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What travel habits should you opt for while travelling abroad?

What were the few first things that raced to your mind when someone asked you to travel around the globe? Exotic scenery, delicious food, fancy clothing and the EXPENSES that would accompany the trip. But hold on, you don’t need to worry about that; you could travel on the points for free.

Travel credit cards are normal credit cards that offer travel-specific benefits. It provides rewards in form of cashback or points which are redeemed for discounts and other benefits. The wide-ranging benefits if these cards include provision of airport lounge access and fee waivers, welcome gifts, travel insurance and many other benefits to make your travel and stay easier.

Benefits that come free with travel credit cards:

  • The Complimentary Air Lounge Access: flight delays, or long layovers, can be tiring. Some travel cards offer both domestic and international lounge access to their cardholders. Not only that, the cardholders are also privileged to access the services provided in the lounge at zero cost.

  • The Welcome Gifts: as a sign-up bonus, most of the travel cards offer a lot of reward points on air miles as a welcome gift. You can redeem these reward points for both domestic and international airlines. The company also offers free tickets on selected airlines if they have a partnership with them.

  • Travel Insurance: a few selected travel credits cards offer the benefit of comprehensive insurance cover. It provides the cardholder from the unforeseen expenses that may arise because of situations like air accidents, medical emergency, loss of baggage, passport or air ticket. Another impressive feature of these cards is their zero liability on lost cards. You can prevent any fraudulent transaction or misuse of your card by reporting the loss of your card.’

Cash is being replaced by cards everywhere around the world, therefore, it is important to choose a card. Travel reward credit cards come along with many alluring offers. Hence, it becomes important to note down a few details here and there to receive greater benefit out of it. The welcome offers, arcane rules and hidden fees of credit cards can become confusing at first. It can cause great complexity, but there’s a solution to that as well.

Who actually pays for your points and rewards?

Ultimately, there’s someone paying for all these free rewards. Banks introduced credit cards to make larger profits. In 2011, British Airways Visa offered 100,000 point offer. The banks saw more profit in lending money to their customers instead of just lending it to corporates and even mortgages. As the banks expanded rewards, more people started using reward cards. By 2018, 92% of all credit card purchases were made through credit card rewards. But it is not the banks that are paying for these huge rewards. It is the customer itself that is paying for these rewards.

The stores around the world charge an “interchange fee” whenever the customer uses a credit card to buy something. It also called this as “swipe fees”. The fees are the percentage of the total sale. The financial companies charge this fee for accepting the credit risk and handling charges inherent in credit card transactions. It is the bank that issued the card that collects these swipe fees. The banks rely on these fees to pay for the rewards of their cardholders.

However, the swipe fees vary from card to card. The percent may vary from as low as 1.5% of the purchase price for basic cards and it can go up to 3% for the premium cards. The divide between these two has increased. Banks can make about 25% more per average purchase using the premium cards. This is not good news for the stores. They do not want to pay for these free points the bank may offer to their cardholders. The stores do not have the power to negotiate over these swipe fees. They have to accept all the cards. They instead increased the retail price of their products in order to make up for the cost of accepting credit cards. So the customers may still pay for those rewards even if they don’t use a credit card. This includes paying via cash too.

Swipe fees are just one of the various fees through which banks make money. The interest charges are another primary source of revenue. The other fees include annual feels and late fees. They levied the interest charge on the customer when they cannot repay the entire balance in a month. For any account, the interest charged is equal to the card’s periodic time rate multiplied by the average daily balance and number of days in a billing period.

What to look for in the card?

  • Focus on your needs first: look for the benefit of a specific card. If you are prone to using reward points for your purpose, then cashback cards would do you no good. In a similar manner, look for the hotel benefits; if you like a certain hotel and airline then go for the cards which would provide you benefits from them. Decide between a co-branded or general one: the co-branded cards bear the name of an airline or hotel chain. These cards also give you exclusive perks such as free checked bags and priority boarding for airlines, or free upgrades and bonus amenities at hotels. Rewards on these cards can usually be redeemed only with that airline or hotel. This limits your options. If you regularly travel on a single airline or stay with a single hotel group, a co-branded card is a smart way to get more of your costs covered. If you regularly travel on a single airline or stay with a single hotel group, a co-branded card is a smart way to get more of your costs covered. Whereas, General travel cards earn rewards that you can use for any travel expense, either by using your points to book travel directly or by redeeming points for a credit on your account.

  • Cards offering huge welcome offer: they award you with sizable introductory offer. Just by meeting a minimum spending requirement, will reward you with points. These points will provide several free benefits, including free flight; hotel say and other accommodations. But these points come with a minimum spend threshold. If you cannot meet this threshold, then you can ask anyone near you to make transactions. If you travel internationally, keep in mind that while travelling internationally, keep in mind that. The payment network, rather than the card issuer, determines acceptance. Visa or Mastercard are accepted just about everywhere. Some cards aren’t accepted as widely overseas as they are in the U.S. Many cards charge extra fees on purchases outside the U.S. These foreign transaction fees typically run to about 3% of every purchase.

The best of the travel credits offer great incentives and they also come with a range of perks. It is the key to upgrade your normal trip to a luxurious one without spending extra money.




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