5 Ways to Determine if You Should Sign Up for a Travel Credit Card
I know travel credit cards (TCCs) can be a scary-sounding phrase if you’re not familiar with them quite yet, but that’s what I’m dedicating a lot of my time to: demystifying the world of TCCs to make them accessible for more and more people.
It all boils down to this:
When you make purchases using your TCC, the credit card company gives you a certain amount of points (based on how much you spent) which you can then redeem for free travel (flights, hotel stays, etc.).
It really is that simple.
If you’d like more of an explanation or you’re new to the world of travel credit cards, check out my ebook, Free Travel Formula. It’ll teach you a basic understanding of TCCs, how to use them to earn free travel, and give you a plan to get started.
If you’re comfortable with the concept of TCCs, but aren’t sure if they can really benefit you, you came to the right place! Here are some tell-tale ways to figure out if you should get a travel credit card now, or hold off until later.
1. Check your credit score
The credit score to get approved for certain TCCs varies across the board, so I don’t have an exact number that you should strive for. However, you should become familiar with your credit score and what exactly it means for you.
The app I use and recommend for this is Credit Karma. It’ll tell you what your score is and ways you can improve it. What’s GREAT about this app is that you can search for different credit cards and it’ll tell you your chances of being approved based on your credit score and credit history.
Their approval rating isn’t necessarily set in stone, but they base it off of other people who have been approved for that same card. Using a tool like this can save you time and a credit inquiry if the chances of approval are low.
Credit Karma will also let you know if you should focus on improving your score before you start signing up for TCCs. If your approval rating is “poor” on most of the cards you look up, that’s a good indicator that you might want to wait to sign up until you can get your credit score a little higher.
Just to be clear here – it doesn’t have to be perfect!
I’ve had some good luck with cards in the mid 600 range, but even better luck (lower interest rates) when I got into the 700’s.
2. Understand your travel style
Understanding your travel style is important to understand whether or not you’ll benefit from TCCs. First, you have to figure out what kind of travel you can use points for specifically for the card you want. This can greatly influence whether or not you should sign up for a travel credit card.
For the cards I use most, you can use points to get flights, hotel stays, car rentals, things to do, vacation rentals, and cruises. So, this covers a lot of ground and can be beneficial to most people out there.
However, if you’re someone who likes to take road trips in your own car and stay at Airbnbs when you travel, you might not benefit with this specific card as much as someone who flies or likes to stay at larger, chain hotels.
This is actually something my parents had to come to terms with. They have a timeshare (maybe I’ll blog about my thoughts on that some day) and typically like to drive instead of fly. For them, it doesn’t make much sense to invest annual fees into TCCs because they won’t get a lot of use out of them.
Instead, they are opening a free card which doesn’t come with as many perks, but it will help them build up points in case they do need to fly one day.
3. Consider your future large purchases
This is something that I find a lot of people around my age aren’t always considering. We like to think about our lives here and now. At least that’s how I am sometimes!
However, if you’re considering buying a house or taking out a car loan or anything else that requires you to take out a large line of credit, that is a BIG reason why you should not sign up for a TCC just yet.
This is because when you’re taking out a large loan like that, you want the LOWEST POSSIBLE INTEREST RATE. Even a 1% difference can mean owing or saving hundreds or even thousands of dollars in the long run.
To get a lower interest rate, your credit score has to be the highest it can possibly be. Unfortunately, when we open any kind of credit card, our credit score temporarily dips. This is due to two reasons: 1) We’re adding another credit inquiry, and 2) The average age of our credit goes down because now we have this brand new card.
Again, this dip is just temporary and our credit score is ever-changing, so for someone who doesn’t need their credit score to be as high as possible, opening a credit card won’t do them any harm.
There are a ton of financial advisors out there who suggest different ranges, but I’ve found the average advice is usually to spend 6-12 months before a big purchase building your credit score and refraining from opening any new cards.
4. Take a look at your home country’s options
I’m going to try my best to do research in different countries to make sure I’m accommodating as many people as I can, BUT the majority of my TCC knowledge is around US-based credit cards because that’s where I live.
I’d encourage anyone and everyone who doesn’t live in the US to research what options are in your area when it comes to TCCs. If it’s a big thing where you’re from, I’m sure there are people blogging and sharing about it.
If you do find some interesting information, I’d LOVE to hear about it! Post it in the comments below or email/DM me directly. I’m not kidding when I say I get super nerdy about this stuff and I just love to chat about it.
5. Determine your potential monthly credit card spend
The last way to determine if you should get a travel credit card is to calculate the amount you spend on a credit card monthly. This is different than your general monthly expenses because you can’t usually put things like rent or a mortgage payment on a credit card.
Once you have this number, you can start researching different cards and their sign-up bonuses. These sign-up bonuses are large, lump sums of points that you get when you spend a certain amount of money on the card in the first few months.
One of the best sign-up bonuses I’ve come across is from the Chase Sapphire Preferred card (which also happens to be my favorite TCC). When you spend $4,000 in the first 3 months, you’ll get 60,000 points added to your account which is worth $750 in travel.
This sign-up bonus requires you to spend a little over $1,300 per month. If your average monthly credit card spend doesn’t meet that, I wouldn’t recommend getting this card until it does. But if it does now, I’d HIGHLY recommend signing up.
There are TCCs with lower spending thresholds to get the sign up bonuses, so I’d start with those if your monthly spend is a bit lower.
I’ll also add here that the monthly spend should be calculated as the total across everyone who will be on this card’s account. So, if you are the primary cardholder and your spouse is an authorized user on the same account, the total monthly credit card spend between the two of you is what will count toward the sign-up bonus.
This is me being as UNBIASED as possible!
I’m personally in a place in my life where I should be signing up for TCCs. I am in LOVE with them and I will shout it from the rooftops because I want everyone to benefit from them like I have.
However, I want to take as unbiased of an approach as I possibly can because I know there can be downsides to anything. Some people are in a place where they should get a travel credit card, and some simply aren’t.
My intention for this post (and for any future posts on this topic) is that you can make an informed decision that best fits your own personal needs.
I’ll never recommend something just so I can benefit from it if it isn’t the right fit for you.
Disclaimer: There is an affiliate link in this post and I will benefit if you take action and sign up for the TCC I recommend. This is how we keep the blog running! However, rest easy knowing I never recommend anything I don’t use and love myself.
Love this! Bringing up the best points per usual! I love credit karma!
Saaame! And thank you ☺️☺️