Like most travelers, I use credit cards when I travel. Most of us probably use those same cards when we’re not traveling, in hopes of gaining points, rewards, and upgrades. Right?
After all, we constantly see ads on television about this card or that one and we get ads mailed to us to sign up for the next best and greatest reward card. Confusing? Of course. Are they a good deal? That depends. How do you know what’s best? How do you know what’s good for you?
Recently, I was asked to collaborate with U.S. News & World Report regarding travel credit cards. As a nationally recognized publisher of consumer advice and information, they conducted a nationwide study of consumers who own credit cards.
From this study, they created a guide which shows travelers how to best use their cards and get the most from them.
Finally, something that compares cards and gives me information that makes sense.
Throughout the next month I will post results from that study. Hopefully, you will learn something about your credit card.
The link to the entire study is https://creditcards.usnews.com/travel#heading2
Here a few things to think about if you hold a travel reward credit card.
Did you know that more than half of those with a reward travel card carry a monthly balance?
Do you know what your yearly fee is for this card?
From the survey…
2017 Survey: More Than Half of Travel Rewards Cardholders Carry a Monthly Balance
U.S. News surveyed 1,278 travel credit card users to understand the benefits and drawbacks of owning one. While the vast majority of respondents have redeemed lucrative rewards in the last year, many cardholders are not aware of their annual fee or how to take advantage of their card benefits. Additionally, more than half of travel credit card users have carried a balance on their card in the last year, potentially negating the rewards they have earned.
Thirty-three percent of respondents earned more than $500 in rewards in the last year.
The most popular redemption options included free domestic flights, followed by cash back, followed by free nights at a hotel. Free international flights were the least commonly redeemed.
More than half of travel credit cardholders surveyed carried a monthly balance in the last year.
Since travel rewards credit cards tend to have higher-than-average interest rates on purchases, carrying a balance has the potential to cost you more than any rewards you earn. Travel credit card expert Daraius Dubash of millionmilesecrets.com recommends that people carrying credit card debt should probably opt instead for a zero percent APR card and focus on eliminating their credit debt before trying to earn travel rewards.
Sign-up bonuses are one way that cardholders end up carrying a balance, says Joe Cortez, senior writer for frugaltravelguy.com. "In a way [a sign-up bonus] is almost a trap to try to get you to put a balance on the card up-front." Forty-three percent of consumers surveyed said they qualified for their card’s sign-up bonus.
It’s also critical that consumers be aware of annual fees. Most respondents knew what their card’s annual fee was, while 17 percent of respondents didn’t know.
“I think it’s very easy to get caught up in the number of miles that are involved,” says Cortez, but people don’t always consider that there are both additional fees and benefits with the card.
Nearly half of travel rewards cardholders don’t take advantage of cardholder benefits.
Ninety-six percent of respondents redeemed at least some rewards in the last year, but 48 percent of respondents did not take advantage of common cardholders benefits such as airport lounge access, trip cancellation/delay insurance, free checked bags when flying, auto rental insurance and priority boarding when flying.
Cardholders should be aware of auxiliary travel benefits that come with their card and can provide a lot of value and justify the annual fee, Cortez advises. In order for consumers to get the most value out of any given credit card, they need to consider those benefits and fees alongside their personal travel preferences and spending habits.
- U.S. News ran a nationwide survey through Google Surveys between April 17 and April 19, 2017.
- The sample size was the general American population and the survey was configured to be representative of this sample.
- The survey polled 1,278 people who own travel rewards credit cards.
- The survey asked nine questions relating to their travel rewards credit habits.
- All winning answers were statistically significant at the 95 percent confidence level.
- See the full survey data, questions and results.
More results will follow…including how travel cards work, which might be best for you, and how to compare those cards. Stay tuned…