The advantages and drawbacks of travel credit cards

If you're just starting with credit cards or earning points and miles, you might be wondering whether a travel credit card is the right choice for you.

For frequent or even occasional travelers, travel credit cards offer some of the most rewarding benefits available. With a variety of perks and earning opportunities — often accompanied by hefty annual fees — these cards can deliver significant value when used wisely.

Learn about the benefits and disadvantages of travel credit cards to help you decide if this card type fits your financial goals.

Advantages of travel credit cards

Travel-related perks and rewards

High-end and even mid-range travel credit cards often come with luxurious benefits that nearly anyone can enjoy while traveling.

Common perks include annual travel credits, services like Global Entry and TSA PreCheck, elite status with specific airlines or hotels, access to airport lounges, free checked luggage, and priority boarding.

Most of these benefits are automatically provided to cardholders, so you won't have to put in much effort to enjoy them.

Bonuses for travel-related rewards

For frequent travelers, many cards offer travel-specific reward categories that earn you extra points or miles when spending with airlines, hotels, or through the card issuer's travel portal.

For example, the well-known Chase Sapphire Preferred® Card earns 5 points per dollar on travel booked via Chase Travel℠, 5 points per dollar on Lyft purchases (through March 2025), and 2 points per dollar on other travel-related purchases.

If you're a loyal customer of a specific airline or hotel chain, consider applying for one of their co-branded credit cards, like the Southwest Rapid Rewards® Plus Credit Card or the Marriott Bonvoy Bold® Credit Card, to maximize your benefits and rewards.

Flexible redemption options

Many travel credit cards offer the ability to redeem points or miles with a variety of airline and hotel partners, providing more valuable opportunities to use your rewards.

To make the most of these rewards, most card issuers have their own travel portals, where users can discover the best ways to redeem points. Some even offer extra points or miles when bookings are made through the portal.

For example, cardholders of the Chase Sapphire Preferred® Card or Chase Sapphire Reserve® can unlock more than 1.25 cents per point in value by transferring rewards to the issuer’s airline and hotel partners. Notable Chase transfer partners include United Airlines MileagePlus, World of Hyatt, and Singapore Airlines KrisFlyer.

Generous sign-up bonuses

Premium travel cards often offer substantial sign-up bonuses, which can quickly offset the card’s annual fee multiple times over.

Most cards have a spending target you need to reach within the first three to six months. Be sure to check if this is a feasible spending goal for you. It's even better if the card offers a special or elevated welcome bonus when you apply.

Drawbacks of travel credit cards

Credit score requirements

While travel credit cards offer many valuable perks, they often come with strict credit score requirements, making them difficult to qualify for.

Most travel cards require a 'good' to 'excellent' credit score of 670 or higher, with the most premium options demanding even higher scores. If your score falls short, consider working on improving it before applying to avoid a hard inquiry that could lower your score further.

High annual fees

Travel credit cards often come with high annual fees, and the most luxurious cards can cost upwards of $500 a year.

While annual fees are often justified if you fully utilize the card’s benefits, this can be challenging if you're not a frequent traveler or focused on maximizing rewards. You might want to start with a no-annual-fee or low-fee card and upgrade as needed.

High APRs

Travel credit cards often come with high annual percentage rates (APRs), which determine the interest you'll pay on any remaining balance if you don't pay it off in full each month.

Challenging to fully unlock value

You may find it difficult to extract the maximum value from your travel credit cards if you're not frequently traveling or planning a major trip soon.

To get the most out of your travel rewards, the best option is to redeem them for travel-related expenses. If you use rewards for cashback or statement credits instead, you won’t get the same value. Additionally, many airlines and hotels frequently update their rewards programs, which means the value of your points and miles can change over time.

To help optimize your rewards, check out resources like TPG's monthly assessments of points and miles value, as well as our guides on maximizing your next credit card or vacation stay.

Is a travel credit card right for you?

If you meet the necessary credit score requirements and can justify the annual fee, you’re likely to get significant value from a travel rewards credit card. Keep in mind that welcome offers, along with benefits and rewards programs, often change. If you have your eye on a card, try to apply at the right time to maximize its value and take advantage of a great welcome bonus.

Conclusion

Selecting the right travel credit card can help you reach your financial goals, whether that’s funding your next big trip or simply earning some extra cash each month. How much value you gain from the card depends on your personal lifestyle and what aligns best with your financial situation at the time.

For more tips and insights, check out our beginners guide to credit cards.