Understanding Travel Rewards Credit Cards: A Comprehensive Guide
At O1ne Mortgage, we prioritize consumer credit and finance education. This blog aims to provide an objective view to help you make the best decisions regarding travel rewards credit cards. For any mortgage service needs, feel free to call us at 213-732-3074. Let’s dive into the world of travel rewards and how you can maximize your benefits.
How Merchant Category Codes Work
Understanding how merchant category codes (MCCs) work is crucial for maximizing your travel rewards. When a business wants to accept credit cards, it must set up a payment system with a credit card payment network. The business is then assigned an MCC based on what it sells or the service it provides.
Credit card issuers use these MCCs to determine which purchases are eligible for bonus points or miles. For example, they might offer three or five times the miles for travel purchases. However, what qualifies as a travel purchase can vary between card issuers. This means a purchase could be counted as travel by one issuer but not by another.
What Generally Counts as a Travel Purchase
Most travel rewards credit cards offer elevated rewards for travel purchases. Here are some common examples of what generally counts as a travel purchase:
- Airline reservations
- Hotel reservations
- Passenger train tickets
- Bus tickets
- Car rentals from approved companies
- Limousine services
- Cruise line reservations
However, it’s important to note that if you buy through a third party, purchases may not count as travel. The same is true if you use points to buy through your credit card portal. Always check the fine print of your credit card agreement, go online, or call your credit card issuer to be sure.
What Generally Does Not Count as a Travel Purchase
Not all travel-related expenses will qualify for travel rewards. Here are some examples of what generally does not count as a travel purchase:
- Gasoline
- In-flight purchases
- Duty-free purchases at the airport
- Shore excursions and sightseeing tours during a cruise or train trip
- Casino purchases
- Truck, RV, and boat rentals
- Travel insurance
While some credit cards include travel insurance if you use the card to make a reservation, buying travel insurance separately typically won’t earn you travel rewards.
How to Maximize Travel Rewards
Maximizing your travel rewards requires some planning. Here are some tips to help you get the most out of your travel rewards credit card:
Choose the Right Card
If you prefer a certain airline or hotel, consider their co-branded credit cards. These cards often offer higher rewards for purchases made with that specific airline or hotel. However, they may lock you into using that brand. Other cards offer more flexible rewards, allowing you to earn points or miles on a broader range of purchases.
Look for Introductory Bonuses
Many travel rewards cards offer introductory bonuses. These bonuses can be a great way to earn a significant number of points or miles quickly. Compare the rewards and their potential values to determine which card offers the best deal for you.
Make Reservations Through the Credit Card Rewards Portal
Using your credit card’s rewards portal can help you get more value for your points or miles. You’ll typically be able to buy more with fewer points or miles when you book through the portal.
Use Your Credit Card for Everyday Purchases
Even if a purchase doesn’t qualify for bonus rewards, you’ll still earn some points or miles. Use your credit card for everyday purchases and pay it off in full each month to maximize your rewards.
Sign Up for Airline Miles or Hotel Programs
When you or a family member flies, sign up for the airline’s miles program or the hotel’s rewards program. These programs are typically free and can help you earn additional rewards.
The Bottom Line
Matching a travel rewards card to the kind of traveling you plan to do can result in significant savings. However, the fine print on what is eligible for bigger rewards can be confusing. Credit card issuers base decisions on which purchases qualify on the merchant classification code of the business you purchased from.
By using the right card for the right category, you can accumulate points or miles more quickly. If you’re looking for the right travel rewards card, consider what sort of travel you anticipate, as well as introductory bonuses and whether you are willing to pay a fee.
For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.
