The value of points or miles earned in the first year with a travel rewards card averages $901, reports personal finance site NerdWallet. That means you can be leaving hundreds of dollars on the table if you don’t have a travel rewards card.
To help you shop for one, consider three of our favorites:
PenFed Pathfinder Rewards American Express
No annual fee and you’ll earn 25,000 points by spending $2,500 in the first three months of opening the account. This new card shines because it offers two benefits that often come only on cards with hefty annual fees: a reimbursement of up to $100 for a TSA Precheck or Global Entry application fee every five years, and a $100 annual credit toward incidental fees with 11 airlines, such as charges for baggage and in-flight food. You’ll get three points per dollar spent on travel purchases (or four points per dollar if you’re a military member or have an Access America checking account with Pentagon Federal Credit Union) and 1.5 points on all other spending.
A couple of caveats: When you book a hotel room through PenFed’s redemption portal using points, they are usually worth a healthy 1.18 cents or more each. But the value dips to only about 0.85 cent per point for gift cards. And when you buy airline tickets with points, you’ll pay a fee of $15 to book online or $25 over the phone.
Capital One Venture Visa
The $95 annual fee is waived the first year. You’ll also earn 50,000 miles in a sign-up bonus if you spend $3,000 in the first three months. Capital One Venture skips the complex formulas: It pays out two miles per dollar on all purchases. Besides the 50,000-mile sign-up bonus, you’ll earn a whopping 10 miles per dollar on eligible prepaid hotel reservations through Hotels.com (through January 2020). Redeem miles at a value of a penny per point for statement credit on travel purchases you’ve made with the card in the past 90 days (on non-travel statement credits, miles are worth 0.5 cent apiece). Or book travel with miles through the Capital One Rewards Center.
Southwest Rapid Rewards Premier
The annual fee is $99, and you’ll earn a 40,000-point sign-up bonus if you spend $1,000 in the first three months. Cardholders rack up two Rapid Rewards points per dollar spent with Southwest Airlines and on purchases with hotel and car-rental partners. All other spending earns one point per dollar. You’ll also get a bonus of 6,000 points every year on the anniversary of card membership. And for each $10,000 you charge to the card (up to $100,000 yearly), you’ll get 1,500 tier-qualifying points toward A-List or A-List Preferred status.
(Lisa Gerstner is a contributing editor to Kiplinger’s Personal Finance magazine. Send your questions and comments to firstname.lastname@example.org. And for more on this and similar money topics, visit Kiplinger.com.)
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