What You Need to Know About Travel Credit Cards

These cards reward spenders, but watch the fees and terms.

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Consumers who charge purchases often want the best rewards for their well-worn plastic, and travel perks frequently top their wishlist.

With travel-linked rewards program cards, points are exchanged for airline tickets, hotel stays, and merchandise. In some cases, points can be turned into cash.

[See 10 Ways to Start Earning Extra Money Now.]

"After miles for airline flights, the next most important source of miles for most frequent flyers is the credit card. And for good reason. Cards with a mileage-earning component give users a way to double dip—earn miles both for the flight, the hotel, or the car rental, and for the dollar value of the charged purchase, as well as earn miles for credit card purchases which would not otherwise fall under the mileage umbrella," says Tim Winship, editor of FrequentFlier.com. His site reports on deals and provides a one-stop tracking service where consumers can log multi-program points.

Of course, no one is recommending a charging frenzy with little concern for the amount of revolving debt that can quickly accumulate and sabotage monthly budgets or credit scores. But many shoppers tap the convenience and automatic recordkeeping that comes with using credit cards over checks or cash, even for everyday purchases like groceries or gas. The added bonus is the reward points that accumulate with card use.

Some debit cards had been offering rewards that included travel perks, but two programs—at Chase and U.S. Bank—were sacked earlier this year, while PNC Bank curtailed its promotion for rewards-carrying cards. Regulatory changes in the credit and debit card arena are causing firms to rethink perks programs and fees in general, says Doug Miller, senior analyst for banking and cards at New York-based Corporate Insight, a customer-experience research firm for the financial services industry, in a research note.

[See Tougher Rules for Credit Bureaus May Be on the Way.]

For now, credit cards that help users build flight and other travel rewards remain among the most popular.

But long before consumers pack their flip-flops and board the dog, they should review the terms, fees, and interest rates attached to travel credit cards (and all cards with rewards programs), which can vary greatly. The average interest rate for cards with rewards programs is 17.6 percent, compared with 14.9 percent for non-reward cards, according to the comparison site indexcreditcards.com.

Determining what kind of travel card to use also depends on how much flexibility you want. Are you more likely to stick with miles, seating upgrades, or baggage compensation? Do you want the option of switching airline points to hotel stays, other merchandise, or even cash? Are you partial to a certain airline and hotel chain or want more options?

Finding airlines that deliver on rewards promises may be tricky. There may be restrictions and blackout dates that make booking difficult. That said, travel and points program flexibility does come with a price; wider choices and extended deadlines for cashing in points typically equate to higher annual fees. Consumers should determine if their savings offsets the fees. No matter the card, you'll need to travel about six times per year for a program to pay off, according to research firm Corporate Insight.

[See Should You Use a Virtual Credit Card Number?]

The editors of BudgetTravel.com offer top picks for traveler friendly cards across a handful of categories, from domestic frequent-flyers to intrepid individuals discovering the globe's more exotic corners.

• For domestic travelers often flying to the same destination—to visit the in-laws a couple times a year, perhaps—the Citi Gold/AAdvantage Visa Signature Card may fit the bill, the team says. They note its 'Reduced Mileage Awards' program, which allows cardholders to fly to select American Airlines destinations on a round-trip ticket. For $750 charged on the card in the first four months, American Airlines will award 20,000 bonus miles. A cardholder will earn one AAdvantage mile for every dollar spent, and importantly, there are no blackout dates for travel. However, after the first year, a $50 annual fee does kick in.