When it comes to travel, there is no doubt about it, it can get quite pricey. For many individuals who want to travel to their favourite tropical destination each year or head out on an adventure tour, travel expenses like airfare, hotel accommodations, and rental vehicles make up a large bulk of the budget. Not only can the expense limit to where you choose to go due to budget restraints but it can truly dim the experience if you do not have enough capital to enjoy yourself freely while on your trip. With this said, the fastest route to getting a significant discount or even free travel is through credit card programs. In this article, we will explore the difference between point-based and mile-based credit card programs and how they work as well as the different types of travel reward credit cards that are available.

How Come The Names of Cards Are So Confusing?

The market has multiple types of cards, all of which may bear multiple brand names and logos. This is a regular tactic used to make a card seem more appealing but it often is just confusing because a single travel rewards card can have multiple delineations. An easy way to break it down is to look for the credit card issuer, the payment processor, the rewards currency, and then the descriptive words used to differentiate the benefits offered.  So for example, the Citi AAdvantage Platinum Select World Elite Mastercard has Citi Bank as the credit card issuer, Mastercard as the payment processor, AAdvantage Miles as the reward currency, and World Elite as the financial product being offered.

Do I Get A Transferable, Co-Branded, or Fixed Travel Credit Card?

When you go to choose a credit card with travel rewards, you are going to come across three distinct types. These are co-branded cards (loyalty), transferable cards (flexibility), and fixed value cards (often general credit cards). Let’s break down how these work.

1. You can get several different types of co-branded cards but the most common are airline and hotel branded cards. These will carry the names of the airline or hotel and when you use these cards, you will earn miles or points towards redeeming for that specific brand. For instance, when you use a Marriott Rewards Premier Card, you are earning points towards redeeming a free night at this particular hotel chain. A lot of branded cards will have fast-tracking options for those who solely use their cards, allowing them to receive bonus points for making partner purchases.
2. A transferable card basically allows you to have flexibility in where you use your points. This allows you flexibility in earning points with one partner and redeeming them with another, which means that the points are not pegged at the value of the ticket. This is incredibly valuable as it allows you to redeem expensive tickets for a relatively low amount of reward points if you know when and how to rack up the points. The only thing you need to keep in mind with these cards is that the travel points or usually not transferred on a one-to-one basis.
3. A fixed value card tells you exactly what you are going to get. Generally, all rewards are often redeemed on flights booked but you can get general travel cards which are not linked to a specific airline or hotel and are often issued by your bank. These will allow you to earn points that can be used for all types of travel but the points have a fixed redemption value, usually at one point per dollar spent.

You may also come across cash back cards but these do not have any type of points or miles tied to them, and rather just provide you with a cash rebate on your purchases. These can be used to pay off travel expenses but are not specifically related to travel credit cards.

How Do The Credit Card Currencies Work: Points Vs. Miles?

Travel credit cards will issue rewards based either on a point-system or through a frequent flyer mile program. With the point-based systems, you will either be able to redeem that as if they were like money or use them to redeem rewards with a set redemption value.

• Points That Are Like Money: the value of these points are flexible and will vary, often between one and two cents. How this works is you will pay for your travel with your travel rewards credit card and then cash in the points to pay your statement off.
• Set Redemption Value Points: these points will not have a monetary value and instead act as a free redemption on an item that has a set monetary value. For instance, you may be able to get one free night at a certain hotel that would require X amount of points.

If you choose a travel rewards credit card that uses miles instead of points, these will allow you to fly with a specific airline. The neat thing about these types of cards is you don’t necessarily have to set foot on a plane to earn the miles as many of them will allow you to earn miles at certain stores or on certain types of purchases. When it comes down to it, you have to identify what rewards currency you want to focus on as this will help you narrow down which travel credit card is best for you.