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Home / Money / Personal Finance /  How to pick the right credit card, curb expenses while travelling

After 2 years of Covid 19, many Indians are finally getting back to travel. However, high energy prices and general inflation have pushed up the cost of travel the most. Picking the right credit card can provide a cushion from these inflated prices. Travel cards are credit cards that offer higher benefits for travel. Travel benefits come in the form of air miles and discounted airfares, fuel surcharge discounts, airport lounge access, hotel discounts, and bundled travel insurance. For frequent travellers, they offer an edge over regular credit cards. Raj Khosla, Founder and MD MyMoneyMantra.com, said, “For instance, if you spend through a regular credit card, you only earn nearly about 2,000 for travel spend of 5 lakh. It depends from card to card and bank to bank. However,you can earn about 22,500 in terms of points for a normal travel credit card for travel spend of 5 lakh. For example, on Citibank Premier Miles Card, you earn around 4.5% for spends on airlines and hotels."

Benefits of travel cards: Travel cards typically offer a bouquet of benefits for travellers.

Some of them are: Reward points/cashback: You get reward points or cash backs for every spending you make from a travel credit card. Sachin Vasudeva, Associate Director and Head Credit Cards at Paisabazaar.com.said, “Most travel credit cards offer reward points as joining and renewal benefits. These benefits may help recover joining and renewal fees in part or entirety. The benefit realized from such free complimentary tickets may sometimes surpass the cost of joining and renewal fees. It’s therefore important to compare the monetary value of your travel credit card’s joining and renewal benefits and opt for the one having the highest potential of recovering or surpassing your cards’ cost."

 

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Airline lounge access and flight miles: You get air miles for spending you make through your travel card. Some cards also offer bonus air miles at the time of card purchase. Adhil Shetty, CEO, BankBazaar.com, said, “You can convert the air miles to future travel purchases, including airfare, hotel accommodations, ground transportation, travel package deals, etc. The value of air miles depends on your usage. Apart from this, the travel credit cards also offer complimentary lounge visits at both domestic and international airports."

Low forex mark-up fee: Foreign mark-up fees are usually charged on your travel credit cards when you purchase things abroad. There are travel cards that charge mark-up fees as high as 3.5% and on the other hand, there are cards that charge mark-up fees as low as 2% or 1.99%. For instance, SBI Card ELITE charges 1.99%, and HDFC Regalia Credit Card charges a 2% mark-up fee. On the other hand, Axis Vistara Signature Credit Card and Air India SBI Signature credit cards charge 3.5% as mark-up fees.

Bundled travel insurance: Travel credit cards provide a comprehensive insurance cover to protect you from unforeseen expenses that may arise from air accidents, health-related emergencies, passports, baggage loss, etc. For instance, Axis Vistara Signature Credit Card and Citi PremierMiles Credit Card can provide you with air accident cover of up to 2.5 crore and 1 crore, respectively.

Ways to maximise more out of a travel card

Free cards are less generous with reward points: When you opt for a travel credit card, the point is to accumulate air miles through your eligible spending so that they pay for tickets. Hence, the more you spend via travel card, the more benefits you get from it.

Shetty said, “You can be certain that any premium card will repay you more than the annual fees, provided you use it the right way. The fees start from 499 and could go into tens of thousands. The more premium the card, the higher its fees and the value of its benefits. These premium benefits will not be available on a regular credit card or a free card. Free cards will also be oriented towards basic benefits such as fuel surcharge or a small number of lounge entries. Of course, without the card, you miss out on all these benefits."

Go for Co-branded card if you like the airline: “Broadly you can divide travel cards into co-branded cards with airlines and generic travel cards. The latter will get you additional points on travel compared to other spends, but the travel is not tied to a particular airline. If you like an airline, its co-branded card is a better pick for you than a generic travel card," said Ajay Awtaney, editor, LiveFromALounge.com, a digital platform focusing on Indian credit cards. “The risk of reward points losing their value if the airline stops functioning is there. Take the case of Jet Airways. The reward points issuance was hived off into a separate company and while the points continued to exit, they lost a great deal of value. For instance in 2011, 180,000 points would get me a Mumbai-New York return ticket. Now you would need something like 6 lakh points for this," said Awtaney.

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