When A Travel Rewards Card Is Worth It – And When It Isn’t

Travel rewards cards can offer some serious savings and perks…

But are they right for you?

The quick answer is: it depends.

Factors to consider include:

• how often you travel,
• where you travel, and
• what type of travel you do.

Knowing your spending habits is important, when deciding if a travel rewards card is worth it.

(And any credit card rewards you earn will be meaningless if you’re carrying a balance month to month, because typical credit card interest rates are insane. Focus on paying off that balance instead.)

Related: How to Get FREE Checked Bags When Flying

When Travel Rewards Cards Are Worth It

In general, you should get a travel rewards card if:

• You fly at least 1-2 times per year (for leisure or business).
• You stay at hotels more than 5 days per year.
• You rent cars frequently but do not currently have adequate insurance coverage.

Personally I tend to travel 1-2 times per year and have found it’s worth it for us to have a travel rewards card.

I use the WestJet RBC World Elite Mastercard for all travel rewards.

Related: WestJet RBC World Elite Mastercard: Deep Dive Review

The card has an annual fee of $139 but it also comes with an annual companion voucher which allows you to buy a second (companion) flight for a cheaper rate based on your destination ($99 for Canadian destinations).

The card also gives you (and anyone else travelling with you on the same itinerary) free checked bags on all Westjet flights. This is something that most people underestimate for savings.

If I travel round trip for a vacation I would typically save $50 per trip ($25 per flight), which turns into $100 savings if I travel with someone (usually the case).

The card costs $139 per year but the savings amount to around $600 per year so it’s obviously something that helps reduce our travel costs.

Even if you don’t travel often you may want to consider getting a travel rewards card for the travel perks offered by most premium travel cards. For example, the Scotiabank Gold American Express^® Card has a full suite of travel insurance including:

• Travel emergency medical coverage (including coverage for people over 65),
• Travel Accident,
• Trip Cancellation and Interruption,
• Flight Delay,
• Baggage Delay,
• Lost or stolen baggage,
• Hotel Burglary,
• Rental Car theft and damage, and
• Extended Warranty and purchase protection.

The BMO World Elite Mastercard is another great flexible travel rewards card that has 14 types of insurance coverage including coverage for all your personal items for the entire duration of your trip – that’s extremely rare.

Most travel rewards cards have a standard set of travel coverage similar to the ones listed above, and they all focus on ensuring you are covered when you travel.

Related: Credit Card Rental Insurance – How It Works

If you’re not a high spender but still want a travel card, then consider the MBNA Rewards Platinum Plus^® Mastercard^®. You’ll not only get a card that has no annual fee, but still has some pretty good earn rates:

• 2 points for every $1 spent on restaurants, groceries, and select recurring bills (up to $10,000 spent annually per category)
• 1 point per $1 spent on all other purchases

Each point is worth 1 cent, giving this card a minimum return of 1% on your spend. And best of all, you can use these points for any kind of travel you like. And, it also comes with seven different types of insurance. Pretty good for a no fee card.

Car rentals

A travel rewards card might be worth it if you rent a car for more than 5 days per year and don’t already have car rental insurance coverage, since the coverage is so expensive to purchase from the rental car company.

The car rental collision coverage came in handy for me once when I rented a car that was already damaged but somehow I forgot to check for damages before driving it off the lot (always do this and snap pictures to prove it!).

When I returned the car, I was told I was responsible for the damages since I didn’t report them…

The bill for the damages? It was around $1,000. An amount I would’ve had to pay if I didn’t pay for the rental with my credit card.

I could have made a claim through my own personal vehicle’s insurance, but it would have meant my rates possibly increasing in the future.

Making the claim through my credit card was relatively easy and the entire process was settled within a matter of weeks.

I was lucky I thought to pay for the car rental with my credit card and kept all receipts as well as documentation related to the claim itself.

I learned a relatively cheap lesson: Always pay for a rental car (the entire amount) using a credit card that has rental car coverage – and keep all receipts after the rental.

Related: Best US Dollar credit cards – if you have high-volume transactions in US dollars

When Travel Rewards Cards Aren’t Worth It

Travel rewards cards generally are NOT worth it if you travel or fly less than once a year. Because almost all travel rewards cards tend to focus on airlines/hotels.

If you travel in different ways such as camping, driving your own vehicle or using an AirBnB whenever you reach your destination…

Travel rewards card may not be for you, as they tend to focus on points for airlines or hotels. Although AirBnB is an eligible rewards for most flexible travel credit cards that allow you to pay for any travel related purchase that is charged to your card with points.

Also, many premium travel cards come with extensive travel insurance packages so if the coverage doesn’t apply to you, consider other types of credit cards.

Finally, travel rewards cards also aren’t worth it if you travel for business…but don’t have to pay for the expenses. The rewards come when YOU pay. So if your company pays on your behalf you should consider getting another type of card, since most premium travel cards have a fee of $100 or more per year.

Related: How To Maximize Your Tims Rewards

Alternative Card Options

If after weighing your options, it’s clear that a travel rewards card isn’t right for you…

There are other options available.

Consider a card that focuses on rewards for other categories.

Perhaps the simplest and transparent card category is one I’m a fan of: cash back cards.

Credit cards that offer cash back are very easy to understand and there is nothing better than getting cash back for the money you spend on the card. The cash back typically comes as an account credit annually which is the equivalent of a cash reward.

When searching for what card is right for you, the most important thing is to make sure you know what category you do most of your spending in.

Case in point, the Scotiabank Momentum Visa Infinite, here’s a review from a power user.

Someone who spends most of their money each month on groceries might want a different card than someone who spends most of their money at retail stores.