Home Travel Advice How to Choose the Right Rewards Credit Cards

How to Choose the Right Rewards Credit Cards

by Grant
How to Choose the Right Reward Credit Cards

One of the best ways to maximize your travel is by using rewards credit cards. That said, there are A LOT of options when it comes to rewards credit cards. How do you choose the right travel rewards credit card for you?

We have been using various rewards credit cards for more than 10 years. We have had great success in making the programs work for us. Companion tickets, free night stays, points and miles have saved us thousands of dollars. Indeed, our last winter road trip saw us pay for only two nights out of a 12-day vacation with cash. 

We have even managed to use credit card rewards points for all of our hotel stays, nearly all of the rental cars and half of our airfare for our upcoming five-week visit to Hawaii. To put some numbers on that: for our initial bookings, we’ve spent about $4,200 and saved about $7,500. (We’ll have more details on how we did this in an upcoming article.)

Let’s talk about how you can do this, too. 

(Disclaimer: When we link to places you can buy our stuff or places we stayed, we are using special codes which earn us commissions on the sales at no additional cost to you. Please see our Review Policy  for more information.)

Rules for Using Rewards Credit Cards

Let’s start with a couple of ground rules:

  1. NEVER, EVER carry a balance. If you carry a balance on your credit card, the interest fees will eat up the value of any rewards you get. Pay your bill every month in full.
  2. Put every single transaction you can on a credit card. You want to maximize how many points you get. You do this by putting everything on a card… and then paying it off at the end of the month. Be wary, though, of large fees for credit card transactions. Anything larger than 3% or so costs too much versus the value of your points.
  3. Keep a budget. We use mint.com to keep track of all of our spending to make sure we spend within our means.  
  4. Always, always hit the spend for enrollment offers. Most rewards credit cards will offer you a big bonus for spending a certain amount in the first few months of having the card. Always prioritize that card until the spend is met.
  5. Don’t pay annual fees on rewards credit cards unless you are getting more than the value of the fee out of the card on a regular basis! Be sure to budget for those annual fees as well. More on this topic below.
  6. Don’t cancel credit cards unless there is nothing else you can do to downgrade a card to a no-fee option. Closing old accounts will have a negative impact on your score.

As long as you follow these rules, you will start to accumulate points/miles/money that you can use for travel. Once you have been doing this for a while, be sure to take stock of what rewards you are using versus what your cards are earning. If your travel style has changed or you find you are not using one of the main perks of the card, downgrade it.

Grant on the trail in the snow.
We spent last winter visiting National Parks sites in Texas, New Mexico and Arizona. We spent 12 days on the road and only paid cash for two nights in a hotel. We used points for the rest of our trip.

Rewards Credit Card Basics

No matter what you are a looking for in terms of rewards from your credit cards, here are the bare minimums:

  • At least 2% cashback or the equivalent. If you are getting less than 2% cashback, you are using the wrong card. The Citi Double Cash card gets that much on every transaction. There is some wiggle room if you are getting another particular value out of the card but no less than 1.5%.
  • All points/miles have a cash value. We use The Points Guy’s valuations to determine the value of our rewards. You will find sometimes it is better to pay for a hotel or flight rather than use points. It depends on the redemption value. Better to spend money and earn more points on a cheap flight than burn points on a bad redemption.
  • At least two of your rewards credit cards should have no foreign transaction fees. One of those should be a Visa card. There’s no point in having credit cards with you overseas if the rewards you are getting are negated by foreign transaction fees. There’s also no point in taking a card that won’t be accepted like a Discover Card or, often, an American Express. 
  • Do not put all of your eggs in one basket, bank-wise. Make sure that you have a variety of credit cards from multiple banks. If you are traveling and one of your cards from a bank is declined because of a fraud warning, having another card from a different bank will save the day until you can get it resolved. Two cards from the same bank? Both will likely be locked, leaving you holding an unpaid bill at a restaurant, etc.
  • Try to find cards to maximize your earnings on various categories of spending, like travel, dining, grocery shopping, etc. Using the right card for a transaction is just as important as having rewards credit cards.
Restaurant in the Oca contrada in Siena.
We actually had a credit card declined in Siena, Italy. We were able to use our back up card to pay for dinner and then call the bank the next day to sort it out.

Rewards Credit Card Types

There are three kinds of rewards credit cards: straight cash back, generic rewards points and branded rewards points. All three have pros and cons in terms of value to you as a traveler and having a mix of the cards is a good idea!

Cash Back Cards

Straight cash back cards are pretty simple. They offer a straight percentage as cash back for your purchases. The best overall card in this category is the Citi Double Cash card. It is a straight 2% cash back on every purchase and there is no annual fee. It is simple and if there was one card I would recommend for someone who wants simple, this is it. The major drawbacks: a 3% foreign transaction fee and no purchase protection.

The cards I keep in my Apple Wallet.
I use three different cash back cards: the Citi Double Cash card (not pictured), the Apple Card and the Amazon Prime card. These all serve specific purposes in my spending but I do not rely on any of them as my primary card.

There are other cards that offer higher rewards for specific or rotating categories of spends. We have the Chase Freedom card, which offers 5% cashback for categories that rotate every quarter. While this sounds complicated (and it is), where this card shines is its synergy with other Chase cards. More on that below.

Pros of cash back cards: simple and cash is easy to spend. Many have no annual fee.

Cons of cash back cards: signup bonuses are minimal if there are any at all. You can, generally, get better value out of using points for rewards than just getting cash for a statement credit.

Branded Rewards Cards

Branded Rewards Points Credit Cards used to be the bread and butter of any credit card strategy. You would get a credit card for your favorite airline and your favorite hotel and save up rewards points until you took a trip. Often times, the cards provide status within the associated rewards programs or provide other benefits like free checked bags or complimentary breakfast at the hotel.

There’s still some value in doing that but there is not nearly as much flexibility, especially on airlines. Here’s what we do and recommend:

Airline-Branded Rewards Credit Cards

For years, we had a Delta SkyMiles American Express. We used it regularly and made a point to use the companion pass with it as much as we could. That said, we realized quickly the restrictions Delta had placed on how to use the pass were so prohibitive, there were times we could just buy two sale tickets for less than what a ticket eligible to use a companion pass would cost. Plus, we bought an RV and decided we were not going to be flying as much.

Clouds in the sky as we fly home from Denver
Flying home from Denver on Southwest Airlines. We found the best deal for that trip there.

If you fly regularly for work, having a branded airline credit card is worth it, especially if you get status from the card. For the business traveler, this makes complete sense. For the regular traveler, we cannot recommend any airline-branded credit cards except Southwest. The only reason why we recommend Southwest is the amazing Companion Pass. That pass allows you to take your +1 with you on any Southwest flight for a year. That’s an amazing deal!

We do not presently have an airline-branded rewards credit card. The Southwest Rapid Rewards cards are a goal for the future. We are planning on spending some time traveling to major cities like New York City and Portland.

Pros of airline-branded rewards credit cards: Perks for frequent fliers like priority boarding or free checked bags.

Cons of airline-branded rewards credit cards: Can be more limiting in terms of using travel rewards than generic points. Many have annual fees that are not made up when not flying often.

Hotel-Branded Rewards Credit Cards

Hotels are a different story, at least for us. We chose Hilton Hotels many years ago and have maintained at least gold status with that program for most of that time. We have had multiple Hilton-branded rewards credit cards and have gotten great value out of those cards. 

One of the main reasons we like Hilton is we can find Hilton properties pretty much anywhere we want to travel. We can often find several hotels at a variety of price points. Gold status provides complimentary breakfast at most hotels, which is a significant value for us ($25/day or more). 

Hilton Garden Inn Rapid City, SD
Grant scraping the ice and snow off the truck on a winter road trip to Rapid City, SD. We stayed at this lovely Hilton Garden Inn for five days on points and explored the Black Hills in the winter.

We presently have the Hilton Aspire American Express, which is the Hilton premium card. It gets 14 points on the dollar at Hilton properties (8.4% cash back equivalent). We also get 7 points on the dollar for flights, rental cars and restaurants (4.2% cash back equivalent) and 3 points on everything else (1.8% cash back equivalent). We use this card primarily for everyday purchases and Hilton purchases.

The card gets us Diamond status with Hilton. That has a lot of value itself: 12% cash back equivalent in points on every stay. Plus, we get a free night, a $250 resort credit and airline lounge access. In short, it is very easy for us to get the value out of the $450 annual fee. 

We got upgraded to an oceanview room at the Boca Beach Club.
We got upgraded to an oceanview room at the Boca Beach Club… what a great use of a free night certificate!

That said, if you don’t travel as much as we do, you might get more value out of the other two Hilton-branded cards. While the rewards aren’t as great, the fees are significantly less. In particular, the Hilton Surpass American Express is an outstanding card that includes Gold status and the opportunity to earn a free night at only $99 per year.

Getting the Most Out of a Hilton Free Night Certificate

Pros of hotel-branded rewards credit cards: Hotel status is often a perk and is often quite valuable. Many hotel chains have several brands at various price points

Cons of hotel-branded rewards credit cards: US hotel chains can be limited overseas and in vacation hot spots, like Hawaii. Indeed, we are only staying one night at one Hilton property for the whole of our five-week stay. 

Generic Rewards Credit Cards

There are four major generic credit cards rewards programs: American Express Membership Rewards, Capital One Rewards, Chase Ultimate Rewards and Citi ThankYou Points.

When you use one of the cards keyed into these programs, you get a generic point that can be used for travel through the company’s online portal (American Express, Chase, Citi) or redeemed as a straight travel credit (Capital One). 

You can also transfer your generic points to various travel partners. American Express has 19 airline partners and three hotel chains. Capital One has 15 airline partners and three hotel chains. Chase has 10 airline partners and 3 hotel chains and Citi has 14 airline partners.

Chisos Mountains Lodge
National Parks lodges, like the Chisos Mountains Lodge in Big Bend National Park, will not get you bonus points on a hotel-branded credit card but will get you extra points on a generic points rewards card.

While there is some overlap on which programs can transfer to which airlines, most fall in terms of which banks have the branded credit cards for those particular airlines or hotels. 

As you can see, you have A LOT more flexibility in using generic rewards credit cards. If you get really good at working the system, you can transfer points to one partner. Then you turn around and book a flight on one of its partners for even more value but that takes work. It also generally requires an annual fee on the credit card, typically $95 or more.

We presently have three cards that earn Chase Ultimate Rewards Points, two cards that earn Citi ThankYou Points and one card that earns Capital One Points. We are looking to add an American Express Membership Rewards card in the future. 

Chase Ultimate Rewards

Our Chase cards get more use than any other brand. Between the three cards, we earn 5 points on the dollar (10% cash back equivalent) on office supplies, internet, phone and cable (which includes streaming services) plus a rotating category. We earn 3 points on the dollar (6% cash back) for travel and dining.

The Chase Freedom and Chase Ink Business Cash, as long as they are used in conjunction with a card that earns Ultimate Rewards Points, like the Chase Sapphire Reserve, all earn Ultimate Rewards Points.
The Chase Freedom and Chase Ink Business Cash, as long as they are used in conjunction with a card that earns Ultimate Rewards Points, like the Chase Sapphire Reserve, all earn Ultimate Rewards Points.

For this we have one premium card, the Chase Sapphire Reserve, which has an annual fee of $550 but also has lounge access, Lyft and DoorDash memberships and a $300 annual travel credit. The other two cards, the Chase Ink Business Cash card and Freedom card, both earn Ultimate Rewards points. Those cards just have to be paired with one of Chase’s premium cards but do not have annual fees.

The Chase cards, particularly, the Sapphire Reserve card, have excellent travel and purchase protections, including primary car rental insurance.

Read more about the Chase Ultimate Rewards Trifecta

Citi ThankYou Points and Capital One Points

Bonnie recently got the Citi Premier Card, which has a $95 annual fee, and it gets 3 ThankYou points on the dollar (5.1% cash back equivalent) for travel and gas (which Chase does not give credit for), 2 points (3.4%) for dining and entertainment (another category Chase does not cover). 

The Citi Double Cash card also recently started offering ThankYou points at a straight rate of 2 points on the dollar. That translates to 3.4% cashback equivalent on all purchases, which is great, but it does have foreign transaction fees and Citi recently got rid of all of its purchase protections.

Other cards we use: the Hilton Honors Surpass American Express, the Capital One VentureOne Card, the Amazon Prime Visa and the Citi Premier Card.
Our Capital One VentureOne card and Citi Premier card, along with our Hilton American Express and our Amazon Prime Visa.

Lastly, I have the Capital One VentureOne Card, the no annual fee version of the Capital One Venture card. This card earns 1.25 points per dollar spent, which amounts to 1.75% cash back.  I primarily use this card as my back up card when we travel overseas. It has no foreign transaction fees and is a Visa card, which is the most accepted credit card network in the world. 

I put a couple of recurring monthly transactions on the card that don’t fit other categories like car insurance and RV storage to keep the card open and active. If I wanted just one generic points credit card and I didn’t want an annual fee, this is the card to get.

Pros of generic points rewards credit cards: Generic points cards offer a lot of flexibility and typically have good earnings rates on specific categories.

Cons of generic points rewards credit cards: Most have some sort of annual fee. Keeping track of which card to use when can be difficult.

OK, Great But Which Card is Right for Me?

First and foremost: are you interested in travel? If so, skip the cash back cards. While getting straight cash back is great and I have a few cards like that, it does not translate into saving serious money on a trip to Hawaii. Plus, getting things for free tends to feel better than just saving money even if the “discount” is the same.

If you are not interested in travel, go for a cash back card. You just won’t get the value out of any other card.

I highly recommend getting a generic points rewards credit card.

If you are just getting into credit cards, the Chase Sapphire Preferred is a good choice. It has a $95 annual fee but it earns 4% cash back equivalent on travel and dining and 2% on everything else. Looking for a no-fee option? The Capital One VentureOne card mentioned above is a great choice. 

Panorama from our room in Salerno
A panorama from our room in Salerno. We were able to book independent hotels like this one for our Hawaii trip using Chase Ultimate Rewards points.

Second question: do you travel more than two weeks per year for either work or pleasure? If the answer is yes, consider getting a hotel-branded card. Look for one that offers status with a hotel chain, even if it has an annual fee. If less than two weeks, look at a free option.

Third question: do you fly at least once a month on the same airline? If so, look at getting a branded airline rewards credit card. For most folks who don’t fly that often, there’s not enough value in an airline card with an annual fee to make it worth it.

Final Thoughts on Choosing a Rewards Credit Card

If you are looking to get into travel rewards credit cards, now is a good time to take stock of what credit cards you have. This will help you decide what you want out of these tools that live in your wallet. 

We are firm believers in making your cards work for you. Choosing the right card can make all the difference in how you are able to travel and what kind of trips you can take. 

Seeing the Grand Canal in Venice by gondola is an experience not to be missed.
We all want to see the world and to not spend an arm and a leg for it. Using the right credit cards will help you get to amazing places like Venice.

I never would have guessed 10 years ago we would be in the midst of planning a five-week trip to Hawaii to visit all of the major islands and see all of the National Parks sites. We have already saved thousands of dollars on airfare, hotels and rental cars for that trip!

Indeed, using credit cards wisely has saved us tens of thousands of dollars in travel expenses over the past decade. Even if you decide to get the most basic credit card to begin earning points, you can follow in our footsteps. 

Share This

You may also like

2 comments

Avatar
Dale Yarbrough April 17, 2020 - 7:54 pm

Well written!

Reply
Grant
Grant April 18, 2020 - 3:46 pm

Thanks Dale!

Reply

Leave a Comment