Editor's Pick: 2012 Best Travel Rewards Cards
By Eva Norlyk Smith Ph.D.
April 19, 2012
Free checked bag or free airport lounge access or both? Travel rewards cards can boost vacation savings and earn you travel-related perks, but picking the best card out of the hundreds available can be a daunting task.
“Ultimately, the travel rewards card you should have is going to depend on how you plan to use it and the rewards that you want,” says Gary Leff, co-founder of the frequent flier community Milepoint.com. “Different points are more valuable for different rewards, so understand what you want to get out of it before you apply.”
Travel rewards cards fall into two major categories: Generic travel rewards cards offer the greatest flexibility; rewards earnings can be applied to any airline or be redeemed for other travel-related purchases like car rentals or hotel stays.
Airline miles cards, on the other hand, are linked to the frequent flier accounts with specific airlines. These offer more limited redemption options, but they can be a great way to increase miles earnings in an already existing frequent flier account. Airline miles cards also feature numerous travel perks, like free checked baggage, priority check-in and more.
To maximize your rewards for wherever travel season takes you, we'll be concentrating on generic travel rewards cards. Here are CreditCardGuide's Top 3 picks for 2012's best offers.
The Capital One Venture card: In 2011, Money Magazine named the Venture card the most rewarding card for those who “crave free airline flights.” The reason? Cardholders earn 2 miles per dollar spent, the equivalent of 2 percent cash back on all purchases. The miles can be redeemed for any flight or travel-related purchase. Simply book the flight (or other travel purchase) with your Capital One Venture card, and then use your rewards earnings to get a statement credit.
The card has a $59 annual fee, waived the first year. If you prefer a no-fee version, the Capital One VentureOne card offers the similar benefits, but cardholders earn only 1.25 miles per dollar spent.
- Earn 10,000 bonus miles when you spend $1,000 in the first three months, the equivalent of $100 toward a flight, hotel stay, car rental or other travel-related purchase.
- No foreign transaction fees on purchases made overseas. Foreign transaction fees can otherwise add 3 percent to overseas charges.
- No limits on the miles you can earn, and miles don't expire.
- While rewards earnings can be redeemed for other items, such as merchandise, cash back or gift cards, there is a catch: The redemption value for other items is half the value of that on travel purchases. In other words, redeeming your points for non-travel purchases essentially turns the Venture card into a run-of-the-mill one-cent-per-dollar rewards card.
- Rewards miles cannot be transferred into select frequent flier programs, as some other generic travel rewards cards permit (see below).
The Chase Sapphire Preferred card: It's hard to argue with the bonus sign-up offer for this card. New cardholders get 40,000 bonus points after they spend $3,000 in the first three months. That's the equivalent of $500 toward travel rewards, enough to extend your hotel stay by two or three nights.
The Sapphire Preferred offers two rewards points per dollar spent on travel and at restaurants and one point on all other purchases. Cardholders also get 20 percent off airfare, hotels, car rentals and cruises when booking through Chase's Ultimate Rewards center (but expect prices to start at a premium, before the discount). Finally, cardholders earn a 7 percent annual dividend on all new points earned (even those you already redeemed).
- The Chase Sapphire enables cardholders to transfer points at a 1-to-1 ratio into participating frequent flier programs, including United, Continental and British Airways, as well as loyalty programs for some hotel chains, including Hyatt hotels.
- No foreign transaction fees.
- While the card offers excellent value the first year, the $95 annual fee makes it an expensive card to carry over the long term. To earn back the annual fee in travel rewards, cardholders would have to spend more than $9,000 each year just to break even.
PenFed Premium Travel Rewards American Express card: Travel rewards cards with above-average benefits and no annual fee are hard to come by, but the PenFed Premium Travel Rewards card fits the bill. The card lets cardholders earn five points per dollar spent on airfare and one point per dollar on all other purchases. New cardholders who spend $650 in the first three months will receive an extra 20,000 bonus points, enough for a $250 round trip ticket.
The extra perks make this card standout. Cardholders who spend $15,000 annually will enjoy access to more than 600 luxury VIP airport lounges worldwide. The card's program also comes with exclusive travel upgrades and offers, as well as AmEx's 24/7 concierge service.
- No foreign transaction fees
- To qualify, applicant must be a member of the Pentagon Federal Credit Union, which requires a few extra hoops to jump through. Yet application is easy though. If you are not affiliated with the uniformed services (or have family member who is), simply join the National Military Family Association as a civilian member to become eligible. You'll have to pay a one-time fee of $20.