How do travel credit cards work?

Travel credit cards turn purchases into points or miles that can be redeemed for travel purchases, like flights and hotel stays. Sometimes you can redeem those points for cash or a gift card, but you typically get the best rate when using them to book travel. The top cards have their own travel booking portals through which you can find flights, hotels and rental cars. Sometimes, points are worth more when used in those credit card company portals. Airline credit cards and hotel credit cards operate like loyalty programs in that you stay in a closed-loop rewards system. You earn rewards when you purchase flights or hotels through your chosen airline or hotel company, and you can use those points for perks or future bookings through the same airline or hotel group.

What extra benefits do travel credit cards usually offer?

Most premium travel credit cards -- which carry hefty annual fees -- include benefits that add additional value to those cards. The most typical benefits are travel accident insurance, trip cancellation insurance, trip delay reimbursement or protection, lost luggage reimbursement and rental car collision insurance.

How do you choose the best travel credit card?

The points and travel benefits that you accrue through a travel rewards program are often redeemed through your credit card issuer's website (or app) or appear as a statement credit that reimburses you for past travel-related and everyday purchases you made with your travel credit card. Points or miles can also be transferred to travel partners -- mostly hotels and airlines -- at a fluctuating conversion rate, where they can then be used to book a flight or hotel room. To choose the best travel credit card, there are a few key factors to consider: Annual fees : Most travel rewards programs have annual fees, with some climbing as high as $695, but those fees are usually mitigated by monthly or annual credits. Exclusive perks : Some travel rewards card options also grant access to exclusive travel perks, like airline lounges, priority boarding or VIP welcomes at hotels. The value of those perks is subjective and something you'll have to evaluate based on your needs and wants. Foreign transaction fees : The best travel cards don't make users pay a foreign transaction fee, so that's not something you have to worry about.