Travel Credit Cards 101

Travel Credit Cards 101

Many Canadians underestimate the benefits of travel credit cards when used appropriately. The best travel credit cards in Canada can get you free trips, help you save money on travel insurance, offer VIP airport perks and much more. So to help you get the most out of your travel credit card, we’re breaking down some misconceptions and sharing some of the best practices when using your travel credit card!

Card Churning

Applying for credit cards to take advantage of signing bonus can be a great way to earn a lot of free points and mileage in a short amount of time, but you need to be cautious if you’re doing this regularly. Card churning is when you apply for multiple credit cards to take advantage of the sign-up bonuses and one time offers, often closing the cards once you’ve redeemed the bonuses or when the annual fee kicks in. Many people do this successfully, but you need to be careful because this practice can negatively impact your credit score in the long term. Generally speaking, applying for new credit cards on a regular basis is okay so long as you know you’ll get approved. This can be determined by knowing the card approval requirements and knowing your credit score. Some cards may have restrictions such as income requirements and age or geographical restrictions, so it’s important to check to see if you qualify before you apply. Additionally, having an excellent credit score will increase your chances of getting approved, so make sure you know your score and it’s in good standing.

Furthermore, it is always worth checking to see if you are pre-approved for a card that you are interested in. This will allow you to get a credit card without impacting your score, also known as a soft check. When applying for credit cards where a hard check may be required, it’s best to limit the number of times this is done to once every six months to allow your credit score to rebound, usually about 3 months.

Annual Fees

Ratehub’s Digital Money Trends report found that over three quarters of Canadians looked for credit cards with a low annual fee. While some no-fee credit cards provide good value, many of the best travel credit cards come with an annual fee. In a nutshell, it all comes down to how much you spend and where your spending goes. It is also worth considering any one-time bonuses. For example, the Scotiabank Momentum Visa Infinite has an annual fee of $99 while providing 4% cash back on gas and groceries. Alternatively, the no fee SimplyCash card from American Express gives you 1.25% cashback on all categories. If you tend to spend a significant amount on gas and groceries, paying the annual fee may result in greater overall earnings. For instance, given the following spending profile using the Scotiabank Momentum Visa Infinite card, you would earn $413 in your second year in net rewards. Conversely, with the no fee SimplyCash card from American Express, you would earn $405 in net rewards on that same spending, making the card with the $99 fee better choice.Travel Credit Cards 101

Similarly, for frequent flyers, a card like the Scotiabank American Express Gold card provides many perks including travel insurance, baggage and delayed flight insurance, in addition to 4 points per dollar on 4 categories. In many cases, these cards can provide better value even with a fee. When it comes to travel cards don’t discount the card just because it may have an annual fee. Depending on your spending, they may be the best cards to have.

Rewards Programs

When people think of travel rewards programs, Canadians naturally think of Aeroplan or Air Miles as they are two of the oldest travel loyalty programs in Canada. But in recent years, proprietary rewards programs like BMO Rewards or Scotia Rewards are becoming more popular because of the programs’ simple redemption process. With many of these programs, you don’t have to work as hard as you do when using Aeroplan or Air Miles. You also don’t have to worry about blackout dates or additional costs like taxes and fees. You simply find the best flight for you and then apply your points to that purchase. For many of these propriety programs, it’s that easy. But if you decide to use a rewards program like Air Miles or Aeroplan, make sure you do your research to ensure you’re getting the best possible value per mile on your redemption.

Insurance

In most cases, travel insurance you receive with your credit card is all you need when traveling for under a month. Many cards such as the Scotiabank American Express Gold card will cover medical emergencies up to $1 million, provide insurance coverage for lost or delayed baggage, trip cancellation or delays, and a host of other situations. This is in contrast to a traditional provider like Blue Cross who may charge hundreds of dollars for the same coverage. For example, let’s say you are planning a trip to France from Aug 6 to 27 and want travel insurance. If you book this trip using a travel credit card, you are covered for up to 25 days for accident insurance, medical insurance, trip cancellation, lost baggage insurance, etc. For the same trip using Blue Cross for very similar coverage, it would cost $228. Therefore, this cost savings alone would justify an annual fee.

From one time offers to reward programs and travel insurance, travel credit cards are loaded with perks and benefits if used properly. Before you take your next trip, head over to Ratehub.ca and compare the best credit cards in Canada.

Giveaway!

Thanks to the folks at Ratehub, I’m giving away a prepaid travel card worth $100 to one lucky reader! To enter, like both the SeeYouSoon.ca and Ratehub.ca Facebook pages and tell us how you would use, or are using, your travel rewards credit card in the comments below!

Note: The giveaway is open from April 17th to 28th at midnight EST. Only Canadian residents’ are eligible to win. Winner will be announced on Monday, May 1, 2017 on seeyousoon.ca’s Instagram Stories. Good luck!

 

  • http://itsRu.com its Ru

    Between the free medical insurance, trip cancellation insurance, rental car coverage, and points, not really sure how anyone really could not get a travel rewards card. I’ve been travelling for the past 2 years non-stop. Every flight has been booked using a travel rewards card!

  • Denise S

    Such a great post! I’m currently planning a trip for the summer and I am always looking into seeing what travel rewards I have access to! I use my travel rewards to help pay for flights and hotels! It is always amazing to see how far your travel rewards can go!

  • Keith Falardeau

    We booked flights for our wedding in Newfoundland using aeroplan points and have also booked flights to Europe! With the help of my td aeroplan visa they add up quickly!

  • Denise

    Awesome Giveaway! Currently looking into booking a flight for the summer and we are always thinking about how to get more with our travel rewards! I commonly use my travel rewards credits towards flight purchases and hotels!

    Thanks!
    Denise

  • Jamey Lo

    Travel insurance is the biggest perk of using a travel rewards card for sure!

  • http://notwithoutmypassport.com/ Helen

    I use my travel rewards credit card for flights (surprise, surprise!). Also, not all credit cards offer cancellation insurance (which can be costly) but the CIBC Aventura Mastercard does. That was one of the big selling points for me.

  • http://chocolatour.net/ Doreen Pendgracs

    I use the Westjet RBC Mastercard and love it! I’ve had several free flights since I’ve had the card, and always get free checked baggage, a $99 domestic companion voucher (higher fees for MX, Caribbean and further) and free lounge passes for a very nominally priced premium card.

  • Marc Smith

    So many ways, towards a hotel, rental car and gas!

  • Abby Swain

    We use the “Westjet RBC World Elite Mastercard” that offers one $99 companion fare a year (travel in Canada). It costs $99 a year but between the companion fare and the points earned it’s worth it for us.