Start Smart: Picking Your First Travel Rewards Credit Card

What Are the Best Travel Credit Cards to Start Travel Hacking? 

Selecting your first travel reward credit card can be a daunting task, given the multitude of options available. Knowing how to pick the best travel rewards credit card is hard and will vary for everyone.  Everyone's travel goals are different. Everyone has a different level of comfort starting to travel hack. This means that no card will be right for everyone. There are also so many cards to pick from. The abundance of choices may lead to analysis paralysis. To help you take those initial steps into travel hacking, I've outlined some strategies to pick the best travel reward card for you: 

Setting Your Vacation Goal:

If you're uncertain about which card to select, consider your next vacation goal. Where do you want to travel?  Find a hotel near your dream destination and determine which airlines operate flights from your hometown to your target location. The hotel or airline you want for. your next vacation might offer a co-branded card. That would be the best travel card for you to start with. If the hotel or airline does not have a cobranded card,  a general travel credit card with more flexible rewards could be a superior option. For instance, my first goal was Lake Placid, leading me to the American Express Hilton Honors card. 

Choosing the Right Travel Reward Credit Card:

There are two general types of travel credit cards, Cobranded with a name-brand hotel/ airline or general travel credit card. Examples of co-branded hotel or airline credit cards, such as American Express Hilton, Chase Marriott, and American Express Delta. 

Alternatively, you may choose a reward card not affiliated with a specific travel brand, such as an American Express Gold card, Chase Ink, or Capital One Venture. Each rewards program has different hotel transfer partners, where you can transfer points between your general travel credit card and the program's hotel partners. Each rewards program will also have partner airlines in which you can transfer airline miles to cover the cost of your air travel. Some general travel cards will also have the option to cover travel expenses by issuing statement credits against those charges. This may be the best option for certain travel purchases (like hotels that are not a chain, Disney vacations, or other trips that won't have a cobranded credit card partner. A good option for this is the Capital One Venture Rewards Credit card. Some general travel cards also have an annual travel credit, which varies based on the card. 

If there is a hotel chain you have a preference for, you can choose that for your first cobranded card. No matter if you choose a cobranded or a general travel card you should compare the welcome offer for new card holders. A key strategy in travel hacking is to gain large amounts of points from a welcome bonus or sign-up bonus points. Earning sign-up bonuses will be the fastest way to free nights and free flights. 

Most travel rewards cards with with other travel benefits as well. Some have bonus points for eligible purchases are various categories of stores such as gas stations or grocery stores. Some travel rewards cards will give you elite status, a free checked bag, airport lounge access, global entry credit as well as many other additional benefits. 

Starting with the Lowest Level Travel Card in a Co-brand Group: 

Once you select a cobranded group or a general travel card brand, always start with the lowest level card in that group possible. This strategy allows you to open higher-level cards later and still receive an additional sign-up bonus. Learn more about why starting with the lowest level is crucial here. You can always level up to the mid and higher-level cards and usually still earn the sign-up bonus miles or points on the higher-level cards. However, if you start with the mid or higher-level card, and then apply for the lower-level card, you may not be eligible to earn extra points for that sign-up bonus. The rules about leveling down and earning sign-up bonuses caries with credit card issuers. 

Avoiding Adding Authorized Users:

Never add an authorized user to your account, as it may disqualify them from receiving their own sign-up bonus when they apply for their own rewards credit cards. If you have someone you are traveling with, have them open their own travel rewards credit cards. If your partner opens their own travel credit cards, they will earn their own sign-up bonuses, making this a good option to get the most value out of your travel partners. To learn more about using Person 2 here.

Make Sure to Meet the Minimum Spend on your Travel Reward Cards:

After receiving your new travel reward credit card, ensure you meet the minimum spend to receive the sign-up bonus. Channel all your regular monthly expenses to the new card, an exception to this is if you have more significant purchases that you are confident will meet the minimum spend. This will depend on your spending habits and your monthly budget. However, to earn the most amount of points, all of your monthly spending should be charged to your travel rewards cards.  

Involving Person 2 to Maximize your Travel Reward Points: 

Once you have the sign-up bonus, move on to Person 2. Have them apply for a travel reward credit card, either the same card as yours if you are still working on your travel goal (for example you need more points for the hotel, apply for the same hotel cobrand card) or a different card (such as a airline card) to get to your free travel hacked vacation. 

Options for Regular Monthly Spending:

Once Person 2 has their travel reward credit card, there are a few options for what to do with your regular monthly spending, depending on the minimum spend amount and your monthly budget.

Repeating the Process: 

Keep repeating this process of alternating new travel reward cards between you and Person 2 based on your own travel goals. For example, my husband and I stayed with Hilton for a long time, each having 3 American Express Hilton cards. We were able to earn many hotel stays for free.  Learn more about what to do after your first sign-up bonus here. 

Important Reminders:

1. The purpose of travel hacking is to leverage your regular expenses for free vacations.

2. Do not spend more than you are already spending or beyond your means.

3. Maintain a healthy credit score by paying on time and not carrying a large balance on your credit cards.

The best card will be different for everyone. Using travel hacking to earn free vacations can be enjoyable and fulfilling, as long as it aligns with your financial means and goals. Happy travels!