Have Plastic, Will Travel: The Full Monty on Hotel Credit Cards

With the COVID-19 lockdowns loosening, it could be a time for a big trip to exotic bourses. Should you take a hotel credit card with you?
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Hotels and resorts are opening up and that means new travel opportunities for Americans locked down for the past few months. Whether that means Las Vegas for some casino shopping or a few languid days on the beach in Costa Rica, having a hotel credit card in hand might save some cash and add a few perks to your trip.

The Kitchen Table Economist recently connected with Steve Dashiell, credit card writer at Finder.com, to discuss the pros and cons of hotel credit cards, and what owning one might mean for a member of the wanderlust set.

KTE: What are hotel credit cards?

Dashiell: Hotel credit cards are a type of rewards card that offers hotel points and perks when you use the card to make certain purchases. You can redeem these points on free nights at the hotel, on room upgrades, gift cards, and other rewards. Think of them as the sibling of the airline credit card, which consumers tend to be more familiar with and use more often.

KTE: What are the pros and cons of hotel credit cards?

Dashiell: Basically, the pros of hotel cards include the following upsides:

--- Hotel rewards points: These cards are great for earning free nights at hotels

--- A lucrative signup bonus: Signup bonuses on hotel cards are typically quite large and worth several free nights

--- They often feature great complimentary perks: These can include room upgrades, elite status, free fourth nights and late checkout

The downsides of hotel credit cards are usually tied to the following issues:

--- Narrow focus. Hotel cards are typically most valuable when used for hotel purchases and expenses

--- Locked-in to certain hotels. Cobranded cards can only redeem points on specific hotel chains. Even general hotel cards may have such restrictions

--- Annual fees. Higher-end hotel cards can carry high annual fees

KTE: Why should you own a hotel card?

Dashiell: Why you should not own a hotel credit card? Hotel credit cards can offer great value if you’re a regular traveler and hotels are your bread and butter for lodging.

Depending on the card you use, you can earn hotel points on more than just hotel-related purchases, so you’re always building toward that next free night. Plus, the complimentary perks on some of these hotel cards can be worth hundreds of dollars on their own.

But if you don’t travel much, or if you prefer staying at Airbnb’s instead of hotels, a hotel credit card isn’t going to be nearly as valuable. They’re targeted at frequent hotel-goers which is why they tend to be more popular with people who travel often for business.

KTE: Which hotel credit cards do you like and why?

Dashiell: Our current favorite hotel card here at Finder is the IHG® Rewards Club Premier Credit Card.

As far as hotel cards go, it's jam-packed with value. It offers a huge welcome offer that’s easily worth several rewards nights, one of the highest-earning rates on hotel stays on the market, a free rewards night every card anniversary, and a complimentary rewards night just for booking four or more nights in a row.

You’ll also get IHG Platinum Elite status in the hotel’s loyalty program just for owning the card. Typically, you’d have to book 40 nights at IHG properties to qualify for that status level!

If you’re someone who stays at a variety of different hotels depending on where you travel, we recommend a hotel credit card with point transfer capabilities. The Marriott Bonvoy Brilliant and the Chase Sapphire Reserve are both great examples – you can move the points you earn on these cards to other eligible hotel loyalty programs. This offers some nice flexibility in how you spend your hotel reward points.

KTE: What strategies work best when choosing a hotel credit card?

Dashiell: You’re going to look at a few major factors when choosing a hotel credit card.

The first: do you want a cobranded card or do you want a general hotel credit card? Cobranded cards are like the IHG Rewards Club Premier or the Marriott Bonvoy Brilliant. These cards earn the most points on purchases made at their respective hotel brands and usually only allow you to redeem those points on nights at that hotel chain.

General hotel cards are not tied to a brand and will earn points no matter where you stay. The tradeoff is these cards usually earn fewer rewards on hotel bookings compared to if you booked a night at an IHG hotel with an IHG hotel card, for example.

The second major factor is the hotel card’s earning categories. In addition to hotel bookings, most of these credit cards earn points in other categories as well. Gas stations, grocery stores, restaurants, or flights are just a few examples. You’ll want to choose a card that’ll earn you the most points during your travels.

A card’s signup bonus should also play into your decision. Some of these bonuses are large enough to cover several nights at high-end hotels around the world.

An important thing to consider with these types of rewards cards is the annual fee.

Hotel and airline credit cards tend to carry larger annual fees than standard reward cards. This is usually to help offset the numerous complimentary perks some of these cards offer. Take a careful look at a card’s annual fee when weighing up your options.

If you use a card’s perks and benefits, you can more than make up for the card’s annual fee. If you forget or don’t travel enough to use them though, you might be better off with another card.

KTE: Would you own a hotel credit card? Why or why not?

Dashiell: At this point in my life, I don’t stay at hotels often enough to justify a co-branded hotel credit card. However, I do own the Chase Sapphire Reserve, which earns me points on flights and hotel stays, in addition to dining and a few other categories. It’s a “general” travel card so it earns a bit less on hotel stays than I would receive for a co-branded card, but it’s a perfect fit for my unpredictable travel needs.

In the end, I picked a card I knew I’d regularly use, not one that just gives me the most points.

KTE: Any hotel card deals amidst the economic downturn? Any wiggle room on negotiating the best deals?

Dashiell: Most banks right now are focused on assisting cardholders affected by coronavirus hardships, so you’re seeing a lot of waivers and assistance programs focused around that rather than new deals.

Issuers are occasionally amenable to waiving annual fees, even in times of economic growth, so it’s always worth calling the bank and seeing what you can work out.