A few weeks ago, we wrote about ways you can earn free travel even if you’re not a frequent flyer. Instrumental in saving up enough miles for a free vacation, however, is racking up the points in the first place.
One tool that will help is a miles card that pays generously not just on travel purchases, but on everything you buy. If you play to spend more than $10,000 a year on such a credit card, paying an annual fee to get a higher rewards rate might make sense. If not, however, you’ll want a card with no annual fee.
Enter cards that pay more than 1 percent on everything all the time and. They do exist.
Note: These cards require excellent credit scores, which generally means at least 3 years of credit history with NO late payments. If you don’t meet that criteria, check out our recommendations for credit cards for average credit here.
Best no annual fee miles rewards credit cards
Barclaycard Arrival World MasterCard®
With the no annual fee Barclaycard Arrival World MasterCard®, you earn 2X miles on travel & dining and 1X miles on all other purchases. Plus, get 5 percent miles back to use toward your next redemption, every time you redeem for travel statement credits. Learn more: Barclaycard Arrival World MasterCard®.
For an $89 annual fee (waived the first year), the Barclaycard Arrival Plus World Elite MasterCard® increases the reward rate to 2x miles on every purchase.
Capital One® VentureOne® Rewards Card
The Capital One® VentureOne® card pays 1.25 miles on every purchase, period, with no annual fee. Learn more: Our Capital One® VentureOne® and Venture® comparison.
For a $59 annual fee, the Venture® Rewards Card pays double miles on everything.
Discover it® Miles — Double Miles your first year
Discover it® Miles — Double Miles your first year has no annual fee and pays 1.5 miles per every eligible dollar spent with no limits. After your first year of cardmembership, you will earn bonus miles equal to all the miles you earned in the first year. That basically means that all of the miles you earned for the first year will be doubled. Learn more: Our review of Discover it® Miles — Double Miles your first year.
The above cards are good if you tend to spend evenly across normal categories (for example, gas, groceries and shopping, with some dining and travel mixed in).
How the best no annual fee miles credit cards compare
For a majority of users, no annual fee miles credit cards are the best way to sock away points toward free travel.
And though I used to be solidly in the cash back camp when it came to credit card rewards, my perspective is shifting. It’s getting easier to redeem miles, and I think it’s financially advantageous to save your credit card rewards over many years and redeem them all at once. (Otherwise we tend to spend $25 here, $50 there and use the money in less meaningful ways.)
For serious travelers, however, paying an annual fee still has a place. It all depends on the value you get back.
Annual card spend
We did a comparison between the Capital One Venture ($59 annual fee) and VentureOne Rewards (no annual fee) cards and found that you would need to spend about $10,000 a year to earn a better return from your rewards with the premium version of the card. After that, paying the fee makes sense because you’ll earn it back in rewards.
Free checked bags and other perks
There’s one thing that airline loyalty credit cards can offer that even the best no annual fee miles credit cards can’t: Free checked bags, priority boarding and other airline-specific perks.
Personally, I’ve found that the priority boarding that comes with these cards is a joke. (You’ll still be behind first class and the airline’s most elite frequent flyers, which at a peak time could be half the plane!)
With checked bags costing $25 or more a piece, however, it wouldn’t take long to make up the annual fee. If a card has a $100 annual fee you’d just need to check four bags a year to break even.
First class upgrades
This is the big one. While no airline credit card I know of can directly help you get free or discounted first class upgrades, many can help you earn additional miles that will qualify you for elite frequent flyer status.
With said status, you become eligible for complimentary space-available first class upgrades on most airlines.
In most cases, you won’t be able to reach that status with the credit card alone, but if you fly a lot on one airline having their card could put you over the edge.
There are pros and cons to redeeming miles with both airline credit cards and the no annual fee miles credit cards we mention above. With the generic miles cards, your miles work more or less like cash. You can use them to book travel at specific sites or, in most cases, you can simply apply for a statement credit towards travel purchases you make with your card.
That’s easy, and there are no restrictions on when you can use your miles.
The downside, however, is the redemption rate is fixed.
With airline credit cards, you typically purchase tickets with your miles. How many miles you’ll need depends on myriad factors including your route, fare class, and travel dates.
Although many credit cards advertise “no blackout dates”, it can still be more expensive or difficult to book award travel at peak times. (And yes, some cards still have true blackout dates.) If you’re hoping to bank all your miles for one big vacation, keep this in mind.
The selling point of the air miles credit card advertisements is almost exclusively a long-awaited vacation, yet big vacation planning is the most ill-fated way of redeeming miles. Why?
- Holidays and other frequent travel days are more likely to be blocked from air miles redemption.
- The planning and reservations a vacation takes could be strained by the red tape of miles redemption. If you have to change your vacation plans, change fees of up to $150 on some airlines can quickly eat into the value of your rewards.
- There’s a lot more to the cost of a vacation than the airfare. Hotels, attractions, food, and other costs make the real expense of a vacation extend far past the ticket price. A vacation is a huge addition to any budget compared to the tiny amount of savings that credit card air miles rewards can bring. You should already have an eligible trip for rewards miles planned in your budget before you sign up for the card.
Air miles rewards credit cards work best for people who already travel frequently and are looking to beef up their frequent flier accounts with a few more miles. If you’re savvy enough to know your cards’ rules and play along, they might be a way to earn a free vacation even if you don’t travel a lot, but weight the pros and cons carefully before choosing one of these cards over one of the best no annual fee miles credit cards above.