How do travel credit cards work?

If you're unfamiliar with the world of credit card rewards, you're probably wondering why there are so many card offerings with benefits and perks focused on travel. Travel credit cards make up a healthy chunk of the financial space and can get you serious value on your next big trip or flight when used to their full potential.

Read on to see how these cards work and what kind of travel credit card best suits your needs.

How travel credit cards work

Unlike cash-back cards, travel credit cards earn rewards as issuer "points" or "miles" that are racked up as you make purchases with your card.

Travel cards can be used like any other card, but they also offer valuable earnings rates (e.g., 3 miles per dollar spent or 5 points per dollar spent) in specific spending categories like groceries, restaurants and gas. These points or miles will be calculated and added to your card account for later use.

Many travel cards also offer valuable perks like free checked bags, priority boarding and statement credits for services like TSA PreCheck, which can be valuable if you travel frequently or even only a couple of times a year.

Related: 7 of the best starter travel credit cards

What are the types of travel credit cards?

The three main types of travel cards are airline, hotel and general travel cards.

As you might guess, the first two types are cards issued specifically by airlines and hotel chains. If you're loyal to a particular brand, it might make sense to look into its card offerings and earn rewards for its particular loyalty program.

If you're looking for more flexible rewards, you can opt for a general travel rewards card that isn't tied to a specific hotel or airline brand. These cards, like airline and hotel cards, are issued by major banks like Chase, American Express and Citi, but they offer more versatility since their points and miles can be transferred to multiple travel partners.

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Related: When does it make sense to spend on a cobranded credit card?

Points and miles overview

Once you've accumulated a good amount of rewards with an issuer, you can redeem them for various travel-related expenses. The type of rewards you earn will depend on the type of card you get.

The best way to redeem your points or miles is usually to transfer them to one of the airline or hotel partners affiliated with the card issuer. We recommend using your points or miles for flights, especially if you have a big vacation or scheduled flight coming up.

Related: Credit cards 101: The beginner's guide

How to maximize your value

When earning points, you'll want to make sure you're doing two things. The first is taking advantage of your card's earning rates in different spending categories — such as travel, restaurants, gas and groceries — to rack up as many points as possible.

The second is taking advantage of your card's welcome offer. This is usually a significant number of bonus points or miles you can earn if you hit a specific spending threshold within a certain time period after opening a new card. For example, a valuable card might offer upward of 50,000 points or miles if you spend a few thousand dollars with your card in the first three or six months.

Hitting your welcome bonus can supercharge your earnings and, in some cases, pay for your next big flight several times over.

Related: Maximizing credit cards to become points-rich without spending a ton

Bottom line

Even if you aren't a frequent flyer, travel credit cards can offer you substantial value, provided you follow a few simple steps and take advantage of the card's earning rates and welcome bonus.

While we understand that not everyone can squeeze every dollar out of a premium travel credit card, there are plenty of offerings for everyone that can make your next excursion a little bit cheaper and, hopefully, more enjoyable.

Related: The best overall credit cards