After your passport, I put credit cards next in line on the list of essential items for travel. If you’re going to spend any significant time abroad, you should review what cards you’ll use and, at the very minimum, make sure you won’t be paying hefty foreign transaction fees on any purchases (typically 3% of the transaction). Better yet, get something back for the money you spend. Whether it’s cash or points that can be used for future travel, a good rewards credit card – or a combination of cards – can help offset the cost of travel (and, of course, life in general).
Several personal finance sites discuss and promote travel-oriented credit cards, but as a frugal traveler, I found that these recommendations are often not appropriate for more frugal travelers. So-called “ultra premium” travel credit cards often come with hefty annual fees (e.g. $450/year). While such cards typically come with added benefits and rewards, they’re of questionable worth if you’re the type to stay in budget accommodation options. Additionally, people without a long credit history or high credit score likely won’t be able to get approved for such cards, suffering a credit report inquiry, which hurts one’s credit score, for nothing.
With these things in mind, I’ve put together a list of credit cards which I recommend for friends and frugal travelers like myself. Note that none of the links below are referral links. What I write is my honest assessment of each card, and I would never recommend a product just for a bonus.
Credit cards are like power tools: used responsibly, they can be incredibly helpful; used foolishly, they can do serious damage. If you have a history of making late payments to credit cards, or you have significant credit card debt with no solid plan to deal with it, stop here. There is simply no point in getting credit cards with the intention of earning rewards unless you pay off the credit card balance in full each and every month, as the late fees or interest fees will easily cancel out any cash back or points you earn.
Credit Cards Abroad: The Basics
If you’re headed abroad, my recommendation is to have at least two credit cards that meet the following two criteria:
- No foreign transaction fees – Chances are that the credit cards you currently carry apply a foreign transaction fee of around 3% on any purchase you make outside the US. Even if that card is a rewards credit card, using it abroad will likely negate any rewards you earn because of that fee. Any good travel card should have a 0% fee.
- Visa or MasterCard – The reality is that in many countries, if a merchant accepts credit cards, it will accept both Visa and MasterCard. While acceptance of American Express is growing, there are still many places that don’t accept it. The result is that you can’t rely on it for a primary credit card while abroad. Similarly, merchants that accept Discover card are even harder to come by in many countries.
Note that when paying abroad, payment terminals sometimes prompt you with an option to pay in US dollars instead of the local currency, e.g. when checking out at the supermarket, the teller may ask you “Dollars or euros?” Always pay in the local currency (e.g. say “Euros”). If you choose to pay in dollars, the payment processor will tack on a fee for doing the currency conversion, and you’ll end up paying more than if you opt for paying in the local currency.
Also, if you see what looks like a Wi-Fi icon on your credit card, your card supports contactless payments. Contactless payment terminals are much more common outside the US, especially in Europe, where they’re used everywhere that accepts credit cards (by law). If your card is contactless, use this feature when paying: just hold the card above the screen, or where ever you see that icon. The payment will process much faster than if you insert your card in the slot, and for smaller amounts (it varies by country), you won’t have to sign
Before Applying: Know Your Credit Score
Getting approved for a credit card depends largely (but not entirely) on your credit score. You may be able to see your credit score for free through your existing credit card account: usually if this an option, you see it when you log in to your account online. If not, you can check your credit score for free using annualcreditreport.com.
Cash vs. Points
From the start, you should decide whether you want to pursue rewards as cash back, which can typically be redeemed in the form of a check or statement credit once you have a certain amount (e.g. $25), or points, which are typically best redeemed on flights or hotels (you can redeem for cash, but this is generally considered unwise because you can get better value redeeming for travel). The best points are transferable points, so-called because you can transfer them to airline frequent flyer and hotel loyalty programs. Note that some cash back cards I mention below keep track of your rewards as points, but they’re really just cash back cards (though perhaps with the option of redeeming for gift cards instead of cash, which is typically a poor choice).
If you’re on a tight budget, or you just don’t want to take the time to learn the ins and outs of earning and redeeming points with a points-based credit card program, you may want to skip straight to the section on cash back cards below. If you’re doing OK financially, and especially if you expect travel to be a regular part of your life, it’s often worth getting a points card and doing a few hours of research to understand how they’re best used. (As a long-time traveler who ignored points cards for years because of their annual fees, I can say in hindsight that I was foolish to do so.)
Some cards offer a sign-up bonus if you spend a certain amount of money on the card in the first few months. In some cases, like with the Chase Sapphire Preferred card listed below, this bonus can be big enough to earn you enough points for a round-trip international flight (assuming availability), but requires you to spend a minimum of $4,000 in the first 3 months.
Usually, any card that offers a big sign-up bonus will come with an annual fee. Sometimes the annual fee is waived the first year, which provides a nice opportunity to earn the sign-up bonus and try out the card at no cost. You can always cancel the card (or better yet, downgrade to a different card with no annual fee) if after the first year you decide it’s not worth the annual fee. Note that even if there is an annual fee which is not waived the first year, it can still very much be worth getting the card just for the bonus, assuming you can meet the minimum spending requirement to earn it.
The Best Points Card: Chase Sapphire Preferred Visa
The Chase Sapphire cards have become rather renowned among travelers as a great way of earning Chase’s Ultimate Rewards points, which are prized for their flexibility and excellent value in terms of redeeming them for travel.
It’s important to consider this card first because, if you want it, it should be the very first card you apply for – before any other card – because of Chase’s “5/24” rule, which dictates that if you’ve opened 5 new credit cards in the past 24 months, Chase will automatically deny your application for this or any Chase personal credit card.
As for whether this card is appropriate for you, I recommend it if the following applies to you:
- You have an “excellent” credit score, e.g. a score of 720+, ideally 750+, which is required to get approved for this card. (Note that even a score of 750+ doesn’t guarantee you’ll get approved, as approval also depends on other factors like your current income, debt, and more).
- You haven’t opened 5 or more credit cards in the past 24 months (see 5/24 rule above).
- You foresee travel as being a big part of your life in the coming year (e.g. a long trip or several trips), or a regular part of your life the next few years.
- You wouldn’t find it difficult to spend $4000 via credit card in 3 months, as this is the requirement to get the sign-up bonus. I would go so far as saying it’s not worth applying for this card if you find it unlikely you’ll be able to meet this requirement to get the sign-up bonus. Keep in mind that, if you don’t normally spend over $1000 a month using credit cards, but you have a big trip coming up, you could wait and apply for this card shortly before the trip (at least one month before your departure date). If approved, that should give you enough time to receive the card and use it to pay for your flights, accommodation, and any items you need (e.g. a new carry-on bag) prior to your trip. That spending plus using the card at restaurants and for other expenses during your trip could allow you to meet the spending requirement to earn the bonus. Alternatively, time your application ahead of a major expense that you can pay for with a credit card, like a medical or dental procedure, auto repair, tuition payment, etc.
- You can afford to pay a $95 annual fee now knowing you’ll get the equivalent of that amount (and much more) back after you meet the spending requirement for the sign-up bonus mentioned above. Assuming the bonus is 60,000 Ultimate Rewards points, that can be redeemed for $600 cash, so if nothing else, you could redeem 9,500 points for cash to cover the cost of the annual fee.
Value of the 60,000 Point Bonus
The 60,000 point bonus for spending $4000 in 3 months is a BIG reason to consider this card. As mentioned above, 60,000 Ultimate Rewards points can be redeemed for $600 cash, but this is actually considered a poor redemption choice — a waste of valuable points. If, instead, you transfer those points to one of Chase’s partner programs, like United Airlines MileagePlus frequent flyer program, those 60,000 points can end up being worth closer to $1,200 — meaning, with that many points, you can potentially book a United frequent flyer award ticket which, if paid for with cash instead of using frequent flyer points, would cost $1,200. This is the reason why Chase’s Ultimate Rewards points are so coveted by travelers. The points are transferable to any of 9 different frequent flyer programs, including:
- Aer Lingus AerClub (Ireland)
- Air France/KLM Flying Blue (France/Netherlands)
- British Airway Avios
- Iberia Plus (Spain)
- JetBlue TrueBlue
- Singapore Airlines KrisFlyer
- Southwest Airlines Rapid Rewards
- United Airlines MileagePlus
- Virgin Atlantic Flying Club
Keep in mind that you can use miles with some of the airlines listed above to book award flights on partner airlines not listed here. For example, you can use British Airways Avios to book award flights on their partner American Airlines for a flight within the US or abroad.
Additionally, Ultimate Rewards points can be transferred to three different hotel partners:
It’s this diversity of partners and the redemption value you can potentially get through them which make Chase’s Ultimate Rewards points so prized. Getting 60,000 such points, if you achieve the spending bonus, should be enough to get you a round-trip economy flight to Europe — though it must be noted that getting any ticket depends on finding award seat availability. For this reason, it’s recommended that you don’t transfer points to a partner airline until you’ve found an award at a good value you want to book. The advantage of having so many program partners is that if you can’t find an award seat with one airline, you can try another, and transfer the points to whichever airline gets you the best award ticket.
Earning Points With Purchases
When making purchases, the Sapphire Preferred card earns:
- 2x points on flights, trains, buses, ferries, cruises
- 2x points on hotels, hostels, Airbnb, cruises, timeshares, campgrounds
- 2x points on ride-sharing (Uber & Lyft), car rentals, parking, road tolls
- 2x points on discount travel sites
- 2x points at restaurants
- 1x points on everything else
- No foreign transaction fee
Note that if redeemed for travel or transferred to partners, points end up being worth between 1.25 cents and 2 cents each (possibly more), so “2x points” can actually be equivalent to earnings 4% back.
- Best redemption: Transfer the points at a 1-to-1 ratio (with no transfer fees) to one of Chase’s airline or hotels partners listed above. As mentioned, this is typically considered the best way to redeem points, but of course the value of the redemption depends on what you’d otherwise pay for the same flight or hotel stay.
- OK redemption: Redeem the points through Chase’s online travel portal and gain a 25% bonus (so 60,000 points can be redeemed for a $750 flight you find on the portal).
- Worst redemption (but a good option to have): Redeem for cash at a value of 1 cent per point (60,000 points = $600)
Summary for the Chase Sapphire Preferred Visa
If you have a good credit score and can meet the minimum spend requirement to get the bonus, this is definitely a card you should consider if you’re a regular traveler. If you see the $95 annual fee as an obstacle, just remember you can redeem the bonus points for cash if you need to recover that cost. Whether it’s worth keeping the card after the first year varies from person to person, based on how much you spend and what value you get from Chase’s Ultimate Rewards points. If you do decide to cancel the card, wait until the annual fee posts to your card statement after your first year, then give Chase a call. They will cancel the card and remove the fee. A better option is to downgrade the card to the Chase Freedom (mentioned below) or Chase Freedom Unlimited. The annual fee will still be removed, but this keeps the account open, which is better for your credit history, and leaves you with a card you might be able to use.
An Alternative with No Annual Fee
Wells Fargo Propel American Express
If you want to avoid paying an annual fee, the Propel American Express issued by Wells Fargo is a very valuable travel card given that it has annual fee. Note, however, that it isn’t a Visa or MasterCard, so while you can probably use it to book your flight and hotel, you’ll want another card as backup – a Visa or a MasterCard – for places that don’t accept American Express.
- No annual fee or foreign transaction fee
- 3x points on hotels, homestays (Airbnb), timeshares, campgrounds
- 3x points on airfare, trains, cruises, travel agencies
- 3x points on rideshares, taxis, car rentals, ferries, tolls, parking
- 3x points on gas
- 3x points on “eating out and ordering in” (restaurants, bars, more?)
- 3x points on online streaming (e.g. Netflix, Spotify, Hulu, Apple Music)
- 1% cash back on all other purchases
- Sign-up bonus varies (currently 20,000 points after $1000 spend in 90 days)
To make things more interesting, if you also get the Wells Fargo Visa Signature, you can transfer the points you earn on this card to that one and redeem them for travel with a 50% bonus, effectively turning those 3x rates above into 4.5x. Each point it worth 1 cent when redeemed for travel. These are very good reward rates for a card with no annual fee. (Note that the Visa Signature has a foreign transaction fee, so you’ll still want a different Visa or MasterCard for foreign travel.)
Cash Back Credit Cards
If you don’t want to deal with learning a points program, here’s what I recommend for earning cash back when abroad. No amazing sign-up bonuses, but more straightforward rewards and no annual fees.
Huntington Voice MasterCard
(This card is only available to residents of Illinois, Indiana, Kentucky, Michigan, Ohio, Pennsylvania, West Virginia or Wisconsin. For residents of other states, see the alternative below. To apply for this card, first you need a Huntington bank account. You can open an Asterisk Free Checking account online. Once you have a bank login, you can apply for the credit card.)
This is a very unique cash back card in that it allows you to choose a category to earn 3% cash back on. There are 10 categories to choose from, and you can change the category every quarter. For example, you could choose:
- 3% back on travel from January to March
- 3% back on groceries from April to June
- 3% back on gas from July to September
- 3% back on restaurants from October to December
All purchases outside your chosen category for that quarter earn 1% back. Note that rewards are earned as points redeemable for cash. There’s no annual fee and no foreign transaction fee. Unfortunately there’s no sign up bonus.
What makes this card particularly valuable for use outside the US is that it’s one of the only cards out there with no foreign transaction fee and no annual fee that can earn 3% cash back on groceries, making this a great card to travel with if you spend a lot at supermarkets. It’s best paired with one of the cards above.
An alternative for 3% back on groceries is the Visa Titanium Signature Rewards card from Andrews Federal Credit Union. It earns 3% back (as points redeemable for cash) on groceries and gas purchases, 1.5% back on everything else, no annual fee or foreign transaction fee. Note that, being a credit union, you likely need to join the credit union by opening a bank account before you can apply for the credit card.
A 2% Cash Back Card (3 options)
For all spending outside the categories covered above, I suggest getting one of these cards which earn 2% cash back with no annual fee or foreign transaction fee. Note that I haven’t used any of these cards (yet), but will likely apply for one in the near future (probably the PenFed card).
- Paypal Cashback Mastercard
- Requires a Paypal account (if you don’t already have one)
- Easier to apply for than the options below
- Includes extended warranty benefit and purchase protection
- No sign-up bonus
- Power Cash Rewards Visa from PenFed Credit Union
- Requires joining PenFed Credit Union (non-military can join with a $5 charity donation)
- Requires opening an Access America checking account (no fees) and maintaining a $500 balance to get the 2% reward rate (otherwise 1.5%)
- Contactless card
- Includes travel accident insurance benefit
- $100 bonus after $1500 spent in 90 days
- Premium Cash Back+ Visa from State Dept. Federal Credit Union
- Requires becoming a credit union member to apply
- Application process more difficult than most
- Includes several benefits: extended warranty, car rental collision damage waiver, cell phone protection (for lost/stolen phone), trip cancellation/interruption insurance
- $200 bonus after $3000 spent in 90 days
Note that while I list some of the card benefits for the sake of comparison, you can get all of the same benefits with the other cards mentioned above.
Discover IT Card
This card is worth mentioning for a few reasons: First, a Discover card is one of the easiest cards to get, even if you don’t have a great credit score, and they tend to be more generous with the starting credit line than other banks. Additionally, this card gets you 5% cash back on categories which change each quarter. For example, Discover has been pretty consistent about giving 5% back on purchases at Amazon for the October to December quarter, making it great card to have for holiday shopping – or personal shopping for items you need prior to a big trip. While it has no annual fee and no foreign transaction fees, what holds this card back from being a serious contender with the other cards mentioned above is that it can be quite difficult to find merchants which accept Discover in certain regions outside the US (e.g. Europe). That said, you can still benefit from using this card to save money on pre-travel shopping and even when booking your international flight and overseas accommodation (e.g. if airlines is the 5% category that quarter), as most big online travel booking sites accept it.
Chase Freedom Visa Card
This card is a great companion card to the Chase Sapphire Preferred card above, as it gets you 5X points on certain category purchases (e.g. restaurants, groceries) each quarter, similar to the Discover IT card, above. The difference, however, is that the points you earn with a Chase Freedom card can be transferred to a Chase Sapphire card, making them into the much more valuable Ultimate Rewards points discussed above. While the card has no annual fee, it does have a foreign exchange fee of 3%, so it’s generally best used for purchases in the US. However, if you use it for the 5% category while you’re abroad, you still come out ahead.
Any questions? Feel free to leave a comment below.