Have Plastic, Will Travel - More on Rewards Credit Cards
Frequent travelers who haven't traveled much during COVID-19 may be wondering if their hotel rewards credit cards deserve a slot in their mobile phone case.
My take is "no" - at least right now.
Unless you travel extensively - and fewer people are doing that these days - there are better ways to earn credit card rewards that don't focus on hotels you're not going to. (Rewards cards with cashback on grocery store and big box store spending come directly to mind.)
Not everyone shares that exact sentiment.
Recently, the KitchenTable Economist talked to Zachery Hewke, a finance and travel blogger and a hotel credit cardholder. Hewke has his own opinions on the use of hotel credit cards.
Here's what he had to say.
KTE: What are hotel credit cards?
Hewke: Hotel credit cards are cobranded credit cards, typically issued by a
large national bank. With these credit cards, you can earn hotel points
when you spend money, as opposed to airline miles, or cash back. Sometimes,
hotel cards even come with added hotel-related benefits, too.
KTE: What do you like about hotel cards?
Hewke: Over time you can rack up some serious points. These points can
then be used for unique and extravagant adventures, possibly ones that you
wouldn't be able to afford if you were to pay cash. On the downside, you earn points based on money spent on the card. If you don't spend much money, you won't earn many points. On top of that, the most useful hotel credit cards come with an annual fee, which is a big drawback for most people.
KTE: When should you own a hotel card?
Hewke: You should have a hotel credit card if you can handle the
responsibility of a credit card, and you live a life where a hotel credit
card makes sense.
If you're someone who travels a couple of times a year, then you can benefit from a hotel credit card, so long as you're brand loyal.
On the flip side, you shouldn't have a hotel credit card if you can't handle the responsibility of a credit card.
Hotel cards often come with high-interest rates, which will void any points that you earn if you're not paying your entire statement balance. Aside from that, if you are a homebody, or if you simply don't travel that often, you would probably be much better off with a cashback credit card.
KTE: What are your favorite hotel credit cards?
Hewke: I've got a few favorite hotel credit cards.
My all-time favorite is the American Express Hilton Aspire Card. It comes with a hefty $450 annual fee, which may seem like a lot, but the fee is can be more than offset by the benefits it provides.
Some of these benefits include:
--- Hilton Diamond Status (their highest status tier)
--- A $250 airline fee credit
--- A $250 Hilton Resort credit, and a free weekend night at any Hilton property each year. This weekend night can be used anywhere in the world, from Billings, Montana, to Bora Bora in French Polynesia. My wife and I plan on cashing in our Hilton Points, along with this free weekend night at the Conrad
Maldives this year. We'll be paying next to nothing for the vacation of a
My other favorite hotel credit card is the Chase World of Hyatt Card.
This card boasts a $95 annual fee, however it comes with a free night that can
be used at any Category 1-4 Hyatt property. Unlike the Hilton Aspire, this
certificate can be used any night of the week. If you use this night at a
Category 3 or 4 hotel, you're effectively paying $95 for a hotel stay that would normally cost you somewhere in the $200-$300 range.
This card is perfect for those one-off weekend trips that you take.
KTE: What's your best strategy for using a hotel card?
Hewke: Unfortunately, there isn't a cookie-cutter strategy for choosing a hotel
Not everyone can benefit from paying $450 per year for a credit card. But, there are people like myself who are able to derive more than $450 of value from that credit card.
When choosing a card, you need to be realistic with yourself. Choose a credit card that has benefits that offer real value. The greater the value you can derive, the more the card makes sense for you. In an ideal situation, the card's derived value should be greater than the annual fee.
I own several hotel credit cards, mainly since I can derive significantly more value from the card's benefits than I pay for the annual fee. Take the Hilton Aspire, for example. I'm able to use both of the $250 credits, which already puts me ahead $50.
On top of that, I typically use the free weekend night at a property that would
cost at least $600 per night. Diamond status comes with free American
breakfast, which I value at $30 per day (since I often travel with my
wife). If we go on vacation three weeks per year, the card is paying for
about $625 worth of breakfast for us. In our case, owning several hotel
credit cards just makes sense.
KTE: Whare can people get a good deal on a hotel card? Where do they start?
Hewke: There aren't any deals these days per se, that I can think of off the top of my head.
That said, If you're an existing hotel (or really any type of travel reward)
cardmember, you can call up your bank looking for a retention offer. If you push hard enough, you might get a good deal on a hotel card - but you have to ask.