Are Travel Credit Cards Worth It For Non-Aspirational Travelers?

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Are Travel Credit Cards Worth It For Non-Aspirational Travelers?

Included Travel Benefits

While travel cards with an annual fee might be a waste of money in some situations, in others they can be a major win even for basic travelers. In fact, some of the best card benefits specifically cater to economy flyers and limited-service hotels.

Airlines offer several overlooked benefits to cardholders that can make a travel credit card an essential tool in your arsenal. For example, many Aeroplan credit cards offer Air Canada flyers valuable perks, like a free first checked bag for you and up to eight companions. Most travel credit cards also include valuable travel insurance, like emergency medical and travel accident coverage, and even things like trip cancellation and rental car insurance.

A popular perk on hotel credit cards is the inclusion of a free night certificate every year when you pay the annual fee. These certificates are typically only valid at hotels up to a certain cost in points, which will usually include comfortable stays but not premium properties. If that’s the type of travel you’re looking for, you’re in luck: It’s not hard to break even on a card’s annual fee with a single free night.

Increased Earnings

One of the most compelling reasons to choose a travel card—even with an annual fee—is they often rack up rewards more quickly than their cash back counterparts. Travel cards are highly competitive, so it’s not uncommon to see welcome bonuses worth $1,000 or more for eligible new cardholders. The best cash-back cards, on the other hand, tend to fall under $400 for welcome bonuses (or maybe even zero).

After the one-time welcome bonus, many travel cards also continue to outperform cash-based programs. For example, our pick for the best travel card, the American Express Cobalt, will earn 5 points per dollar on groceries, 3 points per dollar on streaming, 2 points per dollar on gas, travel booking and transit and 1 point per dollar on everything else. Plus, it offers an additional point per dollar on hotel and car rental bookings made through American Express Travel. Plus, you get perks like travel insurance, a $100 USD hotel credit and a solid welcome bonus. Based on the median value of the points and average Canadian spending, it earns $594.52 per year in rewards value, with the annual fee factored in. Our best cash back card, the CIBC Dividend Visa Infinite, offers similar perks, but a slightly lower earning potential of $537.50 per year with the annual fee factored in. (That said, cash back holds a stable value, where as points can have a higher or lower value depending on what you redeem them for.)

Increased Upside Potential

Travelers who are willing to put some time in to learn program nuances can redeem their points for outsized value, even without choosing premium travel experiences. Strategies like comparing airline award charts or adding in stopovers can increase the value of your points. Other tactics, like booking a single, longer hotel stay and taking day trips rather than booking two shorter stays, also stretch your rewards.

When you book with cash, the opportunity for upside is limited by market rates. With points, leveraging redemption sweet spots can stretch your hard-earned rewards farther.

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