For a long time, we here at SmarterTravel have been recommending plastic as the best way for travelers to spend money: credit cards for big-ticket purchases, debit (ATM) cards for cash. But which cards to choose? Clearly there is no single best card. What’s best for you depends on what you want by way of extras and special features. I’ve identified different traveler profiles and identified the plastic that best suits their needs.
My analysis is based on long-term use and not on one-time enrollment or transfer incentives. I assume you either pay your complete bill every month or have the option to do so, so I do not consider APRs, nor do I consider credit-score qualification. Many credit cards that assess an annual fee waive the fee for the first year.
If you travel to foreign countries, cards that do not assess a foreign-transaction fee are especially attractive; I note cards with this feature. Chip-enabled cards were once very rare, but chip cards will become widely available in 2015.
The Best Credit Cards for Infrequent Flyers
If you don’t travel much, or you travel mainly by car in and around your home area, you probably figure that travel-specific features are less important than getting the highest monetary value.
The Citi Double Cash card basically pays off 2 percent for every dollar charged, on any purchase, anywhere. You receive 1 percent when you buy and a second 1 percent when you pay the bill. This 2 percent payout is in cash, not in miles or points limited to travel purchase. There’s no annual fee.
Several cards offer payouts higher than 2 percent on charges in grocery stores, drugstores, gas stations, or other categories, subject to maximum limits, but only 1 percent on other charges. Some cards rotate high-payout categories. The highest overall payout we found was on the Blue Cash Preferred American Express card, with an annual fee of $75, which pays 6 percent on grocery charges and 3 percent on gas station charges, but several others come close.
The Best Credit Card for Occasional Flyers
If you travel enough to limit your card purchases to air tickets, hotel rooms, and other travel services, the Capital One Venture Rewards card, with an annual fee of $59 and no foreign-transaction fees, returns 2 percent of charged value on all purchases. But the payback is in “miles” you can use to buy travel services through Capital One; there’s no all-purpose cash equivalent. The annual fee is $59. There is no foreign-transaction surcharge.
The Best Credit Cards for Frequent Flyers on One Airline
An airline mile can be worth considerably more than 1 cent, and airline miles are one of few affordable ways to enjoy premium-cabin upgrades. If you concentrate your flying on one airline, you should first consider a credit card co-branded with that airline — a card that earns miles or points in the airline’s frequent-flyer program that you can combine with the miles you earn by flying.
Co-branded airline cards typically earn one mile (or equivalent) for each dollar charged to the card, plus bonus miles or points on charges for tickets and other airline services. All large U.S. and Canadian airlines other than Allegiant and Porter co-brand at least one mileage-earning credit card.
The following cards include one no-charge checked bag for the cardholder; most extend that to at least one traveling companion: American’s AAdvantage Platinum Select MasterCard from Citi, with an annual fee of $95; Delta’s Gold Delta SkyMiles card from American Express, with an annual fee of $95; United’s Mileage Plus Explorer card from Chase, with an annual fee of $95 and no foreign transaction fee; Virgin America’s Visa Signature card from Comenity, with an annual fee of $49; and WestJet’s RBC World Elite MasterCard from RBC Royal Bank, with an annual fee of $99.
One no-fee checked bag per flight can more than offset the annual fee for anyone who prefers to check a bag and takes more than two round-trips per year. These cards add other benefits too, ranging from a yearly companion ticket to a free visit to an airline lounge. Additionally, the United card adds primary rental-car collision coverage.
The Best Credit Cards for Very Frequent Flyers on One Airline
For really heavy users, American, Delta, and United issue premium credit cards that include the features of the base-level cards plus membership in each line’s lounge club and a laundry list of other features. Strangely, the annual card fees are less than the regular lounge club membership fees.
The outstanding premium airline card is United’s Mileage Plus Club Card Visa from Chase, which includes United Club access, 1.5 miles per dollar for all charges, and primary rental-car collision coverage, with an annual fee of $395 and no foreign transaction fee. But if you concentrate your flying on American or Delta, the AAdvantage Executive Card, with an annual fee of $450 and no foreign transaction fee, and the Delta Reserve card, with an annual fee of $450 and no foreign transaction fee, both earn 1 mile per dollar on ordinary charges and include club access and a bunch of other benefits.
The Best Credit Cards for Frequent Flyers on Several Airlines
The key here is transferable miles. Several cards earn miles or points that you can transfer to more than one airline program. These cards all earn one point per dollar charged, and most include bonuses.
The Starwood Preferred Guest card from AmEx, with an annual fee of $65, allows points transfers to the frequent-flyer programs of 28 leading airlines, including Alaska, American, Delta, JetBlue, Hawaiian, and several big Asian and European carriers. The basic transfer rate is one mile per point, but if you transfer in increments of 20,000 points, you get 1.25 miles per point. You can also transfer to United, but the exchange rate is only half what it is for other airlines. In effect, you earn 25 percent more miles in most airlines’ programs per dollar charged than you earn with the airlines’ own cards (although you may miss out on other airline-card benefits, like free checked bags).
The Diners Club’s Premier card from MasterCard earns one point per dollar charged, and points can be transferred, at 1:1 or equivalent, to the frequent-flyer programs of Air Canada, Alaska, Delta, Frontier, Hawaiian, and Southwest, as well as several big foreign airlines. The card also includes access to hundreds of airport lounges around the world and primary rental-car collision coverage. The annual fee is $95, and there is no foreign-transaction fee.
The Chase Sapphire Preferred card allows the transfer of points at 1:1 to the frequent-flyer programs of Southwest, United, and several foreign airlines. The annual fee is $95. Wyndham Rewards Visa transfers points to several programs, but at a less than 1:1 ratio.
The Best Credit Cards for Foreign Travelers
In this case, think ATM cards. A few small banks’ ATM debit cards incur either no fee or a 1 percent fee for local withdrawals, with no withdrawal charge. This is clearly the best way to get foreign currency. Banks offering these features include Ally Bank, Capital One 360, Charles Schwab, EverBank, TD Bank, USAA, and several credit unions.
Travelers with checking or savings accounts at Bank of America can use their ATM cards to withdraw local currency without a withdrawal charge from ATMs operated by Scotiabank in Canada and much of the Caribbean, Barclays in the U.K., BNP Paribas in France, Banca Nazionale del Lavoro in Italy, Deutsche Bank in Germany and Spain, UkrSibbank in Ukraine, TEB in Turkey, ABSA in South Africa, Westpac in Australia and New Zealand, China Construction Bank in mainland China, and Banco Santander in Mexico. Scotiabank clients get the same deal at Bank of America and the other listed banks. You do pay a 3 percent exchange fee, but that’s considerably better than exchanging cash at airport change offices.