Disclaimer: While I fully take advantage of credit card rewards programs, credit cards are not for everyone. If you struggle with debt and overspending, you probably shouldn’t sign up for rewards cards. The interest rates tend to be much higher, so if you can’t pay off your card in full every month, you’ll end up spending a lot more money in interest over time. So proceed with caution!
The best thing about rewards credit cards is that you usually get a large bonus after signing up and spending the minimum required amount. This is often the best way to get you the amount of points you need to pay for expensive travel. However, you usually have to spend from $500 to $5,000 to get that initial large bonus. Don’t overspend just to get the bonus points! You always want to be able to pay off the card at the end of the month. Depending on what you need or prefer, there are several different kinds of rewards cards. Check them out below!
Airline Miles
Signing up for an airline’s loyalty program, and getting the associated credit card, can take you a long way towards the vacation of your dreams. Oftentimes, the most expensive part of a trip is the flight. If you can get that covered, you are much more likely to afford the trip as a whole. To make things better, many airlines are in alliances with each other, which makes it possible for you to transfer points from one to another.
A few years ago, I used US Airways (RIP) points to fly to the UK roundtrip. I only had to pay $106 for taxes and fees. Just last summer, I used American Airlines points to fly my boyfriend and me home from Spain for about $60.
To see if your favorite airline has a credit card, click here.
Hotel Points
If you frequent hotels, it might benefit you to get the credit card offered by your favorite hotel chain. Their cards provide large bonuses, plus you can often get a free night on your credit card anniversary. If you like to stay at hotels over Airbnb or hostels, these kinds of rewards could save you a lot of money. Last month, I used Hilton Honors points to cover a full week’s stay in Denver for free. That saved me probably $1,000.
To learn about the hotel credit cards that are available, check out this list.
If you don’t want to get a credit card, but you still want hotel rewards, check out Hotels.com! You can get rooms at a discount, plus for every 10 nights that you stay, you get a free night.
Points as Cash
Many credit cards have great cash back rewards programs. Usually, you get a bonus up front, and then you get one point per dollar you spend from then on. Some cards even offer up to 5% cash back, depending on where you’re using the card. You can transfer these points into your bank account as cash, you can use them to book travel at a discount, or you can apply them as a credit on your statement.
The Barclaycard World Arrival Plus credit card let’s you use your points as a credit towards your travel spending. So if you have 12,500 points, you can get $125 applied to any travel spending on your credit card. For example, I used points to knock over $100 off of a car rental.
For a list of cash back credit cards, go here.
Rental Cars
Although car rental companies typically don’t have their own credit cards, you can still use a credit card to save money on a rental. Most rewards cards include their own rental car insurance coverage, so you can decline the extra insurance that the rental company offers. This can save you quite a bit of money over the course of your rental.
Note: Not all countries are included under the car insurance benefit. When I was in Mexico earlier this year, if I declined insurance coverage from the rental company, I had to allow them to put a $12,000 hold on my credit card. $12,000! That amount was higher than my credit limit, so I ended up paying extra for insurance through the rental company. I was not pleased. So do your research ahead of time!
For credit cards that offer rental car insurance, check out this list.
Disclosure: Some of the links above are affiliate links. This means that, at no cost to you, I may earn commission if you click through and make a purchase or open an account. I only link to companies that I personally use and endorse!
Maggie Germano
Certified Financial Education Instructor. Feminist and financial coach for women. Founder of Money Circle.