Bonuses are back for travel-reward cards.
So many credit-card companies are offering deals and perks right now that frequent travelers may want to re-evaluate whether they should switch their card allegiance.
Among the deals that have become more common in the past year: waived fees on the first checked bag for you and those traveling with you, free passes to airline clubs, no foreign transaction fees, waived annual fees for the first year and generous bonus miles when you sign up and spend a little in the first few months.
As The Wall Street Journal reported on Tuesday, lenders are ramping up efforts to court wealthier customers. Travel-reward cardholders are especially big spenders, charging an average of $1,359 a month in the first quarter, compared with $805 for the average cardholder, according to research firm Synovate’s Mail Monitor service, which tracks credit-card mailings. Research firm Mintel Comperemedia says that while credit-card promotions of all kinds are up this year, bonus miles and points are the most popular, included in 25% of all credit-card offers from January through April.
Card companies say they also are responding to the additional airline fees and increased travel hassles. “We asked, ‘What can we do to relieve that stress?'” says Robin Korn, senior vice president of American Express’s consumer charge card group.
American Express’s Platinum card, which carries a $450 annual fee, has added several travel extras this year that could more than cover the card cost, including free access to international airport clubs, elimination of foreign transaction fees, a $100 credit to pay for the U.S. Customs’ Global Entry program that speeds up the customs process, and $200 in airline-fee credits, which can be used for checked baggage, airline change fees or in-flight food.
Given that there are dozens of cards available from big issuers such as J.P. Morgan Chase, Citigroup, American Express and Capital One Financial, you will want to zero in on the ones that best fit your travel plans, whether you use a preferred airline or hotel or want certain perks. Since this column addressed the topic of travel abroad on Jan. 15, more cards are waiving foreign transaction fees. Chase now offers 10 cards without such fees, and Citi and American Express each have two, while Capital One doesn’t charge the fees on any of its cards. In addition, many credit unions don’t assess the fees or charge less than the typical 3%.
Many cards are waiving the annual fee for the first year—and you should try to negotiate a longer waiver, especially if you have a long history of paying your bills on time. “Consumers have more power than they know,” says Beverly Blair Harzog, a credit-card expert at Credit.com.
Among the other options: Gold and Platinum Delta SkyMiles cards and Continental OnePass Plus and Presidential Plus cards waive fees for the first checked bag. Some cards offer a pass or two to use an airport lounge, which often costs $50, and several offer a complimentary or $99 companion ticket each year.
You can even improve your status: The US Airways Dividend Miles card allows you to act like an elite frequent flier, checking in at the first-class counter, zipping through the priority security line and boarding near the front.
While you are shopping, consider a few rules that aren’t in the fine print:
• Don’t be lured into the teaser bonuses without first looking closely at how the point conversions will work for you. For instance, the Capital One Venture card has an appealing 25,000-point bonus if new cardholders spend $1,000 in the first three months, and it pays two points for every dollar you spend. You can convert your points into travel at a rate of 100 points for every $1 of travel cost, so 25,000 miles will buy a $250 ticket or can be converted to $250 cash.
That is a good exchange for modestly priced tickets, but less so if you are looking for big rewards, like a business-class flight to Europe. In those cases, you probably will get a better conversion rate by earning miles for your preferred airline. Ideally, you want to get about two cents or more for every mile. Capital One says its conversion method gives customers flexibility, allowing them to shop for the lowest ticket price and preferred route.
• Skip these cards if you are going to carry a balance. Between interest charges and annual fees, your costs will outweigh any rewards you get.
• Be aware that applying for a new credit card may knock some points off your credit score. If you plan to apply for a mortgage or car loan in the next year, you should wait until after you have done that to get a new card.