purchases.
On the contrary, the Venture card doesn’t offer any 0% intro offers. Once the 12 month period has expired, you will revert to the standard variable APR of between 13.74% and 23.75%. The specific rate will depend on your creditworthiness at the time of the application.
As a final note – and much like in the case of the Venture card, the VentureOne card allows you to exchange your air miles with over 12 loyalty programs, and there are no blackout dates to consider. Furthermore, you can choose to fly with any airline of your choice, and there are no restrictions on your chosen hotel.
Bank of America® Travel Rewards Visa® credit card
The Bank of America Travel Rewards Visa credit card is a bit of an all-rounder, as it offers a number of benefits that we think you might like. Firstly, the card comes with a native rewards offer that consists of 1.5 points for every $1 that you spend.
We should also note that those of you that fall within the remit of a Preferred Rewards member will earn a points boost of between 25% and 75% on all purchases. The card does not favour particular spending categories, meaning that you will earn miles every time that you use the card – both domestically and overseas.
While we are on the discussion of being overseas, the card offers fee-free foreign transactions, so it’s yet another option for you when it comes to travelling. The points that you earn will never expire, and they can be used on an array of travel-related purchases such as flights, hotels, vacations, rental cars, and more.
On top of the longer-term points offer, the card also comes with an attractive introductory bonus. In a nutshell, when you spend $1,000 within the first three months of opening the account, you will receive 25,000 bonus points. When you do the maths, this works out at around $250 worth of statement credit.
Although the Bank of America Travel Rewards Visa doesn’t come with a balance transfer offer, you will benefit from 12 months of 0% interest on purchases. After this, the standard variable APR is from a minimum of 16.74%, up to a maximum of 24.74%. Finally, the card does not come with any annual fees, which is an added bonus.
Capital One® Spark® Miles for Business
Capital One makes its way on to our list of the best travel rewards cards for the third time with its Spark Miles for Business card. The rewards and benefits that come with the card are plentiful, so let’s break them down one-by-one. Firstly, the card offers a lucrative introductory offer that amounts to 200,000 air miles when you spend $5,000 in the first 90 days.
This works out at approximately $2,000 in rewards that can then be used to make purchases on flights and hotels. In even better news, you will get an additional 150,000 bonus points if you then spend a further $50,000 in the first 6 months. Due to the sheer size of the spending requirement – and as the name suggests, the Capital One Spark Miles for Business is best suited for those that regularly travel on business.
Nevertheless, on top of the introductory offer, you will earn 5x miles every time you use the card to purchase rental car bookings or hotels. Take note, you’ll need to do this via the Capital One Travel platform, so your options might be somewhat limited. Outside of hotels and rental cars, you’ll earn 2x air miles on every $1 that you spend – irrespective of the spending category. Moreover, there are no monthly or annual limits on the amount of air miles that you can earn.
The card also comes with a number of other benefits, such as an $85 credit that can be used on TSA pre-checks, or a $100 Global Entry application. In terms of the negatives, the card does come with an annual fee of $95. However, this is waived for the first 12 months. Furthermore, you won’t benefit from any 0% interest periods on balance transfers or purchases. Finally, the card comes with a variable interest rate of 18.74%.
Bank of America® Premium Rewards® Visa® credit card
The final travel rewards card on our list is the Bank of America Premium Rewards Visa credit card. The card allows you to earn 2x air miles on every $1 that you spend on travel and dining-related purchases. For everything else, you will earn 1.5x per $1 spent. Regardless of whether you are targeting the 2x or 1.5x rate, there are no limits to the amount of points that you can earn.
You also have the chance of boosting your air miles by between 25% and 75% if you currently hold a Bank of America Preferred Rewards membership. When you use your card overseas, you will not encounter any foreign transaction fees, which makes it suitable as your primarily travel credit card. Furthermore, the card offers $200 in statement credit that can be used on airport fast-track services.
The card doesn’t, however, come with any 0% offers on balance transfer or purchases. You will also need to pay a $95 annual fee, which isn’t waived for the first year like the other cards on our list. As such, you need to ensure that the rewards you expect to earn will be higher than the $95 fee. Finally, the card comes with a standard variable APR rate of between 17.74% and 24.74%.
Other Types of Credit Cards
- What Are the Best Secured Credit Cards?
- What Are the Best Balance Transfer Credit Cards?
- Best Credit Cards for People With No Credit
- What Are the Best Credit Cards for Students?
- Best Reward Credit Cards
- Best Cash Back Credit Cards
What are Travel Credit Cards?
In its most basic form, a travel credit card is much the same as any other credit card, insofar that it allows you to purchase goods and services within your agreed credit limit. However, as credit cards now come in a range of shapes and sizes, this particular breed focuses exclusively on travel.
Notably, this comes in the form of favorable exchange rates when using the card overseas, as well as enhanced reward points for using the card on travel-related expenses.
As is the case with most credit cards in the US market, the best deals are typically reserved for those with a good or excellent credit rating. If you don’t fall within this bracket, you won’t be excluded completely, albeit, the benefits that come with the card will likely be less competitive.
As we will discuss in more detail further down, the overarching concept of obtaining a travel credit card is that it should only be used to take advantage of the benefits that come with the card. In other words, you shouldn’t use the card to rack up bills on things you don’t need, and certainly not on things that don’t come with reward points (or a favorable exchange rate when abroad).
Furthermore, by always clearing your monthly statement in full, you stand the chance of utilizing these benefits without paying a single cent in interest. In fact, if the travel credit card also comes with a cashback rewards program, it can work in your favor.
So now that you have a brief understanding of what a travel credit card actually is, in the next section of our guide we are going to explore the ins and outs of foreign exchange fees.
The Woes of Foreign Exchange Fees
Before you make the decision as to whether or not a travel credit card is worth your while, we think it is highly relevant to explore just how crippling foreign exchange fees can be. This typically comes in two main forms – withdrawing cash from an ATM, or using the card physically – such as in a restaurant or hotel.
Either way, the process remains constant. When you use your everyday debit card overseas, the underlying financial institution will need to perform a currency conversion on your behalf. This means that they will need to take the current spot rate into account at the time of the transaction.
It isn’t as straightforward as that, as the multi-trillion-dollar inter-bank industry relies heavily on the SWIFT network to exchange currencies. Not only is the process slow, cumbersome, and fraught with red-tape, but it is also extremely expensive – especially when non-major currencies fall into the equation.
As is to be expected in the current state of the banking arena, your card issuer will, of course, want to make a financial return when facilitating currency exchanges on your behalf. This is the key reason that you are likely to run into multiple fees when spending cash abroad.
Let’s break down the fees that you will typically encounter when using your standard debit/credit card overseas.
Unless you are looking to take the risk of carrying thousands of dollars with you when traveling overseas, it is likely that at some point you will need to withdraw cash from an ATM. If using a standard debit/credit card that does not specialize in travel, then you will be hit with a range of fees.
First and foremost, this will either come in the form of a fixed fee, a percentage fee, or a combination of the two. For example, the card issuer might charge you 3% of the transaction amount, plus $5 for each withdrawal.
Furthermore, you then need to make some considerations regarding the actual ATM itself. While this will depend on the specific country you are visiting – as well as the bank behind the ATM, it is likely that you will be charged a withdrawal fee.
If you are, this will usually come as a fixed fee, regardless of how much you withdraw. Taking all of these fees into consideration, let’s look at a quick example to see just how costly it can be.
Example of ATM Fees When Abroad
- You take a trip to Italy and decide to use your US debit card to withdraw some cash from an ATM
- As they use the Euro in Italy, you want to take out the EUR-equivalent of $400.
- The ATM that you have decided to use charges a flat fee of $7 to make a withdrawal
- The issuer of your card also charges a flat fee of $5 per overseas withdrawal
- Furthermore, the issuer also charges a foreign transaction fee of 3%, which amounts to $12
As you will see from the example above, you have been hit with fees on three fronts. You’ve been charged $7 by the Italian ATM provider, a flat fee of $5 by your US bank, and a variable fee of $12 by your US bank. All in, that amounts to a $24 fee for withdrawing just $400 in local currency! In other words, that amounts to a foreign exchange fee of 6%!
Using Your Card at a Physical Location
The second option that you have when traveling overseas is to use your US bank card in-person. This could be useful in places such as hotels or restaurants – on the proviso that the merchant accepts Visa or MasterCard. However, this isn’t always guaranteed, especially if you are visiting a country in a less developed region.
Nevertheless, using your card at a physical location is potentially more beneficial than taking money from an ATM. Firstly, as you are not using an ATM, you won’t need to contend with a local ATM fee. Moreover, you also stand the chance of avoiding the flat-fee charged by your US bank for using the card at a foreign ATM.
However, you will still need to take into account the foreign exchange fee that is based on the size of the transaction. In most cases, this will average between 1-3% of the transaction amount. At the higher end, a $1,000 hotel bill would cost you an additional $30 in fees. Over the course of your trip, this can start to add up very quickly.
So now that you know just how costly using your card overseas can be, in the next section of our guide we are going to look at how a travel credit card can help.
How can a Travel Credit Card Reduce Foreign Transaction Fees?
Depending on the health of your current credit score, you might be able to obtain a travel credit card that wipes all foreign exchange fees. In reality, you will need to have a FICO score of at least 670 – which represents a ‘Good’ rating.
Nevertheless, these travel-specific credit cards often come with the promise of inter-bank rates. In other words, you will get the exact same mid-market exchange rate that the underlying card issuer gets – meaning that you stand to save a considerable amount of money.
Not only does this come in the form of the exchange rate itself, but some cards also alleviate the foreign ATM usage fee. Once again, this can save you heaps of money. However, do bear in mind that if you do use a foreign ATM, you will still be charged if the local machine in question implements a flat fee.
Moreover, some overseas ATMs might not have the capacity to accept a foreign-based credit card, so make sure that you do your homework. If you do have issues finding a suitable ATM, try to find out if your chosen destination is home to an overseas branch of a US financial institution.
Travel Credit Card Rewards
If you have read our Travel Credit Card Guide up to this point, then you’ll now know just how much you could save on unfavorable foreign exchange rates and ATM withdrawal fees. In even better news, a lot of travel credit cards also come with a very competitive rewards program.
This gives you the chance of earning points every time you use the card – especially if it is related to travel. For example, the credit card might give you triple points when using your card at overseas restaurants or hotels. Alternatively, you might get extra points for using a specific hotel booking website. Either way, if you were going to make the purchase anyway, it is well worth using your travel credit card to take full advantage of the points offer.
Here’s a breakdown of how the rewards will typically work on a travel credit card.
First and foremost, a good number of travel credit cards now come with a highly competitive introductory offer. This is no different from obtaining a balance transfer credit card that lures you in with 18 months of 0% interest. In the case of travel credit cards, this usually comes in the form of a huge points allowance when you meet certain criteria.
For example, while the card might ordinarily pay 1 point for every $1 spent, you might get 30,000 points when you initially spend $2,000 in the first 90 days. In most cases, introductory offers do not require you to use the card on travel-related expenses to meet your target, so if you’re shrewd and use the card wisely, you should be able to get there with ease.
Standard Points System
Outside of the introductory offer, your travel credit card will come with a points structure. In layman terms, you will be offered a fixed number of points every time you use the card. In the vast majority of cases, certain purchases will get you a higher number of points.
For example, your travel credit card might give you 3x points when you use the card to book hotels or flights, and 1x points on everything else. This means that you should always use your credit card if you were going to make the purchase with cash anyway.
However – and as we will discuss further down, it is imperative that you put the money to one side so that you are able to settle your credit card statement in full when it is due. Otherwise, you’ll be liable to pay interest on your prior purchases, subsequently making the travel rewards exercise counter-intuitive.
Redeeming Your Points
As you continue to use your travel credit card on eligible purchases, you will begin to accumulate more and more points. Each credit card will come with its own redemption system which dictates what you can exchange your points for. This usually comes in the form of cashback, gifts, or air miles.
Regarding the cashback, the redeemed amount will subsequently be reduced from your credit card bill. Once again, the specifics will vary depending on the travel credit card provider. As an example, if your upcoming statement amounts to $900, and you have achieved a $40 cashback, this means that you will only need to pay $860.
If the travel credit card comes with a redemption model that centers on gifts, then this will usually be related specifically to travel. For example, the card might offer you a gift card balance that needs to be used at a specific airline or hotel website. In other cases, the credit card company might have its own proprietary travel platform that allows you to spend the points directly.
Alternatively, the travel credit card might be based on air miles. This is where each and every point amounts to a specific number of air miles, which you can then exchange at a specific airline. This might allow you to obtain a reduction in flight costs, upgrade to business class, or cover the costs of an airport lounge.
How to Take Full Advantage of a Travel Credit Card
If you like the sound of what a travel credit card offers, it is imperative that you have a firm grasp of what you should and shouldn’t do. In other words, if not used correctly, you stand the very real chance of paying more than what the rewards are actually worth.
Check out the following tips that will ensure you get the most out of a travel credit card.
Utilize your introductory offer
As we discussed earlier, a good number of travel credit cards now come with a juicy introductory offer. This is an attempt to lure you over, so why not take full advantage? You will often find that the points on offer during the introductory period will be significantly higher than what you would ordinarily get, so it shouldn’t take too much effort to reach your target.
On the other hand, we can’t stress enough the importance of refraining from making purchases simply for the purpose of obtaining your introductory points. This will render the exercise pointless, as you’ll end up spending more than what the points are worth!
Forget Cash – Use Your Card Before You Depart
If your travel credit card comes with an ongoing rewards system that gives you points every time you use it, then it would be foolish not to take full advantage. By this, we mean using it at every given opportunity. However, it is crucial to remember that you should only use the card if two key conditions are met.
Firstly, the purchase needs to be on something that you were going to buy with cash anyway. This could be anything from gas, coffee, or groceries. Secondly – and just as importantly, you need to make sure that the purchase is eligible. For example, there would be no benefit in using your card to pay for your weekly gas purchase if you won’t receive any points!
Always Repay Your Balance In-Full
As great as a travel credit card can be, don’t forget that you still need to pay interest on the purchases you make. Rarely will you find a suitable travel credit card that comes with 0% on purchases, meaning that any outstanding balances will be liable for interest.
In fact, we often find that travel-related cards come with a somewhat unfavorable APR rate, so it’s absolutely crucial that you pay your balance in full each and every month.
In order to help you along the way, we would first suggest setting up an electronic agreement with your checking account provider. This is where the credit card company will take your repayments automatically. Rather than instructing them to take the minimum, set the agreement up so that it takes the balance in full every month.
Furthermore, if you are going to be using your credit card with the view of maximizing your travel rewards, you need to ensure that you put the cash to one side. In other words, if you use your card to pay for $100 worth of gas, put the $100 into a dedicated checking account so that you always have enough to cover your monthly statement – in full!
Maximize Your Foreign ATM Withdrawals
When it comes to using your card at an overseas ATM, you must not forget the local ATM charge. Some countries are notoriously bad for this, meaning that you will need to encounter the fee every time you make a withdrawal. This is why you should always maximize your cash withdrawals so that you can avoid constantly paying the flat ATM charge.
For example, let’s say that the ATM charges $7 per withdrawal. If you withdrew $300 on Monday, and then a further $300 on Friday, you would pay $14 in fees ($7 x 2). However, if you instead withdrew $600 on Monday, you would only be required to pay the ATM fee once!
Never pay in US Dollars When Given the Option
This final tip centres on something that frustrates us greatly here at MoneyCheck, as it is nothing short of scandalous. In a nutshell, we are referring to a ‘Dynamic Currency Conversion’.
Let’s say that you are visiting Thailand and you decide to use a local ATM. Upon going through the process of selecting how much you want to withdraw, you are then asked whether you would like the transaction to be processed in ‘Thai Baht’ or ‘US Dollars’. For those unaware of how a Dynamic Currency Conversion works, it is reasonable to suggest that most of us would choose US Dollars. After all, that is the native currency of the respective credit card, so why wouldn’t we choose it?
Unfortunately, by selecting US Dollars over the ATM’s local currency, you will be accustomed to a significantly adverse currency exchange rate. In fact, forget the fact your travel credit card comes with a competitive offer of 0% on foreign exchange rates, as this won’t be able to help you.
The reason for this is that a Dynamic Currency Conversion is a way for the local financial institution behind the ATM to make additional profit from you. They do this by effectively using their own exchange rate, as opposed to the mid-market rate that they are able to get. As such, you’ll end up paying heaps of money in unwanted fees!
Compare Travel Credit Cards
Head over to our partner to compare the top travel credit cards and make your application.