5 points to consider before selecting travel credit cards
Travel credit cards can be an excellent tool for business travellers and holiday makers. These cards earn you higher reward points and other benefits on travel-related expenses. You can redeem accumulated reward points for air tickets, hotel stays and other expenses. They also enrich travel experience by providing complimentary airport lounge access, additional baggage allowance, dedicated concierge service and priority check-in at airports. Following are the points that you must factor in while selecting your travel credit card:
Co-branded or non-co-branded credit card:
Co-branded cards bear the name of their partner airlines, hotel chains or other travel brands. These cards offer higher reward points and other benefits on spends made on partner brands. For example, Air India SBI Signature Card credits 4 reward points for every Rs 100 spent on retail expenditures whereas it credits 30 reward points for every Rs 100 spent on booking Air India tickets for self through Air India's website or mobile app.
Unlike non-co-branded cards, reward points earned through co-branded travel credit cards may only be redeemed for spends at their partner brands.
While brand-neutral travel credit cards offer higher benefits on travel expenses, they also offer greater options for redeeming accumulated reward points. For example, Citibank PremierMiles Credit Card credits 10 miles for every Rs 100 spent on booking air tickets, both through its dedicated website 'PremeirMiles.com' as well as through websites and ticket counters of all airlines. Similarly, card holders can redeem accumulated miles to book air tickets of all airlines through the PremierMiles website as well through the online partner portals. This card also allows redemption of accumulated miles for buying merchandise at retail partner outlets, gift vouchers of partner e-commerce firms and for buying fuel at select Indian Oil fuel pumps.
Opt for co-branded travel card if you are a frequent consumer of particular travel brand. Else, opt for a brand-neutral travel credit card for greater choice of redemption.
Joining and renewal fees: Travel credit cards usually have higher joining and renewal fees vis-a-vis regular and shopping-oriented credit cards. Their annual and renewal fees can go up to Rs 10,000. Hence, make sure to carry out cost-benefit analysis of various travel credit cards before closing in on a particular one. Opt for the one whose benefits in the form of reward points, discounts, cashbacks, etc exceed its costs by widest margin.
Joining and renewal benefits: Most travel credit cards provide joining and renewal benefits in the form of free reward points and travel vouchers. The monetary value of these benefits is usually high enough to recover your joining and renewal fee or at least significant part of it.
For instance, while Axis Bank Vistara Signature Credit Card charges Rs 3,000 as joining and renewal fees, it also offers one complimentary premium economy domestic air ticket as a joining and renewal benefit. Hence, always compare the utility and monetary value of various travel credit cards' joining and renewal benefits and opt for the one that suits you the most.
Travel-related and other benefits: Free access to airport lounges, lost card liability cover, priority check-in, additional baggage allowance and free insurance cover against air accidental death and emergency hospitalisation are some of major benefits that travel credit cards use to entice frequent travellers. These benefits and protections often come in handy for frequent travellers. Other benefits like fuel surcharge waiver, dining discounts, bonus rewards points or renewal fee waiver on reaching threshold spends will further help save more on your transactions. Thus, compare these benefits diligently across several credit cards and opt for the one which suits you the most.
Airmiles/reward points expiry: Just like most credit cards, the reward points earned from travel credit cards also come with expiry dates. However, there can be exceptions like Citi PremierMiles Card whose airmiles never expire. Therefore, always track the expiry dates of your reward points. Use your accumulated reward points to buy services or merchandises before their expiry dates if you do not have any travel plans in near-term.
Foreign currency mark-up fee: While travel credit cards are accepted across the world, their usage in foreign jurisdictions, both online and offline, attract foreign currency mark-up fee. This fee is charged on the rupee equivalent of the amount transacted in a foreign currency. While most credit cards charge 3-3.5 per cent of the transaction amount as foreign currency mark-up fee, some like JetPrivilege HDFC Bank Diner's Club credit card and Standard Chartered Ultimate credit card charge 2 per cent for foreign currency transactions.
To conclude, opt for a co-branded travel credit card only if you incur sizeable expenses through its partner brand. Otherwise, stick to a brand-neutral credit card for greater flexibility in redemption options. If chosen and used wisely, travel credit cards can significantly reduce your travel bills through reward points, free travel vouchers, cashbacks, discounts, complimentary air tickets, free lounge access, etc. Also, make sure to redeem free vouchers and reward points that you have earned before their expiry dates.
(The writer is CEO & co-founder, Paisabazaar.com)