Benefits and Drawbacks of Hotel Credit Cards

Free nights are great but the lack of redemption options isn’t.

In this overhead photograph a man and a woman dressed in robes sit atop a hotel bed and enjoy a continental breakfast of pastries, coffee, and fruit juice.
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Ariel Skelley / Getty Images 

When you’re trying to choose a new travel rewards credit card, it’s easy to become overwhelmed by the sheer number of options available. You can opt for a general travel credit card that lets you earn points for a variety of travel rewards. You can sign up for a co-branded airline credit card that lets you earn airline-specific rewards. Then there are hotel credit cards—a type of rewards credit card that lets you earn points and rewards with a specific brand of hotels. 

To make the most of a hotel credit card, cardholders should also be active participants in the hotel's loyalty program. These cards often provide program extras, like points earning boosts, shortcuts to higher levels of elite status (and the perks that go with), and more.

Hotel credit cards can be useful for the right type of consumer, but they aren’t for everyone. Before committing to a co-branded hotel credit card, make sure you have a plan for using the points, and that you understand the pros and cons.

Benefits of Hotel Credit Cards

The main advantage of hotel credit cards is that they let you earn hotel rewards points for each dollar you spend. These points are usually offered on top of rewards points you earn just for booking a paid stay with a hotel. 

For example, if you’re a member of the Hilton Honors loyalty program, you can earn 10 Hilton Honors points per $1 spent on Hilton brand hotels, no matter whether you pay with a rewards credit card or not. But if you happen to sign up for the Hilton Honors Aspire Credit Card from American Express and use it to pay for your hotel booking, you’ll also earn another 14 Hilton Honors points for each $1 you spend. 

Other advantages of hotel credit cards include:

  • Free nights: In addition to earning points you can redeem for free hotel stays later on, some hotel credit cards offer a free night just for signing up or renewing your card after the first year. There are often limitations on these “free nights,” however. For example, they may only be good for weekend evenings, or redeemable for hotels that cost a specific number of points per night. 
  • Elite status benefits: Some hotel credit cards offer “elite qualifying nights” that can help you jump up a level of elite status in the hotel's loyalty program, thus climbing the elite status ladder faster. You may even receive automatic hotel status just for signing up for a specific hotel credit card, whether you use the card regularly or not. 
  • Hotel perks: Also note that some of the higher tier hotel credit cards offer lucrative perks such as annual resort credits, airline credits, and even airport lounge access. 

Drawbacks of Hotel Credit Cards

There are plenty of benefits that come with carrying a hotel credit card, but there are a few notable drawbacks. For starters, the points you earn in these programs are less flexible than points you can earn with a general travel credit card.

Let’s imagine for a moment that you earn points in the World of Hyatt program with a co-branded Hyatt credit card. In that case, you would have the option to redeem them for free nights at hotels under the World of Hyatt umbrella, and you could redeem for stays at Small Luxury Hotels of the World. You can also redeem them in a few other ways—for “experiences” booked with the brand, for fitness classes and spa treatments booked with Hyatt, for room upgrades, and for Hyatt dining experiences. 

You can also convert World of Hyatt points into airline miles, but at a poor redemption rate (5,000 World of Hyatt points turn into 2,000 miles). 

If you wanted to stay with a different hotel brand, on the other hand, you’d be out of luck. You also cannot redeem World of Hyatt points for gift cards or statement credits.

On the flip side, some flexible travel credit cards, including cards that earn Chase Ultimate Rewards points or American Express Membership Rewards points, let you redeem points for nearly any type of travel, and for gift cards, statement credits, merchandise, and more. 

In addition to a lack of points redemption flexibility, hotel credit cards come with some other downsides:

  • Annual fees: Hotel credit cards with the most benefits tend to come with high annual fees, and these fees may not be waived the first year you have the card. 
  • Limited award availability: While there are definitely exceptions, hotel points can be difficult to redeem—especially if you need to travel during peak travel times when award availability may be limited. Using your hotel points can also be a struggle if you travel with children and need a room that sleeps more than two people. 
  • Inflexible rules: The free nights you earn can come with rules about when they can be used or on which type of hotel you can redeem them for. Plus, annual resort credits may only be good for specific hotels, and they tend to be “use it or lose it,” meaning your credit won’t roll over to the next year if you’re unable to stay at a specific hotel brand during a cardmember year. 

Is a Hotel Credit Card Right For You?

Because hotel rewards tend to be less flexible than other types of points, hotel credit cards work best for people who are 100% certain they can use them. If you need more flexibility in terms of how you redeem points, and with whom, you may want to look into a flexible travel credit card that lets you redeem for a broad range of rewards options.