Lots of people enjoy traveling and would love to do it more often. Travel credit cards are one of the most common recommendations to make that happen. With these cards, you can earn points (or miles) that you put toward travel expenses, including airline tickets, hotel stays, and more.
It probably seems like a pretty good deal, and it is. Travel points can help you save money on your trips. Many of these cards offer excellent sign-up bonuses, too, so you can earn a large number of points in a few months.
However, there is a downside of travel credit cards that doesn’t get talked about much. If you’re not careful, it could end up costing you money.
There are plenty of features available through travel cards, particularly the cards with hefty annual fees. For example, you can find cards offering complimentary access to airport lounges, elite status in hotel loyalty programs, and free checked baggage.
An abundance of features is normally a good thing. The problem is that with most travel cards, benefits tend to be a mixed bag. There are some that you’ll love, and some that you may never use. For example, you might get a card with airport lounge access that comes in handy every time you travel. But that card might also have a $200 airline fee credit that you can’t find a way to use.
This is a common issue with travel cards, and it’s largely by design. The card issuer gets to advertise more features and say that a card has “over $1,000 in spending credits” or “over $1,200 in partner benefits.”
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And if those spending credits or benefits aren’t that easy to use? All the better. If you don’t use them, they don’t cost the card issuer any money. That’s why a card issuer will offer an airline fee credit instead of a credit toward any type of travel purchase, or a dining credit doled out in $10 monthly increments instead of just $120 per year.
There are a few ways these features can end up costing you:
- They make it harder to get your money’s worth. Most travel cards charge an annual fee, with the most expensive ones costing $450 to $695 per year. If you leave too many perks unused, you may be spending more on the card than it saves you each year.
- It’s more time consuming for you. Keeping track of credit card benefits is no small task. Your time is valuable, so it’s worth considering how much of it you want to spend managing your credit cards.
- Some benefits encourage you to spend more. Spending credits might seem like a perk that will save you money, but that isn’t always the case. Let’s say your card offers $10 in monthly DoorDash credits. You never previously used DoorDash, but you start ordering $30 to $40 worth of food on it per month. You’re not coming out ahead here, because even with the $10 credit, you’re still spending more than you used to.
Because no travel card has everything, it’s also easy to fall into the trap of opening too many cards. You might get one for its airport lounge access, one for elite status at your favorite hotel chain, one for upgrades with your favorite airline, and so on. Each card seems like a good deal when you apply for it. But you ultimately end up spending a lot more on annual fees and having more cards than you know what to do with.
Don’t overspend on travel credit cards
Overspending, in this case, refers to both your money and your time. It doesn’t make sense to pay for a travel card with a bunch of features you never use. It also doesn’t make sense to spend hours every month trying to use every spending credit and other perk in a wallet full of cards.
To avoid this, only apply for a travel card if you’re sure you’ll be able to get your money’s worth. You don’t need to use every single benefit. But you should be able to use enough, without any difficulties, to outweigh the annual fee.
Also, go over all your travel cards with annual fees at least once per year to make sure they’re worth keeping. If not, downgrade your credit card to one without an annual fee. This way, the only cards you’re paying for will be the ones that best fit you and your lifestyle.
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