Travel Bonuses Are Great – If You Can Use Them

In Money by NikitaLeave a Comment

In previous blog posts I’ve written about the great benefits of travel bonus cards. However, most of these posts were written prior to our international travel. While I still believe that travel bonus cards are useful when living in America and traveling abroad occasionally, my views have shifted on the benefits of travel rewards cards, especially for those of us who live abroad or who do not spend tremendous amounts of money on cards.

The US News and World Report recently covered travel bonus credit cards in an interesting article comparing their pluses and negatives. While this article is good, it keeps a US centric view on travel reward spending. One of the most important things that US News mentions is that travel rewards cards can require a tremendous amount of vigilance in order to derive their full benefit.

Travel rewards cards offer amazing perks and sign up bonuses, many of which could allow you to buy an international round trip ticket after only two or three months of spending. Big rewards up front like these mask the potential problems with obtaining further rewards from travel cards after signing up.

As US News mentions, these cards often have much higher interest rates and keeping the balance necessary to obtain rewards quickly negates any benefit. Also common are yearly fees that eat into your travel benefits and blackout dates that actually limit your travel.

One of the biggest issues I encountered when trying to use travel bonus abroad is the ability to use points to purchase plane tickets from one part of the world to another.

One recent example was when I had over 70,000 available points on an American Airlines award card. While I wasn’t traveling in the United States I assumed that like most big airlines, partnerships and code shares would allow me to travel pretty much anywhere while still booking through American Airlines. Did this turn out to be true?

Nope. There were no available flights in the destinations I was planning on traveling to and from. 70,000 points still in limbo.

While this map makes it look like it’s possible to travel out of Bangkok, in practice it was impossible for me to book a ticket out of Bangkok to any destination.

The important lesson here is to make sure you research the rewards program and how/when/where exactly the benefits can be used by investing time and energy in picking up those benefits.

Another example of this is hotels. The way we travel at Overland Undersea is simply not conducive to using hotel travel cards. We prefer more active, budget travel, and many of our experiences are in remote areas with only local offerings.

Any hotel chain with a travel card is likely too expensive to stay at if you’re traveling full time for many months or years. We also always prefer to stay in local guesthouses owned by local people. This method of travel allowed us to spend money that directly benefited the local community and was also much cheaper than staying in chain hotels.

Finally, when we moved to Bangkok, we realized how much less people used credit cards in daily transactions. In most of the developing world credit cards are only used in places where you’ll likely spend a small percentage of your overall budget. We weren’t able to spend the many thousands of dollars a year on our travel cards to justify the high yearly fee associated with the cards.

Sometimes guesthouses have much more character than the hotel chains and they come at a greatly discounted price!

This is true even if you’re not an expat, but a long term traveler. Many of the places you’ll want to travel to will not be credit card friendly, so you’ll need to have a bank of rewards points already in order to spend them.

On the flipside, there are travel rewards cards that do not provide the best benefits available, but are good credit cards for long term international travel. One example is the Bank of America Travel Rewards credit card. We use this card paired with a Charles Schwab Debit Card for most of our international travel. US News mentioned finding a credit card that doesn’t charge foreign transaction fees. I would have to agree and add that finding a debit card that refunds ATM withdrawal fees can create the best set of cards for longer term travel and for living abroad. When you’re living in a predominantly cash-based society, you’ll be withdrawing quite frequently.

Both the Bank of America credit card and the Schwab debit card have no foreign transaction fees, provide good exchange rates on transactions, and provide decent benefits. The Bank of America card gives you points worth 1.5% of spending that you can credit against travel spending. The Schwab card refunds all ATM withdrawal fees at the end of each month. When we were traveling heavily, Schwab refunded us over $30 in fees in just one month!

To sum it up, travel credit cards with excellent benefits are a big asset if you are based in the US, but travel abroad occasionally. For those of us who live abroad, or travel more long term, travel credit cards have to be scrutinized more closely. While they can still benefit us through no foreign transaction fees, some of the extravagant perks could become less meaningful.

Got questions or experiences with travel bonus cards? Please share them with us in the comments!

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