How to Plan Your Travel Rewards Card Strategy

Find the right credit card combination to help fund future travel plans

A couple enjoys a trip paid for with travel rewards.

The Balance

There are many different types of credit card rewards. Depending on your spending habits and preferences, you may be drawn to cards that offer cash back, points, or miles.

If you want to focus your efforts on earning travel rewards, you should create a credit card strategy to maximize the value you get for your spending patterns. Here's how to find the best approach for you.

Having a strategy can be especially helpful as you plan for travel after a year of being largely shut in. This story is part of Our Money’s on Travel, a series to help you make your 2021 travel dreams a reality.

How Travel Rewards Cards Work

There are three main types of travel rewards cards: general travel, hotel, and airline. General travel credit cards typically offer points or miles you can redeem for a variety of travel-related activities. In contrast, hotel and airline credit cards typically offer rewards best-suited for booking award stays or flights with the card's brand.

Most travel credit cards offer sign-up bonuses, which are sums of cash, points, or miles you can earn by spending a certain amount in the first few months of owning the card.

In addition to points or miles, hotel and airline cards offer perks specific to the brand, such as elite hotel status or free checked bags. Some general travel cards offer great trip insurance protections and other perks like reimbursed TSA PreCheck or Global Entry application fees, but they're usually not specific to an airline or hotel chain.

Travel credit cards offer either a flat rewards rate on every purchase you make or a tiered rewards structure, giving you more rewards for purchases in certain categories (though some allow you to transfer your points directly to airline or hotel loyalty point programs). 

Before You Get Started

The prospect of earning a big sign-up bonus on your first travel credit card can be exciting. But before you open new cards and spend, it's important to take stock of a few things, including what you want from your credit cards and your spending habits.

Assess Your Priorities and Spending Habits

It's important to think about your travel habits as you formulate a rewards strategy. If you fly with one airline or stay at one hotel brand only, it may make sense to get a co-branded credit card with that airline or hotel chain.

Alternatively, if you aren’t loyal to a brand and you tend to book the cheapest option, a general travel card could be a better choice because they let you redeem your points for most travel purchases, no matter which brand you book with.

Also, think about which perks you want from your card. Some premium travel cards go the extra mile with complimentary airport lounge access, car rental discounts and benefits, travel-related statement credits, and other perks. But those cards typically charge steep annual fees. Weigh the benefits you can get from certain cards against their costs to determine which one offers you the most value.

Finally, think about your spending habits. For example, if you eat out a lot, a card with a high rewards rate on restaurant purchases may be a good fit. If you’re a rideshare driver, it would benefit you to have a card with a high rewards rate for gas purchases. You can also apply for multiple cards to take advantage of the varying rewards rates on each one, as a single card usually doesn’t offer maximum rewards in all the areas in which you spend the most.

Know Your Limits

Experienced travel-card users often have multiple travel credit cards to maximize the value they get every time they travel. But it's important to know your own limits before you start applying for more cards. More specifically, think about how much you can afford in annual fees, how much time and effort you want to spend managing multiple accounts, and how easy it will be to keep up with multiple rewards categories.

If you find that you prefer keeping your annual fees to a minimum or you feel like you struggle to stay organized, using just one or two cards may be preferable.

One basic rule of thumb for anyone chasing travel rewards is to pay off your card balance every month. Otherwise, interest costs can eat up the value of any rewards you earn.

How to Design Your Travel Rewards Card Strategy

Once you've taken steps to lay some ground rules and expectations, here's how to develop the best approach to travel rewards for you.

Choose Your Credit Card Combination

One of the best ways to maximize travel rewards is to use multiple credit cards. For example, you can choose a general travel credit card for the flexibility and also one or more airline and hotel credit cards that offer perks and extra points just for that brand. For example, if you’re a big American Airlines fan, you might get the Citi AAdvantage Platinum Select card, which earns 2 miles per dollar spent on American Airlines, gas, and restaurant purchases, and includes a free checked bag and priority boarding when you fly. Then for all your other purchases you could use the Capital One Venture Rewards card, which earns 2 points per dollar spent on everything.

Alternatively, you can combine two cards within the same general rewards program. For example, one popular combination is the Chase Sapphire Reserve and the Chase Freedom Unlimited

The former offers a lot of premium travel perks, a 50% bonus when you use points to book travel through Chase, and the ability to transfer rewards to airline and hotel partners. You’ll earn 3 points per dollar spent on travel and dining, but just 1 point per dollar spent on everything else.

The Freedom Unlimited offers a flat rewards rate of 1.5 points per dollar but doesn't give you the travel redemption bonus, the opportunity to transfer points to partner programs, or the premium benefits. If you use the Chase Freedom Unlimited for its higher rewards-earning rate on all your non-travel and non-dining purchases, then transfer your points to your Chase Sapphire Reserve account, you can earn more than if you were to have just the premium card. 

Shop around and compare the best travel credit cards to find the best credit card combination for you.

Open a New Card, If Needed

In some cases, you may already have the cards you need to maximize your travel rewards. But if not, you may want to apply for a new card to fill a hole in your strategy or create a combination that works well for you.

Opening a new card is also a good way to take advantage of sign-up bonuses—many travel credit cards offer substantial incentives for new cardholders. However, it's important to be aware of your credit score before you apply. Most travel cards require good or excellent credit, which starts at a 670 credit score. 

Also, keep in mind that applying for multiple credit cards in a short period can hurt on your credit score. So, try to space out your applications to avoid trouble.

Plan and Track Your Spending

Once you start using more than one credit card, make sure you know when to use the right card to maximize your rewards. This is especially important if you have several cards that offer bonus rewards in different categories. 

You can keep track of bonus categories using a spreadsheet or a note on your phone. Some rewards enthusiasts even use a label maker to label each card with their bonus rewards categories.

Make sure to track your spending as well to ensure you're getting the best return on each purchase and to avoid overspending for the sake of earning rewards.

Don’t Be Afraid to Adjust Your Travel Rewards Strategy Later

No rewards credit card strategy is set in stone; you can always tweak yours as your travel and spending habits change. Just remember that applying for new credit cards all the time is generally a poor approach.

For example, as you travel more often, you may notice that you prefer a specific airline or hotel brand and choose to lean more into that rewards program. Or, you may decide you want more flexibility with certain general travel programs. The important thing is that you continue evaluating your strategy to make sure you're getting the best overall experience.