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Annual fee and usage category hold the key to choosing a rewarding travel credit card

Choose a card that offers the most rewards on the travel portal or hotel you frequently use. If the reward points or cashbacks from your usage are lower than the annual fee, you must avoid the card

March 03, 2021 / 10:14 AM IST

As the COVID-19 pandemic abates and vaccines become more accessible, we expect to see a surge in travel. Many people are using this time to save up for vacation spending; however, with the right credit card, they will need to save up less cash than initially expected.

Travel rewards can be used for all flight expenses

The days of only being able to earn air miles if you are a frequent flyer are long gone. Nowadays, travel rewards are earned on travel credit cards as you spend daily. You can optimize your earnings by getting a card that earns on travel and has higher rewards on specific spending categories.

For instance, the Air India SBI Signature credit card is suitable if you do not travel frequently but want a credit card that earns great rewards – 1.7 percent on general spending, 13.5 percent on Air India spending. Furthermore, cards such as Air India SBI offer perks and travel benefits that may be of help during your trip.


Benefits and promotions can be used during trips

Cards can also help you save money by offering you promotions and travel-related perks with their business partners. An example of a great partnership is American Express and Taj Hotel, which can be used by the Platinum credit card holders. Notably, cards with these partnerships are often seen as premium cards and can have annual fees of up to Rs 20,000.

These premium credit cards also offer the best travel lounge and upgrade perks. Other promotions that help reduce the costs of travel include international dining benefits and discounts on entertainment activities such as golf and shopping.

Also read: All about what you should do with travel credit cards now

Discounts on flights, hotels and car rentals

There are also credit cards that are platform specific for those that prefer a one-stop-shop for travel booking and planning. Platforms such as Yatra and Cleartrip have bank issued credit cards that offer great discounts and reward points or cashback on the platforms. Cardholders can also avail other benefits to maximise savings. An example of one of these cards is the Standard Chartered Yatra Platinum credit card. Cardholders receive waivers on flight cancellation fees for trips booked on Yatra and are eligible for dining and shopping discounts through the Standard Chartered Good Life Programme.

Also read: How many credit cards should you have?

Travel insurance on credit cards

One of the most overlooked aspect of some credit cards is the insurance benefit. When accidents happen abroad, they can prove to be very costly and insurance can help minimize that. This can save you thousands of rupees. Insurance is usually offered by premium cards that have higher fees. An example of a card that offers great insurance is the ICICI Bank Sapphiro American Express card. This credit card offers holders insurance on air accidents, baggage, loss of travel documents, flight delay, plane hijacking and more. These insurance policies go a long way when you need them while traveling.

No matter what your card is, remember to always check the annual fee it charges. There is no point acquiring a great credit card that offers a 5 percent discount on flight expenses if you only travel domestically once a year and the card incurs a high annual fee. For example, if the annual fee is Rs 10,000 and you get a great five per cent cashback on all travel expenses on a credit card you only plan to use on travel, you need to make sure that your travel expenses exceed Rs 2 lakh. If they do not exceed Rs 2 lakh, then the credit card is not worth its fees for you.

If you are interested in travelling at a low cost with a credit card, begin today and start racking up those reward points!
Sahmi Chowdhury is Research Analyst at ValueChampion India
first published: Mar 3, 2021 10:14 am

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