Our philosophy on applying for travel credit cards is, it depends. It depends on your personal travel goals and how well you manage your money. If traveling is a hobby or passion for you and you can manage your finances, then it probably makes sense. If traveling isn’t a priority, or you have difficulty managing money, the answer is probably no. There is not a one size fits all approach to this question, but let’s look at a few of the upsides and downsides to having a travel credit card.
Upsides to Travel Credit Cards
The benefits of having one or more travel cards are many, depending on which cards you carry. The best upside of having a card is you will earn miles or points every time you use the card. And, eventually, you will have enough miles to book a flight, stay in a special hotel, and more. The welcome or sign-up bonus you may receive from opening a credit card account will also go a long way in helping you meet your travel goals faster. Many travel credit cards offer extra perks such as discounts with Uber, large department stores, and top-name luxury product brands. If you take advantage of these extras you will definitely save money, but only if it was something you would have purchased anyway.
Downsides to Travel Credit Cards
Two major downsides of travel credit cards (or any credit card for that matter) are the annual fees and the possibility of spending past what you can actually afford. For most major credit cards, the annual fees will vary from $0 to $700. Our experience is that cards with higher annual fees generally offer more extra perks. If you have more than one travel credit card, these annual fees can add up quickly.
The downside of overspending on a credit card is enormous, including bankruptcy. We laugh when we see IG reels with the caption, “Show me the reason you have no money.” You have probably seen this too. It is funny, but not so funny if you have a credit card or debit from travel that can’t be paid off. Also, it makes no sense to overspend just so you can earn your credit card bonus. Doing this will likely counteract any rewards you earn!
Our Experience
What We Carry in Our Wallets
We currently carry four credit cards — American Express Platinum, Chase Sapphire Reserve, American Express Marriott Bonvoy, and Citibank Executive AAdvantage — which costs us $1900 in annual fees. This is quite a chunk of money! For these fees to be worth it, we need to use all or most of the card benefits.
Our travel goals for the last two years were about acquiring as many miles as possible on American Airlines, which has been our choice of airline for thirty years. The way we did this was to use the Citibank Executive AAdvantage card for nearly every purchase and we flew American Airlines for every flight, which also gained us miles. Not only did this help us accumulate an enormous number of Advantage Miles, it also helped us maintain elite status, Executive Platinum and Platinum Pro, and as part of the annual fee we have unlimited access to all American Airlines airport lounges, which we consider to be a great benefit.
We also spend many nights each year at Marriott properties across the world, which is where the Bonvoy card comes in handy. And finally, there is the American Express Platinum card. We carried this card for years then downgraded to the Gold card because, well, we just were not using all the benefits and the annual fee kept going up. However, at some point, American Express offered us the opportunity to upgrade again to the Platinum card and 100K bonus points if we spent $3000 in three months. The truth is, we love this card. It has a lot of benefits, which we are trying to ensure we take advantage of each year.
How We Manage Our Cards
Managing these cards takes work. We have to know which card is best to use under which circumstances such as grocery shopping, fueling the car, dining out, replenishing our business products, and more. We have to track when the annual fees are due and reflect in advance if we want to keep the card or cut ties. Each year, we spend a little time evaluating how we used the cards and whether or not the cards still align with our travel goals.
For example, our Chase Sapphire Reserve card annual fee is due in December, but we have not posted any purchases to this card this last year and we have few reward points left available. We may need to consider canceling this card, but we are also not sure how our travel goals may change in the next year. Chasing miles, points, and status with a single brand is time-consuming and not always in our best travel interest.
Tips for Managing Travel Credit Cards
If you decide to take the plunge into the world of travel credit cards, or you have already taken the plunge, here are a few tips to consider.
- Have a goal in mind for how you would like to use those points/miles
- Start with one card, then open for more if you can handle it financially
- Create a spreadsheet to track each credit card
- by the monthly due date
- cancel by the date if you want to avoid paying the annual fee again
- cost of annual fee
- benefits/extra perks, and
- what to use the card for so you can earn the most points possible (such as 5 X points on dining, fueling the car, etc.)
- Conduct an annual review of how you use each credit card
- Determine which cards to keep and which cards to cancel
- Follow a few experts in the travel credit card game and learn from them how to maximize your benefits
Conclusion
When people sign up for a travel credit card and earn a good number of points by spending $X in X months, those points can be redeemed for flights, hotel stays, car rentals, and other benefits, which is terrific. We have done this many times over the years and have stayed in places we might not have otherwise stayed.
But, keep in mind, there is always a cost to any of these trips. The cost of food, taxis, additional resort fees, and excursions can add up rather quickly and before you know it, you’ve overspent your budget even when the hotel and airfare is paid for with credit card points and miles. On the other hand, if you are armed with this information going in, and you are diligent about your spending habits, using travel credit cards can help give you the kind of travel life you desire.
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