Ask the Classy Frugalist: Should I Get a Travel Credit Card?

Thank you to each and every one of you who read my blog. Whether this is your first time reading or you read my posts every Tuesday, I’m grateful. You may have noticed that there was no post last week. I apologize – I have been dealing with a family emergency over the last week and a half. I will do my best to continue bringing content every week, but there may be another break in content if things get too overwhelming. With that said, let’s get on to this week’s post.

Let’s say you’re looking for a new credit card and you’re considering a travel credit card. How do you know if it will be worth it? Is there a certain amount of travel that you should be doing to make the perks and the cost of the card worth it?

Following my recent series on credit cards, Beth asked just this question. She writes, “Every week I find I receive at least one piece of mail encouraging me to get a new credit card. I've considered a Southwest or other airline-related card that would help me accumulate airline miles, but have never felt I travel enough to justify the upfront or yearly cost associated with it (I admit I did rough math on this!). I travel maybe 4-5 times per year on an airplane. For those of us not always interested in doing the math calculations, do you have an average of how much travel would justify getting a flight miles related card?

That is a great question, Beth, and one that I struggled with a lot when I decided to get my first travel card. At that time, I was traveling about 6-8 times per year and I just wasn’t sure if that was enough. Here are a few things that I invite you to consider as you make this decision. For the sake of this post, I’m going to assume that you already know that you need another credit card. Not sure, if you need it? Take a look at this post.

·      Is travel a core part of your lifestyle? Many people sign up for these cards because of the introductory offer. Others sign up for these cards because they want to be a person who travels often. I wouldn’t sign up for one of these cards until travel is already a central part of your lifestyle and you see the potential for the amount of travel growing. The amount of travel you would need to make it worth it varies from person to person and card to card – we’ll take a closer look at the math later in the post. Bottom line, having a travel card will not encourage you to travel more if you aren’t already doing it. In fact, getting a travel card may mean that you miss out on another credit card that’s a better fit for your lifestyle.

·      Are you ready to commit to one brand? Many travel cards, including the one that you mentioned from Southwest, require you to commit to one brand. Ok, it’s not a requirement, but using other brands won’t allow you to make the most of the card benefits. Is this the brand that you want to be tied to when you travel? Take a look back at your flights over the past year or two – is this the brand that you have chosen. Or, do you like scouring for the best deals and not sticking to one brand. For those of you not looking to commit to one brand, there are some travel cards that allow you to use your points with a variety of different brands, like the Chase Sapphire PreferredÒ Credit Card or the Bank of America Travel Rewards Credit Card.

·      Do the card’s benefits really outweigh the cost? Many cards offer seductive introductory offers and interest rates. I would encourage you to ignore those as you consider how the card will work for you over the long-term. Let’s take a look at the card that you mentioned – the Southwest Airlines Rapid Rewards Plus Card. The annual cost is $69. For this cost, you will earn double points on Southwest Airlines purchases as well as Rapid Rewards hotel and car rental partners. You also receive 3,000 points on your card anniversary each year – which can add up over time but isn’t likely enough to purchase a free flight depending on where you want to go. This card has foreign transaction fees, but the Premier Card doesn’t. If you are very committed to this airline and fly it often, I could see how these points – particularly with the Premier Card – could really add up over time and help you achieve a higher status and the coveted Companion Pass. This Nerd Wallet article can help you break down the math on the Premier Card. But for someone looking for a travel credit card, it’s possible there are better deals out there for you.

To help you put this in context, I have the Platinum Delta Skymiles Credit Card. While this card costs $195/year, the perks far outweigh the cost. The main reason I upgraded to the Platinum card was the Domestic Main Cabin round-trip Companion ticket – this allows me to take my husband with me on one trip each year. This year, I took him with me to Portland. The cost of my ticket was $380.40, the cost of his ticket was just the taxes and fees - $28.40. Our total savings was $352. Already, the card had more than paid for itself, this doesn’t even include the perks of zone 1 boarding, a free checked bag, and more!

·      What’s the interest rate? If you are looking for a card on which to carry a balance, likely a travel card isn’t the best choice for you because many travel cards have high interest rates. My Platinum Delta Skymiles Credit Card has an interest rate of 20.74%. it looks like the Southwest Airlines Rapid Rewards Plus Card has around the same interest rate. I can’t warn you enough – this interest can add up FAST! Be careful what you charge to this card, especially during the introductory period. Achieving an additional mileage or statement credit because you spent $3,000 in the first three months is NOT worth the debt if you can’t pay it off.

·      Are you working toward status? I can speak from experience that having credit cards with specific brands can really help you as try to climb the status tier with a specific airline or hotel. As I mentioned earlier, if you’re trying to gain A-list status with Southwest that would be a great reason to get this card. In fact, this year Marriott gifted me Gold Status because they saw I was getting close between my hotel stays and purchases with MARRIOTT REWARDS® PREMIER CREDIT CARD.

·      What are the introductory perks? This is listed last for a reason – introductory perks should be the icing on the cake of a credit card that fits your needs and lifestyle NOT the main reason that you sign up for the card. Don’t be enticed by credit card companies’ clever marketing tactics – there’s a reason why they are trying to lure you in. Many people end up with more debt than they expected after the introductory period and this allows companies to more than pay for the perks. If you are trying to decide between two different cards that are equally good for your lifestyle, let the introductory perks be a deciding factor. Otherwise, let them be the icing on the cake. As you consider when to get your card think about how you’ll maximize the introductory perks. For instance, if you are required to spend $3000 on the card in three months wait to get the card (if you can) until a period where you could spend that money – on a vacation or Christmas gifts – and have the money available to pay it off during that period too.

Wondering what travel credit card is right for you? Check out these reviews of the best travel credit cards of 2018 by NerdWallet, SimpleDollar, and CreditKarma. I also found this travel credit card study by NerdWallet really fascinating.

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Editorial Disclaimer: Opinions expressed here are mine alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities. I get a commission for some of the links on my blog. You don’t have to use my links, but I’m grateful when you do.