Choosing the best credit card can be a tough decision at any age. This is especially true when considering travel cards for retirement. While the right travel card can help you gain free travel points and enhance your travel experience overall, the wrong can quickly tank your credit and leave you grounded for months or even years.
Retirement is supposed to be a time in life where you can let go of stress and enjoy the fruits of your labor. The best way to ensure that you can do so is by picking a financial strategy that works for your individual situation. With so many travel card options available, here are some tips and considerations to keep in mind while figuring out which offering is right for you.
Why Do You Need a Travel Card for Retirement?
Carrying cash, especially in unfamiliar surroundings, can be considered risky behavior for anyone—but it can be even riskier later in life. Statistically, scammers and muggers target seniors and tourists more often than younger individuals. Being both, you’d be wise to secure your travel funding via an easily replaceable card rather than a wallet full of cash. This is not only protection for your wallet but you as a person, too. Imagine the danger you would throw yourself by flashing a stack of cash in an unfamiliar place.
Another critical reason to carry a travel rewards credit card is that most will reward you for your spending and repayment habits. This can add up to more perks, which means more fun on your travels. Having a card enables you to do more with your money and stretch your dollars further, which is a top priority when enjoying life on a budget.
Choosing the Best Travel Card for Retirement
There are literally hundreds of travel cards out there to choose from, so don’t be embarrassed if it all feels a little overwhelming at first. Your first instinct may be to blindly select the first card name you recognize and run with it, but that would be a mistake!
There are several tips and tricks you can use to choose the best travel card for your retirement, and I have outlined them below to get you started.
Tip #1: Start by choosing between a Co-Branded and a Travel Card.
Some cardholders struggle with wondering why they need a credit card specifically for travel. Isn’t the co-branded card they already carry good enough? Below, I’ll outline the differences to help you gain a better understanding.
A co-branded card is a credit card offered through a particular brand that offers great perks when you use it to pay for the brand’s products and services. For example, many of us have Amazon or Walmart Credit Cards that give us access to discounts and other unique benefits when we buy from those companies. While these cards offer numerous benefits, they usually only make sense to carry for travel if all of your traveling needs can be covered by the same brand.
You will only earn points on these cards for purchases made through that brand. So, while having a Delta SkyMiles Reserve card might benefit you in terms of purchasing airfare, you will be losing out on gaining points for things like food, lodging, and experiences along the way.
Instead of rewarding you for brand loyalty, a travel card will offer you bonuses and rewards on all purchases related to travel, usually focusing on one or more travel purchase categories. If you intend to spend a lot of time driving, look for a travel card that will reward you for gasoline purchases and dining out on the road. Are you a fan of luxury hotels? Then a card that rewards you for a hotel stay—regardless of the hotel brand—is the best fit for your circumstances.
Armed with this information, you now know whether or not your co-branded card will suit your needs as fully as you hope. In most cases, a travel card prevails as the wisest option.
Tip #2: Take Note of Fees and Ways to Minimize them.
Most people are drawn to lower annual fees for obvious reasons. The promise of “no annual fee” is an even greater pull when looking at advertisements for travel cards. You should note that many cards offering no annual fee are just as competitive in terms of perks and benefits as those that do, but individual perks and benefits may vary. This is where you need to look closely at your individual needs concerning what you seek from a travel cardholder agreement.
One area of research often overlooked, particularly in travel cards for retirees, is the cost of foreign transaction fees. These apply anytime your card is used abroad. Most card companies charge a rate of around three to five percent for foreign transactions. However, some cards waive this as part of their annual fee. You may find that paying an annual fee will benefit you more in these circumstances, especially if you intend to spend a great deal of time out of the country.
Think about the time you intend to spend abroad and how much money you plan to spend while you’re there. What benefits you more? No annual fee, but 3% foreign transaction fees, or a $100 annual fee with no foreign transaction fees? This is where you’ll want to dig out your calculator and put your math skills to good use!
Tip #3: Don’t overlook these post-retirement card considerations.
When shopping for any card post-retirement, there are a few things to consider. During the senior years, credit building is not as much a priority as maintaining the credit and budget you already have established. Instead of credit-building possibilities, look at the fine print for these commonly overlooked issues with senior travel cards.
Some Perks Have Age Limits
A typical example of one perk that expires with age is travel medical insurance. Many major travel cards offer travel medical insurance, but what they may not tell you outright is that this perk doesn’t apply to cardholders past retirement age.
Travel medical insurance is something you’ll always want to make sure you have through one means or another. It covers you if you become sick or injured during your trip, even if your private health insurance doesn’t cover the needed care because of being out of range.
For anyone looking to spend a significant amount of time traveling, this is one perk you will need to look at very closely before signing on the dotted line.
Spending Habits Change
Think about it—you aren’t spending your money like you were twenty years ago. You are probably spending fewer nights out clubbing and taking more time to enjoy the peaceful luxuries of travel and life. You might also be on a tighter budget during retirement than when you were still working.
Look for a card that rewards you for the purchases you most commonly make now that you’re retired, and pay careful attention to your budgeting needs while doing so. Find a card with an interest rate and repayment terms that you can handle. Cards with higher cash-back perks for the purchases you already make will stretch your budget further, so don’t overlook those when making a decision.
Do not be pulled in by the same hooks that card companies throw out in hopes of attracting younger people. Instead, consider what really matters at your stage in life. In doing this, you are not only protecting yourself from certain hassles, but you are also protecting your financial future.
Tip #4: Pay Close Attention to Rewards and Bonus Programs
We are all dazzled by big sign-up bonuses and welcome offers, especially when some cards offer up to $2,500 worth of benefits within the first few months of opening an account. While big welcome bonuses have their draw, it’s essential to ensure you can meet all the requirements to get the bonus and make the most of all the rewards a good travel card offers.
Tip #5: Weigh each card’s travel perks against its annual fee
Sometimes, when shopping for a new card, we find ourselves balking at the seemingly high annual fees associated with certain premium card brands. Let’s say you and your spouse fly three times a year on Sunquest Airlines. You pay $100 combined for airport lounge access each time you fly. You also are interested in enrolling in TSA Pre-Check, which renews at $85/year per person, averaging $34 per year for the two of you. This quickly adds to $334 per year in lounge and Pre-Check fees.
However, if you qualify for a GlobeTrotter Card, you pay only $150 in annual fees with airport lounge access and TSA Precheck enrollment included in the card’s perks. Doesn’t it make sense to save $184/year by paying the annual credit card fee instead?
Travel Cards offer a lot of perks like these that are beneficial to cardholders. Perks to look for include:
- TSA Precheck or Global Entry Benefits
- Hotel Elite Status upgrades
- Travel Insurance
- Airports Lounge access
- Annual hotel credits
- Frequent Flier Points
- Priority Boarding, Baggage Checking, or other Airline Perks
Remember that the best travel card for retirement is a card that will serve you well through its perks. While interest rates and spending limits are also significant, don’t let them blind you to the other benefits that might be offered through a seemingly more expensive plan elsewhere.
Tip #6: Consider Minimum Spending Requirements
When looking at a travel card, you will want to be wary of any Minimum Spending Requirements before you can receive the sign-up bonus. Many companies use this standard marketing tactic to get new customers, but it can often do more harm than good.
For example, let’s say you are interested in The Platinum Card from American Express, which offers a 100,000 Membership Rewards points welcome bonus after you spend $6,000 in the first six months. This requires you to spend an average of $1,000/month. However, if you only spend close to $800/month on credit card purchases on average, this means that to receive the bonus, you would have to spend an additional $200/month in those first six months—20% more than your average monthly spending.
If you can’t manage the extra spending or run into an emergency that causes you to spend less than normal, you might not receive the bonus at all. This would be a waste of your time and money since the welcome bonus is one of the main perks you probably signed up for. So, always be sure you can meet any minimum spending requirements before signing up for a new card.
The bottom line
In summary, choosing a good travel credit card for retirement travel is crucial because of the safety involved in not carrying cash around. But that’s true of any credit card, not just travel cards. You should also look for a travel card that serves your purposes appropriately. The right travel card for you is one tailored to the frequency you wish to travel, the perks you’d benefit from most along the way, and how much you are willing and able to pay in fees and interest over time.
Take your time when making this decision and use that time to compare perks, rewards, rates, and fine print. Keeping these tips in mind, you should be able to make an informed and educated decision on your financial future and travel endeavors. Bon Voyage!