The Complete Guide: The Best Travel and Rewards Credit Cards in 2021 for Beginners
I’ve often been asked which is the best credit card to get or what are the best credit cards for travel and rewards.
A couple years ago when I got my first credit card with rewards, I had no idea what I was doing. So much so, I didn’t even get the bonus that I had signed up for!
Dozens of credit cards and several years later, I’ve learned so much more about the best credit cards for travel, rewards, and points.
Here is a complete guide for beginners on where to start and how to get the most benefit from the best credit cards in 2021.
1. Spend Only Within Your Budget
The worst mistake you can off the bat is signing up for a credit card with a bonus and spending more than you should.
It’s the reason why financial experts like Dave Ramsey and billionaire, Mark Cuban believes people should just not use Credit Cards at all.
Interest rates on Credit Cards are exorbitantly high and the worst mistake you can make is not paying off the balance in full each month.
2. Tread Carefully
Knowing the potential temptation of credit cards is key to finding the best reward credit card for you.
While there are numerous benefits one can receive from a credit card with rewards, the reason credit card companies are able to offer such lucrative awards in the first place is because paid interests in debt from consumers is such a lucrative business.
You don’t want to be paying interest to gain rewards so approach each Credit Card application with caution!
There are a few things you need to know before you even sign-up for any credit card.
3. Make sure you know the annual fee on each card
A lot of credit cards offer a waived fee for the first year but usually a recurring annual fee kicks in after the first year. Why is this important?
While some people get a credit card and cancel before the next year’s annual fee kicks in, I wouldn’t recommend doing that often.
You want to maintain an excellent credit history and obtaining and cancelling credit cards doesn’t help.
There are also limitations to how many credit cards you can open in a year. And limitations on when you could reapply, if you could even reapply for a credit card after you cancel.
For most credit cards, plan on the long-haul and having it at least for a few years.
As such, you want to be able to justify the annual recurring fee and make sure it’s worth paying for.
Annual fees are usually offset by the value from the number of points you accrue, free anniversary nights (on hotel credit cards), travel benefits, etc.
3. Make sure you know what the interest rates (APR) are
You really don’t want to ever get stuck paying the interest rates from a Credit Card. The average APR for credit cards these days is a whopping 15.09%!
Compare that to:
- An average 30-year home loan at 4.25%
- An average car loan at 4.21%
- An average student loan rate at 5.05%
Credit card interest rates are 3-4x the average of most other common loans!
But, we know things happen sometimes. Just make sure you know what the APR is for the Credit Card you’re signing up for.
And hope you never have to pay interest on it!
5. Be sure to know the minimum spend to get a bonus
A lot of times bonuses that come with Credit Card sign-ups have a minimum spend. You want to pay close attention to the terms.
Most commonly, credit card companies will give you 3 months to spend at least a certain amount to obtain the bonus offered.
The reason this is important is because you want to budget accordingly and make sure you can meet this requirement.
It’s best to be able to meet this requirement with what you normally need to spend on without any extra purchases just to meet the minimum.
6. Get a Credit Card that Benefits You the Most
This sounds like a no-brainer but different credit cards have very different benefits.
You want to find a credit card that best suits you.
For example, there are credit cards that are best for travel.
There are credit cards best for hotels.
There are credit cards best for business use.
There are credit cards best for all-around general use.
And so on and so forth.
If you prefer staying in Airbnbs, it doesn’t make sense to get a credit card specialized for hotels!
7. Credit Cards Best for Travel
So finally… onto the good stuff.
Most people wish they could travel more or enjoy traveling (after they get dragged off of the couch).
Usually the problem is travel isn’t always cheap.
One of the best ways to travel without having to spend a lot of money is traveling with award points.
If you’re just starting out, the points game is a somewhat complex game that takes time, research, and knowledge.
If you don’t want to delve too deep into it, just know that there are three important costs to travel: flights, accommodations (hotels), and transportation.
For flights, it’s usually great to start with credit cards associated with any of the large US carriers such as United Airlines or American Airlines.
Below are a few great cards to start with:
United Explorer Card (no annual fee for the first year, $99 thereafter, 40,000 bonus United points) https://www.rewardexpert.com/blog/united-airlines-credit-cards-everything-you-need-to-know/
American Airlines Red Aviator Card (no annual fee, 50,000 bonus AA points)
American Airlines CitiAAdvantage Card (no annual fee for the first year, $99 thereafter, 50,000 bonus AA points). https://thepointsguy.com/guide/choosing-the-best-card-for-american-airlines-flyers/
Southwest Airlines Credit Card (Different Cards available) https://thepointsguy.com/news/southwest-cards-current-offers/
Even if you don’t fly the specific airline you signed up for, miles are transferable to a lot of other partner Airlines in the same alliance (with the exception of Southwest Airlines Card).
For example, with United Points, you can book award airfare with EVA, Turkish Airlines, etc. since they’re under the same Star Alliance.
Other Credit Cards offer even more flexibility with transfer of points to other airlines.
Chase Sapphire Preferred Credit Card (60,000 points from $4,000 spend in 3 months, $95 annual fee)
Chase Sapphire Reserve Credit Card (50,000 points from $4,000 spend in 3 months, $450 annual fee)
AMEX Gold Credit Card (50,000 points from $2,000 spend in 3 months, $250 annual fee)
AMEX Platinum Credit Card (60,000 points from $5,000 spend in 3 months, $550 annual fee)
Are great options that give you Chase Ultimate Reward Points which are transferable to a number of things including different airlines.
The only caveat with Chase is you want to be aware of the 5/24 rule which basically means there are certain cards you can’t exceed applying for/having five cards in total in 24 months.
Even if you have excellent credit.
Also, as always you want to be aware of the annual fee on the card. Some of the credit cards like AMEX platinum or Chase Reserve have excellent benefits including priority pass lounge access and travel credits… but they do come with a hefty fee of over $400+ per year.
Lastly, there are a number of other Credit Cards issued from other banks that also have flexible reward options.
CapitalOne Venture Card (50,000 points from $3,000 spend in 3 months, $95 annual fee)
Bank of America Travel Rewards Card (25,000 points from $1,000 spend in 3 months, No annual fee)
Bank of America Premium Rewards Card (50,000 points from $3000 spend in 3 months, $95 annual fee)
Both cards give you even more flexible options of using points for any travel related purchases (including air tickets, hotels, transportation, etc.).
Although the points are more flexible, they may not be quite as valuable as points from Chase Ultimate rewards.
So where do you start?
It ultimately just depends on you. You want to factor in minimum spends to acquire such bonuses, annual fees, and what the awards are good for.
Just starting out, I think:
Capital One Venture Card
Chase Sapphire Preferred Credit Card
United Explorer Card
American Airlines Red Aviator Card
American Airlines Citi AAdvantage Card
Are great cards to start off with since the annual fee is low, the minimum spend requirement is relatively low, and the bonuses are fantastic with great transfer options when you’re ready to book your travel plans.
While the other cards can be extremely valuable, they have a higher spending requirement, higher annual fee, and require a bit more traveling for the benefits to be of use to you.
8. Credit Cards Best for Hotels
Hotel Credit Cards are one of my favorite credit cards to have. Why?
Because #1, if you ever go anywhere outside your hometown, whether it be for vacation, a road trip, or work, you’ll need to book a hotel or Airbnb.
#2, the best perk from hotel credit cards is the free anniversary night a lot of them offer. It essentially awards you a free hotel night each year after your first year.
The free anniversary night not only covers the annual fee of the card, but since you’re able to book hotel rooms that cost a lot more, it’s a sweet perk to have.
Here are some of my favorite Hotel Credit Cards:
IHG Premier (80,000 points from $2,000 spend in 3 months, $89 annual fee)
Marriott Bonvoy Boundless (75,000 points from $3,000 spend in 3 months, $95 annual fee)
Marriott Bonvoy AMEX (75,000 points from $3,000 spend in 3 months, $450 annual fee)
The World of Hyatt (25,000 points from $3,000 spend in 3 months, $95 annual fee)
All the above hotel credit cards have great redemption options all around the world. And the best part is the redemption value is quite good especially when prices may be higher at certain destinations (such as Europe).
It makes the free anniversary nights even sweeter!
Recently, I booked a couple nights in Zurich and London where hotel rates were over $300. I used anniversary nights on a couple nights and then points for remaining nights I needed and got an incredible value for them!
Essentially, I would have had to shell out a few thousand dollars but instead paid $0!
9. Credit Cards Best for Business
If you have a small business, you probably have a lot of expenses. The great thing about business expense is you can charge it on a credit card.
Points tend to rack up pretty quickly when you’re putting your business expense on a credit card.
But you also want to be strategic as not all points are equal.
A few great credit cards for business are:
Chase Ink Preferred (80,000 points from $5,000 spend in 3 months, $95 annual fee)
Marriott Bonvoy Business AMEX (75,000 points from $3,000 spend in 3 months, $125 annual fee)
United Explorer Business Card (50,000 points from $3,000 spend in 3 months, $0 first year, $95 annual fee after)
AMEX Gold Card (35,000 points from $2,000 spend in 3 months, $250 annual fee)
10. Credit Cards Best for General Use.
If you’re looking for a credit card with just the best general use rewards, your best best would be the cash back credit cards.
Although cash back value (and sign-up bonuses) may not be as lucrative, they are the most straight-forward as you don’t need to worry about redeeming point values.
Honestly though, it’s also not the most exciting. But it’s understandable if you don’t want to spend time exploring different travel options.
Some good credit cards with great cash back value include:
Chase Freedom Unlimited
Blue Cash Preferred Card from AMEX
CapitalOne Savor Cash Rewards
Citi Double Cash Card