Travel Rewards Credit Cards

History of Credit Cards with Travel Rewards Points

Getting a bonus for using a certain credit card is nothing new. Many card companies began offering travel incentives, usually in the form of air miles, for card loyalty in the 1980s. These rewards helped credit card companies establish a strong customer base since it encouraged consumers to use just one credit card. These programs were also a windfall for travel companies that could encourage customers to use a particular airline by offering coupons and extra miles.

Once the popularity of air miles took off, other travel and tourism groups got involved. You can now use your credit card to earn discounts or free passes to hotels, amusement parks, car rental companies, cruise lines, and tour operators.

Using a Reward Program

Most travel rewards credit cards have a pretty simple system: charge purchases your credit card and earn points that can be redeemed for free travel coupons and tickets. In many cases, you earn one point for every dollar you charge, but incentive earning structures vary by issuer.

Depending on how much you charge, points can add up quickly, earning you a free trip. In some cases however, it can take a few years to earn enough points.

There are two main ways to get a travel rewards card:

• Direct from airlines. Many airlines offer their own reward or air mile cards. This can be a great way to earn points for a particular airline, which is especially convenient for travelers who have a favorite airline that reaches their preferred destinations. These points are limited to the specific airline offering the card and can’t be used for anything other than airfare or discounts with the airline's approve affiliates, but you may earn points faster than with a card offered by a bank. Casual travelers may find this type of card too restrictive for their travel needs.

• Through a credit card company. Almost all major credit card organizations, like MBNA, Chase, and Citibank offer travel reward cards. Even retailers like Sears have reward cards. These cards offer more flexibility than airline cards, since you can usually use the points with different airlines, hotels, or other travel companies. You can also use the points for coupons in retail stores or restaurants, which is a great resource during your trip. Some cards are linked to specific travel organizations, like a cruise lines or resorts, and you earn extra points for purchases made through those companies. This allows travelers who frequent the same destination to earn extra points for travel they do anyway.

Travel Rewards Credit Cards Disadvantages

Of course, these great deals often come with a few strings attached. Some rewards cards may charge a higher interest rate than standard cards or they might carry an annual fee. They may also offer incentives like extra points to open a card but have so many regulations on how to get more points that you’ll never earn enough to travel. Always read the small print of your credit card offer to make sure it meets your needs and has a realistic method of earning points that match your spending habits.

Other things to watch out for with your travel rewards credit cards:

• Blackout dates. Some reward programs have a lot of restrictions on when you can travel. If you are planning for a trip over the holidays, but your card won’t allow you to travel during that time, it’s not much a deal.
• Expiration dates. Your points may begin to disappear if you don’t use them. Check if there is a limit to how many points you can earn within one year.
• Reservations. You may need to book your trip a certain amount of time in advance to use your points. That’s great if you plan ahead by a month or so for a big trip, but if you want to head out of town for a last-minute getaway, you may need to leave your points behind.