Top 3 Travel Credit Cards for Beginners
A family member reached out us recently, asking for credit card recommendations. Like most, they are new to the idea of using their normal spend to accumulate miles & points to supplement their travel budget. While we've "only" been at this a few years ourselves, it's benefited us greatly with trips around the globe, to include recently booking our anniversary holiday to the Maldives in business class!
Below are our recommendations of the Top 3 Credit Cards to consider if you're just starting out. The criteria we used are:
Low to no Annual Fee.
Reasonably achievable purchase expectations and time period.
Generous allotment of bonus miles/points for signup (called the SUB)
Broad network of travel partners
AAdvantage Aviator Red Mastercard
This is by far the best way to get a nice return for taking on a new credit card, and the reason is quite clear: after paying the $99 annual fee and making ANY purchase (say, a pack of gum) both within the first 90 days, you get 60,000 AAdvantage Miles (at the time of this writing, worth about $600)! Depending upon the season, it's good for 2 round-trip economy tickets within North America or 1 round-trip economy ticket to many international destinations.
When booking travel with this card and flying an AA, domestic route your first checked bag is free for the primary cardmember and up to 4 companions traveling with them on the same reservation. You will also get a $25 statement credit towards in-flight WiFi, and 25% credit on food & beverages purchased on AA operated flights.
Additionally there are no transaction fees when used for purchases internationally.
This year, AA drastically changed how elite status is earned, with spend becoming a huge factor in acquiring Gold, Platinum, Platinum Pro, and Executive Platinum status. Unfortunately, unless you are a consistent AA flying customer and have significant spend throughout the year (most spend only getting 1X miles) in our opinion there are better cards to keep long-term for supplementing your travel budget.
This is a card that both Stephanie and I have held. That said, after her first year, Stephanie cancelled her card, as her AA Elite Status means she was already getting preferred seating and the free checked bag benefit, so the $99 annual fee wasn't worth it. The following year, I got the card, and used it with miles we already had to pay for 2 one-way tickets to the Maldives on a Q-Suite-equipped Qatar Airways flight! Once my 1-year anniversary arrives, it's likely I will cancel my card as well.
The card that is most used by us for daily spend is the Chase Sapphire card with the $95 annual fee (as compared to $550 for the Chase Sapphire Reserve). For that annual fee, and spending $4,000 within the first 3 months of account opening, you get 60,000 Ultimate Reward (UR) points which, at the time of this writing, is worth $600-$725 in travel spend. Before getting our American Express Gold Card, this was our default card, with which we accumulated enough points to dramatically decrease the cost of our trip to Paris in 2021 with our mothers and one of our daughters.
Other travel related benefits include a $50 credit towards a hotel stay booked on their travel portal (which typically has prices similar to Expedia and gives you a 25% bonus on any Ultimate Rewards points you book with) and $0 foreign transaction fee. Chase Ultimate Rewards points can also be transferred 1:1 to many airlines (sadly, not AA).
Closer to home, you'll get a complimentary DoorDash DashPass subscription, extended warranty protection and purchase protection, 3X on dining, online groceries, and some streaming services.
Ok, this card may be aspirational for some, but if achievable, the benefits are significant. Because of its relatively higher annual fee ($250) we suggest timing your application to when you have specific travel goals in mind and (like with the Chase Sapphire Preferred) expenses that you can put onto the card within the allotted time for the SUB.
And at the time of this writing, the SUB is pretty sweet for B2G followers: 90,000 Membership Reward (MR) points! We have not found MR points to be a good value when used on the American Express travel portal, instead transferring transfer our points to airlines. For example, we transferred 100,000 MRs to Air Canadas's Aeroplan program and immediately used those points + $1,100 USD to purchase 2 Business Class tickets from the Maldives to Chicago (note: we could have waited to earn more MRs, but because award seats to/from the Maldives are highly sought after, we agreed that $1,100 out-of-pocket towards a round-tip to the Maldives was worth it).
For those 90,000 MRs (worth $900-$1,125) you need to pay the $250 annual fee and spend $4,000 within 6mos. That said, you may find it a better "default" card for your daily spend, with 4X on groceries and dining.
Other travel related benefits include $10/mo in Uber Cash, $10/mo in credits for a select number of restaurant chains, and no foreign transaction fees.
All told, if you were to get these 3 cards, you could amass miles and points worth $2,100-$2,450 in travel credits, for an out-of-pocket of $434 in fees and $8,000.01 spent across the cards.
Very Important! Don't Carry A Balance!
It's very important to remember thatĀ if you carry a balance on the credit card and pay interest, that will decrease the value of your miles/points! Our recommendation (did you know Stephanie's a bona-fide Financial Advisor?!) is to time your applications to significant expenses you have upcoming over the next 3-4 mos that you have the ability to pay cash for. Our advice: if you don't have the ability to pay (at least) the Statement Balance when due, don't put it on a credit card!
Summary
Having a travel budget is an important aspect to managing our household finances, regardless of your financial status. It's even more important when you have kids and destinations that could potential constrain the frequency or duration you can afford. Being able to leverage your normal spend and reward yourself with benefits that decrease your out-of-pocket makes every travel adventure that much sweeter.
Thank you for reading this far! We will have a shortened version of this blog on our TikTok, and if you want to see our smiling faces, our YouTube channel. While these opinions are our own, we do appreciate that if you use the links above, we may receive miles or points from the companies referenced.