Travel credit cards

Use your credit card whenever you can

Credit cards are cost effective and secure — You should use credit cards whenever you can.
Get two credit cards — If you have two cards, each attached to a separate account, you will have at least one in case the other becomes unavailable. Choose Mastercard and VISA, as they are the most accepted by far.
Avoid foreign transaction fees — Do not use any credit card that charges a “foreign transaction fee.” This levy on all purchases in any currency other than your home currency usually runs 2.5% to 3% and gives nothing in return. On the contrary, it erodes or eliminates the value of any benefits on offer.
Pay down your monthly balance — Do not maintain a month-to-month balance. Payment of interest will erode or eliminate the value of any benefits attached to the card. The best solution is to set up a direct debit to pay your balance automatically.
Do not use credit cards in ATMs — Only use credit cards in ATMs if you have no less costly choice to get local cash. The cost is higher than a debit card or cash.
No cost cards vs cards with benefits — Decide whether you want a “basic” approach to travel credit cards or whether a more complicated “benefits” approach will provide enough value to be worth the effort and annual fee.

You should use credit cards whenever it is secure to do so (do not let a credit card out of your sight). They carry an attractive foreign exchange rate and you can collect points or cash back on most of them.

Retailer checking a credit card Carry at least two cards, one VISA and one Mastercard, since a business may accept only one of them. If you have a third card, leave it with your trusted agent at home. If you lose the card(s) you have with you, you can get the spare sent by courier.

Do not use a card that carries the 2.5% – 3% foreign transaction fee (FTF). Most domestic cards have this fee although the issuers often bury it in card information. Beware: most credit cards marketed as “travel cards” — because they offer generous points or cash back on travel purchases — take it all back (and then some) by charging the FTF. They’re good only for charges in your home currency.

Bear with us here. This is a long page and it sometimes gets a bit dense. But, if you want your card to be accepted, save money and even earn rewards, getting the best travel credit card is critical.

How to know what cards you need

Credit cards have two distinct uses for travelers:

To make purchases and reservations overseas — Use a credit card to pay for your purchases, both offline and online. You also need a credit card to secure online reservations for lodging and some activities.
To earn rewards that reduce the net cost of travel — Earn rebates or reward points based on your spending. Redeem reward points for travel services.

Unfortunately, apart from rare exceptions, you cannot do both with the same card. Can you use the card or cards you already have for at least one of these functions? Probably not.

Using credit card for online purchase Your current card(s) may be earning reward points, but the real rocket power for points collectors is the sign-up bonus that comes with premium cards. To boost your points in a hurry, you need to be approved for a new card and meet the spending minimum in the first three months to receive the points.

This page concentrates on the first function: making purchases and reservations while traveling, but we prioritize cards with cash-back or rewards points.

Advantages of credit cards for travel

A credit card is a great way to manage your money while traveling and you should use one whenever a merchant will accept it.

Purchases of goods & services — As a digital traveler, you will use your credit card for buying transportation tickets and reserving accommodation. Offline, in rich countries at least, credit cards can be used for almost any retail purchase. But, as you move into middle and poor countries, they become less useful because fewer and fewer merchants have credit card vendor accounts. Most merchants in poor countries, if they accept credit cards at all, handle only VISA or Mastercard. It’s also common for vendors to charge as much as 6% over the cash price to cover their fee to the credit card company. (When this happens, be prepared to use cash.)
Best exchange rate — Using a credit card, you will get the best retail rate possible, close to the interbank rate of exchange. Only debit cards used in ATMs offer a similar rate.
Safety — The more you use a credit card, the less cash you will have to carry. Travel adds risk that your card will suffer loss, theft or skimming. Yet, credit cards are easy to hide from pickpockets and thieves. If your card is lost, stolen or compromised and you report it promptly, you will not be held responsible for any charges thieves make on your card. Most credit card companies will send you a replacement card.
Dispute resolution — Should you disagree about a charge to your card, you can dispute it through the credit card company. Your account will not be debited until the matter is resolved. This is more important while traveling than at home because you move around so much. With offline merchants, by the time you recognize the incorrect charge to your account, you may have traveled far and will not have a chance to get back to the merchant to correct the charge. Make sure you go online frequently to check your account for incorrect charges.
Travel insurance — Fee-based premium cards often come with basic travel insurance that covers goods and services purchased with the card. So, you might get 90 days of loss coverage on goods, such as a new digital device. And you might get cancellation coverage for air tickets bought with the card. Be sure to check carefully what’s covered.
Emergencies — If you find yourself in an emergency situation, such as the need to make a sizable medical payment, a credit card with a generous credit limit might save the day. You can also use your major network credit card to withdraw cash at a bank. It’s costly, but can get you emergency cash when you need it.

Cons

As long as you take care of your cards (never let them out of your sight) and pay down your balance before you accrue interest payments, there’s no downside to using credit cards for travel.

How much can you use your cards? Destinations & style

The countries you visit and your travel style both determine how much you can use your cards.

For example, if you’re an American with a new rewards card that requires $4000 of spending within the first three months, that’s about $45/day on the card. If you’re in SE Asia, staying in cheap hotels and beach huts, many of which don’t accept credit cards, it might be hard to meet the $4000 requirement.

Destinations — Travel in rich countries allows you to use your credit card for almost any retail purchase, so you can build up points rapidly. In poor countries, fewer vendors accept credit cards and those that do may add up to 6% above the cash price to handle a credit card payment. Your opportunities to accumulate points will be diminished.
Travel style — The higher your style, the more you will spend. Even in poor countries, you will use higher-quality vendors (accommodation, restaurants), many of whom will accept credit cards. A premium card, with maximum points earnings on travel expenses, is best. Travelers with a low spending profile or from countries where the choice of cards is poor, may still have to settle for a no-cost, low-benefits travel card.

What is a “travel credit card?”

Using credit card in an Iranian market — Grigvovan / Shutterstock.com

While the basic uses of any credit card are clear enough, true travel credit cards have different advantages, fee structures and benefits than most cards used at home, including those marketed as “travel credit cards” (only good for domestic travel). A true travel credit card can be simple or feature-rich, but it will have three essential features:

No foreign transaction fee! — The FTF adds 2.5% – 3% to any purchase in a foreign currency.
Chip & PIN technology — While most of the world is on this technology already, US card issuers have been slow. If your card doesn’t have it, many merchants will not accept the card.
VISA or Mastercard — These two networks are accepted worldwide. Other cards may be refused by some merchants, especially smaller businesses and in poor countries. Some small merchants may accept only VISA or only Mastercard.

Beware: some cards are marketed as “travel credit cards” that offer more reward points for travel purchases than other types of purchase and better point redemptions for travel services as well. Regrettably, most of these cards include the FTF and are not true travel credit cards at all. There are a few cards with rewards that exceed the FTF.

On the other hand, some cards are not marketed as travel cards although they have all of the basic features.

Three types of travel credit card

Basic no-cost cards — These cards are for buying stuff abroad without an FTF. And that’s all they do. Basic cards have lower maximum credit balances, too. If you don’t have a good credit score, a basic card might be the only type of card that you can get.
Cash-back cards — The cards earn a rebate on purchases, periodically tallied and recorded on your card statement. Many do not have an annual fee, but those that do tend to offer higher cash-back percentages. Sometimes, there’s a small cash bonus for signing up. Other benefits range from none to limited.
Rewards points cards — Use these cards to earn “points” based on how much you spend.
- Between 10,000 and 50,000 bonus points are usually offered just for signing up.
- Points have a nominal value of 1% of cash price, so 10,000 points is worth $100 or £100.
- Actual value varies depending upon how you redeem your points: rates can exceed 1% for booking flights or hotels or fall below 1% for other goods and services.
- The attractiveness of rewards programs depends on where you call home. Americans benefit from a wide choice of attractive travel cards. At time of writing, Australia has four, Britain two and Canada none.
- Most US rewards cards, and all those in Britain and Australia have an annual fee. It’s common for US cards to waive the first year’s fee. Rewards cards from Britain and Australia do not. Generally, the higher the fee, the better the benefits.

Decide whether or not you want to take advantage of points or cash-back programs and whether the other perks of premium travel credit cards are worth any fees and conditions. As a general rule, if you can earn enough point value to exceed the annual fee, go for it.

The poor selection of premium cards in the UK, Australia and especially Canada suggests a two phase solution. Use a premium domestic card (with the FTF) before your trip, to build reward points and purchase travel goods and services that can be insured on the card. Then switch to a proper travel card (no FTF) after you start your trip.

Lucky Americans can get it all in one card.

Travel hacking: how to get enough points to fly for free

If credit card companies are going to offer sign-up bonuses and other goodies, dedicated travel hackers will gladly play that game, amass points without necessarily spending huge amounts on their cards and fly for free.

Travel hacking is not limited to travel credit cards (those without the foreign transaction fee) and you can hack a mountain of points sitting at home before your trip.

Although there are many tricks and permutations, it basically works like this:

Find cards with sign-up bonuses — Find the cards in your country of residence that combine a large number of sign-up bonus points and, in the US at least, waived first year annual fee. In some cases where the annual fee applies, the value of bonus points may exceed the fee, so it’s still a net gain.
Apply — Apply if qualified (it’s bad for your credit score if you’re rejected).
Earn the points — Meet the minimum spending requirement to acquire the bonus points. Dedicated hackers have workarounds to meet this requirement in devious, but legal ways.
Use the highest point earner for regular purchases — Once your bonus points requirement is met, your day-to-day card should be whichever one has the best points reward for the purchases you normally make.
Redeem your points and cancel — Redeem your points for travel services and cancel the card before the second annual fee comes due. Or keep the card if it will continue to earn points valued well in excess of its fee. Or keep the card if it will become one of your credit cards for travel.

Although points are sometimes transferable, especially to airline frequent flier programs, you may need to budget your expected points on each card for specific redemptions. It’s no good piling up 100,000 points if that flight is going to cost 125,000 points. Your only options would then be to transfer points into the account from another points program (where allowed) or buy the extra points to make up the difference.

While some hackers claim they have had up to 20 cards at one time, you need to be careful that churning cards won’t reflect badly on your credit score.

Since credit card markets are very different country-to-country, your opportunities to hack the system will vary. Fortunately, there are hackers who share how to do it.

US: The Points Guy — http://www.thepointsguy.com
US: Extra Pack of Peanuts — http://www.extrapackofpeanuts.com/
Great Britain: Head for Points — http://www.headforpoints.com/the-beginners-guide-to-collecting-avios-points/
Canada: Canadian Free Flyers — http://www.canadianfreeflyers.com
Australia: Point Hacks — http://www.pointhacks.com.au/

Can you use an airline or hotel credit card?

Credit cards offered by airlines, hotel chains or big retailers are not good for foreign travel. Most have the foreign transaction fee. The only case you can make for using an airline or hotel credit card while traveling abroad is if you can pay for the flight or room in your home currency.

Rewards cards offered by airlines or hotel chains are really loyalty cards intended for business travelers who fly the same airline (or airline alliance) and stay in the same hotel chains repeatedly. While you can use the card for any purchase, if you use the card on their flights or their hotel rooms, points earnings can be very generous.

Airline card redemptions are also generous if you use your points on their flights. If the airline is a member of one of the big global alliances, you can book on an alliance airline too. Still, that may not be the best flight or price. Loyal users get loads of perks, too. Airlines may offer class upgrades, free checked baggage, priority boarding and access to lounges. But keep in mind that many airlines have been devaluing their frequent flier miles, so even as you’re earning miles, they could be worth less if you don’t use them promptly.

Hotel chains are also generous if you use your points on their hotels, notably offering free nights to loyal card users. Most big chains are international, so a chain might have hotels in your destination countries. If you want to stay in the same quality of hotel during your travels, you could redeem hotel card points for their hotels abroad.

How to choose the best credit card for travel

Quality features vary by the type of card.

Acceptance abroad

VISA or Mastercard — Your card should be useful in all of your destinations and the cards most accepted worldwide are VISA and Mastercard. If your destinations are all rich countries, you could consider American Express or Discover, but many merchants, especially in middle and poor countries, will refuse them. Businesses that accept credit cards may have only one vendor account, VISA or Mastercard, so it’s best to have one of each.

Chip and 4-digit PIN — To be useful in most countries, a credit card must have chip and PIN technology. Some vendors will not accept your card otherwise. Most credit cards are now issued with chip and PIN, although US credit card issuers are well behind the rest of the world implementing the technology. Most foreign credit card terminals accept only a 4-digit PIN. If your travel card has more, see if you can change it.

Costs

Foreign transaction fee (FTF) — Down in the fine print of the Terms & Conditions, most cards have an FTF of 2.5% to 3% on every purchase made in a foreign currency. Even if your card has a cash-back, reward points program or other benefits and perks, the FTF will erode or eliminate their value. Reject any card with an FTF, unless the cash back or rewards exceed the FTF rate.
Annual fee — Premium cards with high benefits may come with an annual fee attached.
- Find out how much you’ll have to spend, just to break even on the fee. Calculate the value of benefits you think you can receive, which are largely based on how much you spend using the card, versus the fee. In the UK, for example, suppose a premium card costs £140 per year and earns 1.5 points per £ spent. The cash value of a point is not firm, depending upon how you redeem it, but assume each point is worth 1p. To break even: £140 is 14,000p / 1.5 = £9,333. That’s a big spend for a backpacker before you have any net gain at all. If your travel style and spending is higher, maybe it’s worth it.
- Consider the value of other benefits, such as travel insurance, rental car collision insurance and price protection.
- In the US only, it is common for the annual fee to be waived for the first year. This offers Americans the juicy prospect of milking points from the program for almost a year, redeeming the points and canceling the card before the second year fee is due.
Foreign currency conversion fee — Don’t worry about this. It is not the dreaded foreign transaction fee, but the normal spread between buying and selling currencies, plus a small charge from the credit card company. Credit cards offer an excellent retail rate.
Fee for use of foreign ATM — Don’t do it. You should not use a credit card in an ATM, unless you have no other choice. If you do, you could be charged up to 3% by your credit card issuer. Even if that fee does not apply, interest will be assessed immediately. (The foreign ATM owner will also charge a fee.) Solution: use a debit card with no network fee.
Interest — Do not pay any! You are strongly urged to pay your balance due before interest kicks in. If you pay interest, the value of all other benefits will be eroded. Set up an automated direct debit to ensure timely payment.

Incentives

Cash-back multiplier on spending (Cash-back cards only) — What is the percentage rebate? The range is usually from 0.5% to 3%. It’s common for some types of spending (travel, restaurants) to yield a higher percentage than everyday expenses. Cards with high percentage cash backs tend to charge an annual fee.
Point multiplier on spending (Rewards points cards only) — How many points do you get per currency unit spent? In the US, for example, one card offers 3 points for travel expenses, 2 for dining and entertainment and 1 for everything else. Some card issuers do not count certain types of spending towards point accumulation, such as account transfers, cash withdrawals, utility bills etc.
Sign-up bonus cash (Cash-back cards only) — In the US, cash-back cards often come with a $100 sign-up bonus. The top card offers $500. In Britain, the only offer is £20 and in Canada $35.
Sign-up bonus points (Rewards points cards only) — In the US, competition has resulted in generous bonus points on offer just for signing-up for a card. A couple of cards in Australia offer a bonus, too. However, you don’t get the points unless and until you spend a minimum amount over the first three months. For example, a 20,000 mile bonus might require at $1000 spend, while a 50,000 mile bonus could demand a $3000 – $4000 spend. While $4000 over 90 days is under $45 per day, that may still be a big spend for a backpacker in a poor country, where costs are low and many merchants don’t accept credit cards.
Flexible points redemption (Rewards points cards only) — There are so many offers and conditions attached to rewards points programs that it’s hard to determine where the best value lies.
- You can’t figure out what a point is worth in cash until you try to redeem it. Points are nominally valued at 1% of your purchase, which is 1¢ per dollar or 1p per £ spent on the card. But redemption can range from 0.5% to 2%, depending upon the retail value of what you buy with your points. For example, suppose you find a flight that costs $1000 at an online agent, so it should be about 100,000 points. But maybe your choice of where to redeem is restricted to the card’s own shop and the site is telling you it’s 125,000 points. Suddenly, your points are really worth just 0.8¢ each. But if you find a flight worth $1000 and the redemption cost is just 75,000 points, then your points are worth 1.33¢ each.
- “Travel cards” tend to focus the best redemption values on travel purchases, such as flights and accommodations. Cash or general merchandise requires more points for a given retail amount.
- The best cards don’t restrict where you can use your points, so you can shop for that cheap flight. But many card issuers restrict your redemptions to their own online store or to affiliate airlines, hotel chains or travel agents. The value of your points could be less, since you can’t shop for the best deal. On the other hand, card stores sometimes offer “points back” on purchases, a rebate on points you’ve just spent.
- Unless you are able to redeem points at the card’s own store, for a reasonable rate on (for example) your first flight, it’s better to have full flexibility to spend your points wherever you want.
- Some cards allow you to transfer points to a frequent flier program (good luck if you’re already a member of that airline program). Pay attention to the points-for-points exchange rate. Sometimes it’s a good deal (1 reward point or less per airline point), but sometimes not (>1 reward point per airline point).
Other perks and benefits — These are minimal or not available on basic cards, but become increasingly generous as the annual fee goes up on cash-back and rewards points cards. Benefits could include insurance (limited medical, rental car collision, lost or delayed baggage, trip cancellation or interruption etc.), purchase price protection, short-term insurance on goods purchased with the card and other perks. Occasionally, there’s a super deal on offer, such as a UK card that offers a free companion ticket on some flights out of the UK if you spend £12,000 on the card in one year. Another is a US card that offers 5000 points for adding a second user card to your account. Benefits are all tightly delimited, so you have to read the fine print.

Emergency services

Card replacement — Can you replace a card on the road? Before you leave home, you should know whether or not your card issuer will courier you a replacement card. Some won’t send a card abroad. This issue alone is not enough reason to reject an otherwise good card. In that case, you could have the replacement sent to a Trusted Agent who would then courier the card on to you.

Eligibility & available credit

You might identify a great looking card, especially a rewards points card with a fat bonus. But are you eligible to get it? And how much credit can you get on a new card? Credit card companies want to know that you’re a good credit risk.

Eligibility for a card — How does a credit card company assess your “creditworthiness?” Your three-digit credit score is obviously part of the mix, but so is your income, how long you’ve held accounts and more. It’s a bad idea to just apply and hope you’ll be accepted, because a rejection will impact your credit score negatively. Many card companies have an online tool you can use for an unofficial assessment of eligibility.
Credit limit — Young people (without credit history) or those with a low credit score may be offered a low credit limit. That’s only a problem if you need to make a single big payment close to or above your credit limit. For travelers, a large airfare or emergency medical expense are two possibilities. Otherwise, a low limit is just a hassle, requiring you to pay down your balance frequently to leave credit available. After you’ve had the card for a few months and made timely payments, there’s no harm asking the credit card company to increase your limit.

Your credit score & income requirements

How does a card issuer determine whether or not to give you a credit card? The two most important considerations are your credit score and your recurrent income.

There are two sides to that. First, you have to have had loans that needed to be repaid. If you’re young, you may not have had much opportunity to build a credit history. Second is your record of paying that debt. Late or missed payments can damage your score, while a personal bankruptcy will drop your score off a cliff.

Card issuers want to know your recurrent income as evidence that you will have the cash flow to manage the credit limit they grant you. If you have been a student, work part-time, for a low wage or on intermittent contracts, you might qualify for a basic card only, with a low credit limit… or no card at all.

How do you know your credit score? Check with credit agencies listed for your country below. The year before your travel might be late to build or repair your credit score, but note that errors are common in credit reports. If you find any, you can request to have them corrected.

Get your credit report

There are many companies and crooks offering to help you know your credit history and score, as well as assistance to repair your credit. They show up prominently in search engine results. You don’t need them. Worse, some of the fixers are scammers. You are entitled to free access to your credit report (except in Britain, where a £2 fee applies). Other services, including your actual credit score, are available for a fee.

Only seek such information from the major credit rating agencies and not from third party companies.

Your country of residence

Credit cards are issued to residents of a country; foreigners are not eligible.

US residents — Americans are blessed with wide choice and attractive travel credit cards that come with either cash-back or rewards points. There are a few superior rewards points cards with high sign-up bonuses and first year annual fee waived.
UK residents — Britons have choices in basic, cash-back and rewards points categories, but not much in each. Annual fees are not waived the first year.
Canada residents — Canadians have only two cash-back cards and no rewards points cards except one hotel card of limited utility.
Australia residents — Australians have a couple of basic cards and a few rewards points cards. There are no cash-back travel cards. The rewards points cards do not waive the first year’s fee.

If you are resident of another country, you can explore all the Quality Factors that affect your choice and see what cards might serve.

Updates to this page? New cards periodically come to market, while the features, terms and conditions of existing cards may change over time. Although we schedule updates, we can’t monitor the credit card market constantly. If you are aware of any information on this page that is out of date or if you know of a new travel credit card, please let us know.