For the financially responsible person it’s pretty easy to get a good credit card in the US. No annual fees and pretty much no cost for using the credit card in the US if you have good credit score. The choices are numerous with no clear winner. However, when it comes to getting a great travel credit card to use in Europe, then the choices become complicated. In the end however, there are only few great choices. Read on about my quest for finding the best credit cards for international travel.
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What is a Travel Credit Card Anyway?
During the past 10 years, every major US Bank has begun offering credit cards specifically for customers who travel internationally. These credit cards are regular credit cards with a normally high interest rate, but have 2 important distinctions.
A travel credit card is a regular credit card with 2 important features: no foreign transaction fees and some benefits specific to traveling.
Other than these two specific features there is nothing different or magical about a travel credit card.
Now that we understand clearly what a travel credit card is, let’s start our quest for the best card for international travel.
How to Find the Best Travel Credit Cards?
Finding the best travel credit card is no longer simple. In my opinion, there are three factors that make one credit card better than others for traveling: easy access to your money, cost of ownership and travel benefits.
Since travel credit cards have become very common, the main differentiating factors between different offers are cost of ownership and what travel benefits it offers.
In order to find the best travel credit card, you have to know how much it costs you to make a purchase in a foreign country and what kind of traveler you are.
And let’s be clear about one simple thing. Unless you plan on going into debt while traveling, the actual interest rate of the card doesn’t really matter. I always pay my credit cards in full at the end of the month, so I don’t care about the interest rate.
The best travel credit card gives you the cheapest way to access your money while traveling and also provides useful travel benefits.
Ok, ok, but what makes a credit card expensive when using it abroad?
I thought they give it to you for free! Yes, the banks give the credit cards for free, but using a credit card, especially while traveling internationally is definitely NOT FREE!
Why is it Expensive to Use a Credit Card Abroad?
Using a credit card in the USA is free most of the times, provided you pay your balance in full at the end of the month and the credit card doesn’t have any annual fees. However, when traveling abroad, using a credit card can be very expensive.
Let’s see why.
- Foreign transaction fee charged by the issuing bank. Most banks charge anywhere between 1% and 3% of the purchase for any foreign transaction. This includes the 1% foreign transaction fees charged by the credit networks (VISA or MasterCard). So, if you spend $1000 for a purchases made abroad, you will be charged anywhere between $10 and $30 by your bank. Most likely when traveling abroad, people spend way more than $1000…so it can add up fast.
- Foreign currency withdrawal fees. Any credit card company charges between 20% and 30% interest on any cash advances, in addition to foreign conversion fees. It’s crazy! Please don’t ever use your credit card to take money out of an ATM machine, especially abroad! You will be literally ripped off by your credit card company, period.
As a side note, in order to maximize your credit card while traveling, you should also pay attention to some simple steps for using debit and credit cards in Europe. Following these steps can save you lots of frustration and money in fees.
There is no magic however with using a travel credit card versus a regular credit card while traveling. It only saves you money by not paying the normal fees associated with foreign currency conversions.
If you use a regular US credit card internationally (not a travel card) you will end up paying anywhere from $10 to $30 in extra fees for every $1000 spent. Most US credit cards charge around 3% foreign transaction fees which means an extra $30 in fees for each $1000 spent.
Now that we know what makes credit cards expensive to use abroad let’s dive in and understand the two different categories of travel credit cards.
Two Kinds of Travel Credit Cards
The banks have tons and tons of credit cards for different purposes and different credit scores. When it comes to travel credit cards however, there are essentially only two kinds: cash back travel credit cards and rewards travel credit cards.
Let’s take a look at each category.
Rewards Travel Credit Cards
These travel credit cards are more complicated but they have extra benefits: you can get airline miles, free hotel nights, free car rental damage insurance and other travel rewards. The best of the rewards travel credit cards do come with an annual fee however…somewhere between $50 and $100.
Cash Back Travel Credit Cards
These travel credit cards are simple: you use the card and as you spend money and you get cash back in your account. The more cash back you get, the better. So, it really depends on what kind of traveler you are and how much time you are willing to spend on dealing with redeeming rewards.
OK, we’ve looked at what are travel credit cards and why they can save you some money while traveling. Finally, let me show you my top 4 travel credit cards. This can actually save you lots of time sifting through the internet in search of the best travel card to use in Europe on your next trip.
How Much can You Save With a Travel Credit Card?
Well, it all depends on the travel credit card you choose and how much you normally spend. In addition, it gets a bit more complicated as some travel credit cards give more reward points in different categories. So, let’s take a somewhat normal budget for a family of four like mine. Then, let’s see how much you can actually save with my favorite travel credit cards. In this exercise, we assume that you will put all your regular expenses on this one credit card so that you can maximize the rewards you get.
As a word of caution, you should never spend money to get travel rewards. You should only use the travel credit card for items you would get anyway. If you ever get in the habit of thinking of your travel rewards and spending more in order to get more rewards, it will not work well for anyone.
Let’s take a simple family budget. Let’s assume you spend $40,000 each year on your travel credit card, assuming you put all your expenses on this credit card. This is a little more than $3000 a month. Let’s also assume that out of the 40,000 yearly spending you spend $3000 in dining and $3000 in travel each year. We’ll break down spending categories a bit now.
1. Capital One Venture
Capital One Venture is my favorite travel credit card with the most flexible travel rewards and a generous sign up bonus. Straight forward to use, as you can book your travel anywhere you want.
Benefits of the Capital One Venture card
Take a look at these awesome travel benefits:
- Flexible rewards points. The strongest point of Capital One Venture card is that you can simply apply your rewards points to any travel expense. This means that you can book your travel anywhere you like and simply apply your points to any travel related expense few days after making the purchase. This is super cool.
- Transferable rewards points. The points you receive can be transferred to a few airline partners to redeem for free flights. Not all airlines participate but there is a good list to choose from.
- A large sign-up bonus. Get 75,000 points just for signing up which can translate to $750 for your travel expense. Capital One recently increased the sign up bonus from 60,000 points which is an extra $150.
- Earn at least 2 points anywhere you use your card. This is the second strong point for Capital One Venture card. Simply the highest percentage rewards of all travel cards.
- No foreign transaction fees. No fees charged by Capital One or VISA.
- Visa Signature travel benefits like travel insurance and car rental damage waiver.
- Earn 5x points when booking your travel through the Capital One Travel website. For example: when you spend $1000 in travel through Capital One Travel you get 5000 rewards points. One caveat though: you get 5x only on hotels and rental car purchases not airplane tickets.
- Travel cancelation insurance. This is great if something bad happens to you or your family after you have purchased your tickets.
How much money can you save with Capital One Venture card?
After the first year using Capital One Venture you would earn: 75,000 (sign up bonus) + 80,000 (2x your spending) = 155,000 points. This is equivalent to $1550 – $95 annual fee = $1455 statement credit for travel expenses. In addition, if you book your travel through Capital One Travel, you get an extra 12,000 points which is an extra $120 in travel credit.
After the second year using Capital One Venture you would earn: 80,000 (2x your spending) rewards points. This is equivalent to $800 – $95 (membership fee) which is equal to $705 statement credit for travel expenses. Again, if you book your yearly $3000 of travel through Capital One Travel, you get an extra $120 (only hotels and rental cars get 5x).
Bottom line savings using Capital One Venture after 2 years: $2160 for any travel expenses or if you do everything through Capital One Travel, you would get an extra $240 for a total of $2400 which is very very impressive.
Well…there is a $95 annual fee including during the first year. Personally, I don’t mind paying the annual fee considering all the benefits. Not a bad deal at all!
Capital One Venture card allows you to not deal with the hassle of redeeming travel rewards and book your own travel anywhere you want. This comes in very handy especially if you have to make changes to airline tickets after purchasing them. Capital One Venture card allows you the freedom to book straight with the airlines which gives you a lot more freedom to make changes than booking through a travel agent.
Capital One Venture Info
2. Chase Sapphire Travel Credit Card
Chase Sapphire Preferred Credit Card is a great travel credit card with the most flexible travel rewards and a generous sign up bonus. With an amazing signup bonus the Chase Sapphire will give you the best way to maximize your travel budget.
Benefits of the Chase Sapphire Preferred card
Take a look at these awesome travel benefits:
- Flexible rewards points. Ultimate Rewards points can be redeemed as cash back, gift cards, travel bookings or simply transfer them to one of the partner airlines. Ultimate Rewards points are very flexible and easy to use. I really like that once I select my airline ticket I can simply apply my full points balance even if it doesn’t cover the tickets fully. My rewards points are simply converted to cash when used.
- Transferable rewards points. The points you receive can be transferred to your favorite airline to redeem for free flights. Not all airlines participate but there is a good list to choose from. This is probably one of the best benefits of the Chase Sapphire Preferred credit card in my opinion.
- A large sign-up bonus. Get 60,000 points (sometimes Chase offers 80,000 points) just for signing up which can translate to $750 (or $1000 for the better offer) when redeemed through the Chase Rewards site.
- Earn 3 points for dining and 2 points for travel purchases. When booking your travel with Chase Travel and paying with your Chase Sapphire Preferred card, you earn 5x points. So a travel purchase through Chase Travel for $1000 will earn you 5000 Chase rewards points which is equivalent to $50 cash back or $62.50 in travel credit through Chase Travel.
- Earn 10% bonus points for each anniversary. If you spend 40,000 in one year, then you get an extra 4000 points ($40) at the end of one year of membership.
- No foreign transaction fees. No fees charged by Chase or VISA.
- Visa Signature travel benefits like travel insurance and car rental damage waiver. The rental car insurance offers primary coverage unlike most travel cards that offer secondary rental car insurance.
- 25% bonus points when redeeming Ultimate Rewards through Chase Travel. For example: 60,000 points will save you $600 + $150=$750 from any travel purchase you do via Chase Travel.
- $50 hotel credit per year, when booking hotels through Chase Travel.
- Travel cancelation insurance. This is great if something bad happens to you or your family after you have purchased your tickets.
How much money can you save with Chase Sapphire Preferred card?
Let’s use the budget from above and apply it to this travel credit card. Let’s assume you spend $40,000 each year on your Chase Sapphire Preferred card, assuming you put all your expenses on this credit card. This is a little more than $3000 a month. Let’s also assume that out of the 40,000 yearly spending you spend $3000 a year in dining and $3000 in travel.
After the first year using Chase Sapphire Preferred you would earn: 60,000 (sign up bonus) + 40,000 (your spending) + 6000 (extra points for dining) + 3000 (extra points for travel) + 4000 (anniversary points) = 113,000 points. This is equivalent to $1130 statement credit (cash back) or $1412 (25% bonus) towards travel purchases done through Chase Travel service.
July 2020 correction. Since Chase started charging the $95 membership fee even during the first year we’ll have to subtract it. So, after using Chase Sapphire for one year you will get $1035 statement credit or $1317 towards travel purchases through Chase Travel.
After the second year using Chase Sapphire Preferred you would earn: 40,000 (your spending) + 6000 (extra points for dining) + 3000 (extra points for travel) + 4000 (anniversary points) = 53,000 points. This is equivalent to $530 – $95 (membership fee) which means $435 statement credit (cash back) or $567 (25% bonus) towards travel purchases done through Chase Travel.
Bottom line savings using Chase Sapphire Preferred after 2 years: $1670 cash back or $2135 in travel rewards when booked through Chase Travel.
Important note: If you do all your travel spending through Chase Travel you get 5X points, so for 2 years you add to your total an extra 18,000 points + $100 hotel credit. This is equivalent to an extra $180 in cash back or $325 in travel credit usable through Chase Travel. So, after two years of using the Chase Sapphire Preferred credit card and booking all your travel through Chase Travel, you would’ve saved $1850 in cash back or $2460 in travel rewards to use on Chase Travel. Quite impressive!
Well…there is a $95 annual fee including the first year (no more free first year). So you could technically keep it for one year and accumulate as many points you can and then transfer them to the airline of your choice before closing the account. Personally, I don’t mind paying the annual fee considering all the benefits. Not a bad deal!
If you would rather not deal with the hassle of redeeming travel rewards, then using a great cash back travel credit card will work great for you. The major drawback of using rewards for purchasing travel is the extra complications if you have to make any changes after purchasing. This is especially true when purchasing airline tickets.
Chase Sapphire Preferred Info
3. Capital One Quicksilver Cash Back Credit Card
Capital One Quicksilver Credit Card is the simplest and cheapest travel credit card to have. No annual fee and a generous cash back program make this card a strong option.
Benefits of the Capital One Quicksilver Travel Credit Card
Let’s see why the Capital One Quicksilver credit card is the cheapest and simplest travel credit card to use in Europe:
- No foreign transaction fee charged by Capital One. Capital One doesn’t charge ANY foreign transaction fees for any of their credit cards. Capital One used to be the only US bank that didn’t charge foreign transaction fees, but that’s no longer the case.
- You get the best foreign exchange rate! Over the years, during many international trips, I have checked the exchange rate on my purchases done with Capital One credit card in Europe, and I was impressed every time. Frequently, I checked the published rates against the rate I was getting from Capital One and it was the best rate I could get.
- No annual fee. Really…nothing.
- You get 1.5% Cash Back on every purchase, including foreign transactions. Not only it’s free to use but you also get money back.
- Easy cash back redemption. Unlike most miles/points travel credit cards, the Capital One web site makes it very easy to redeem the cash rewards you accumulate. You can simply apply your cash back to the credit card balance with one click.
- Get $200 when you are approved for Quicksilver. While not the greatest bonus, it is still a nice bonus.
- VISA Signature Travel Benefits. This means a lot of stuff: rental car collision and damage insurance, lost luggage insurance and trip cancellation insurance among other things. These benefits come very handy and can save you quite a bit of money.
How much money can you save with Capital One Quicksilver card?
Let’s take the same example as before. Let’s assume you spend $40,000 each year on your Capital One Quicksilver card, assuming you put all your expenses on this credit card. This is a little more than $3000 a month. Using Capital One Quicksilver you don’t have to worry about categories or bonuses or anything else, just spend as you normally do and get cash back….quite a bit of cash.
After the first year using Capital One Quicksilver you would earn: $200 (sign up bonus) + $600 (1.5 per dollar) = $800 statement credit.
After the second year using Capital One Quicksilver you would earn: $600 statement credit.
Bottom line savings using Capital One Quicksilver after 2 years: $1400 cash back.
Nothing really bad. Very simple cash back without any hassles as you can book your travel however and wherever you want. This flexibility comes in very handy especially if you have to make changes to your airplane tickets after booking. However, when compared to the Chase Sapphire card, the total benefits come up short especially in the first year owning the card.
Capital One Quicksilver Info
4. Costco Cash Back Credit Card
Citibank Costco Credit Card has recently become a great travel credit card for Costco members. The reason is that Citibank has decided to eliminate all foreign transaction fees. The Costco/Citibank VISA card is already the best cash back credit card for Costco members, and now it has become a great travel credit card as well.
Travel Benefits of the Citibank Costco credit card
Here are the best features of the Citibank/Costco VISA card which make it a great travel credit card:
- No foreign transaction fees. Starting January 25, 2018, Citibank has eliminated all foreign transaction fees.
- No annual fee. Well, it requires at least the $60 annual Costco membership.
- Excellent cash back. With 4% for gas (up to $7000 per year), 3% for travel and restaurants, 2% for Costco purchases and 1% everywhere else, this is the strongest cash back rewards I know of.
- VISA Signature Travel Benefits. Many benefits included, but for travelers, this credit card provides free rental car damage and loss insurance. In the US, it is secondary to your own auto insurance, but internationally it is primary.
How much money can you save with Citi Costco card?
Let’s take the same example as before. Let’s assume you spend $40,000 each year on your Citi Costco card, assuming you put all your expenses on this credit card. This is a little more than $3000 a month. Let’s also assume that out of the 40,000 yearly spending you spend $3000 a year in dining, $3000 in travel, $3000 in gas and $4000 at Costco. Costco Silver membership costs $60 per year.
After the first year using Citi Costco credit card you would earn: $400 + $40 (Costco) + $60 (dining) + $60 (travel) + $90 (gas) = $650 – $60 (Costco membership) = $590 cash you can spend at Costco.
After the second year using Citi Costco credit card you would earn the same as the first year: $590 cash you can spend at Costco.
Bottom line savings after using the Citi Costco credit card for 2 years: $1180 cash to spend at Costco.
The only drawback of the Citi/Costco card is that the cash rewards can be redeemed only at Costco stores or online. But if you are a Costco member already, and shop there, then it doesn’t really matter.
If you are planning a trip, don’t forget about a safe and comfortable money belt for keeping your money and credit cards safe and available. Or, if you’re like me and need more space you might prefer a small fanny pack that you can carry everyday and easily conceal under your clothes. It has always been a lifesaver for me.
What is The Best Travel Credit Card?
The answer depends on you. For me, I need flexible rewards points and travel perks that I get from the Capital One Venture. If you spend more on dining and travel you may be better off with the Chase Sapphire instead. There you have it, this is my best travel credit card.
- How to Use Debit and Credit Cards in Europe
- Best travel credit cards
- Best travel debit cards
- Get the best foreign exchange rate
- Frequent Questions about Using Debit Cards in Europe
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