Earning miles and points from credit cards is the way to save big money on travel. But you'll need “right” card for you.
Be sure you aren't paying unnecessary fees or missing out on benefits. I'm going to show you have to save money when you travel by having the right credit card.
There's more to life than the Sign-Up Bonus
Getting a credit card sign-up bonus is like finding a pot of gold or winning the lottery. It's totally awesome, but the thrill soon dies down when next year's annual fee is due.
When picking the “right” credit card, you need one that will provide more value than a one-time boost to your collection of miles and points. I pay plenty in annual fees for my credit cards, but only when there is a real opportunity to save money on an ongoing basis.
It now costs $30 to check a bag!
You've probably seen the news where all of the major airlines have now raised their baggage fees by 20 percent (from $25 to $30). This is a bit of highway robbery! Thank god my favorite airline, Southwest, still has the decency to offer two free checked bags.
If you're going to fly one of the other carriers, there are three main ways to avoid paying the fee.
- Have Elite Status: No thanks, I'm not spending that much with any airline.
- Fly in Premium Cabin: I'd love to, but even I don't have that many miles.
- Have the airline's credit card: Having their card is like buying elite status.
You do have to be careful though because there's a big difference between airline credit cards. For example, if you're paying less than a $95 annual fee for your card, you probably don't have free checked bags as a benefit.
Free checked bag benefit varies by airline
And not every free checked bag benefit is the same among the airlines' credit cards:
- American Airlines: The Citi AAdvantage Platinum Select ($95 annual fee) waives the checked bag fee on one bag each for you and up to four companions on the same domestic itinerary.
- Delta Airlines: The American Express Gold Delta SkyMiles Credit Card ($95 annual fee) provides a free checked bag for you and up to eight companions on the same domestic itinerary.
- JetBlue Airlines: The Barclays JetBlue Plus ($99 annual fee) offers a free checked bag for you and up to three companions on the same domestic itinerary.
- United Airlines: The Chase United Explorer card ($95 annual fee) has the worst free checked bag benefit. Only you and one companion can get a free checked bag on the same domestic itinerary.
As you can see, the benefits vary widely among the different airlines. Most airlines have multiple versions of their cards as well, so review their benefits and choose wisely based on what is most important to you.
Excuse me, I'm on the list
Waiting in line sucks. I would say it is even more lame when you're getting ready to fly.
With most airline co-branded credit cards, you can get priority boarding ahead of many frequent fliers, even if it is your first time flying on that airline. How cool is that?
Even better is that some premium credit cards offer reimbursement of your Global Entry or TSA PreCheck enrollment fees. If you don't know what these are, you're in for a treat! Instead of waiting in line at security, TSA PreCheck lets you avoid the line, keep your shoes on, and skip the invasive search of your bags. Global Entry makes returning home from an international trip into a two-minute process instead of a 30-minute wait.
Don't pay full price when buying food & drinks in the air
I don't buy many drinks or snacks when I fly, but my kids have different plans for my wallet. Just like at the theme park or professional sporting event, you are a captive audience when flying. And that means that the prices for drinks and food are many times higher than what you'd pay at the grocery or convenience store.
Luckily, cardholders of many airline credit cards can save 20 to 50 percent on food and beverages during the flights. Here are a couple examples:
- American Airlines: The Citi AAdvantage Platinum Select offers a 25 percent discount on food and beverages.
- Delta Airlines: The American Express Delta Gold card give a 20 percent discount on food, beverages, and audio headsets.
- JetBlue Airlines: The Barclays JetBlue Plus card gives a 50 percent discount on food and beverages.
- United Airlines: The Chase United Explorer Card offers a 25 percent discount on food, beverages, and in-flight WiFi.
Free night? Yes, please!
It's not just with airlines that you can save a bunch of money if you have the right credit card. With the major hotel chains, you can expect to get a free hotel night just for renewing the credit card or when you spend a little bit of money each year.
True, the hotel reservation isn't completely free. But, if you are going to travel anyway, wouldn't you rather buy your room at a discounted price? Even average rooms can be $200+ a night in most major cities. With my hotel credit cards that offer free nights, I cash them in and save at least 50 percent when comparing the cash price vs. what I'm paying in annual fees.
Free hotel night upon renewal
Here are a few of the credit cards that offer free hotel nights just for paying the annual fee:
- Chase IHG Rewards Club Premier Credit Card ($89 annual fee): One free night valued up to 40,000 points.
- Chase Marriott Rewards Premier Plus Credit Card ($95 annual fee): One free night up to 35,000 points.
- Chase World of Hyatt Credit Card ($95 annual fee): One free Category four hotel stay.
- US Bank Radisson Rewards ($75 annual fee): 40,000 bonus points every year you renew the card, which can be used to book one or several nights, depending upon the hotel's category level.
Free hotel night when you spend
And you'll earn free nights when spending on these credit cards:
- American Express Hilton Ascend ($95 annual fee): One free weekend night that can be used at almost any Hilton property around the world when you spend $15,000 in a calendar year.
- Chase World of Hyatt Credit Card ($95 annual fee): You'll receive an additional free Category four night when you spend $15,000 during your anniversary year.
- US Bank Radisson Rewards ($75 annual fee): Earn up to three free nights each year. Get one free night for every $10,000 you spend in your anniversary year.
Just say No to car rental insurance
Rental car insurance is something that I don't like to pay. The fees are outrageous and the coverage can be limited. Most travel credit cards offer secondary insurance, which means that they'll cover whatever the insurance you have back home doesn't. But there's a better way. Two, actually.
Some premium credit cards offer primary rental car insurance. This means that they'll step in and cover any problems without involving your normal car insurance. Primary rental car insurance is a fantastic benefit, especially if you travel to places with dangerous roads, like when going snowboarding in the mountains.
American Express also offers wonderful rental car insurance at an affordable rate, and it is available on almost all of their credit cards. Instead of paying a daily rate, you'll pay one flat rate of $25 or less that will cover you for rentals periods up to 42 days. The coverage is even available worldwide with a couple of exclusions.
Don't pay Foreign Transaction Fees
Foreign transaction fees are a hidden tax that inflates the price of everything you buy in a foreign currency. If your card is still charging you this fee, it needs to be left at home whenever you travel.
So many credit cards waive the foreign transaction fee as a basic benefit. There is no reason you should be charged this three percent fee when making an international purchase.
Get the right credit card to save even more money
Yes, the credit card you have is probably pretty good. And it might even save you some money and have some cool perks. But are you paying any of these fees above when you travel? If so, it might be time to upgrade or add another credit card to your wallet.