Wednesday, October 13, 2010

Guest Post: Are Hotel Rewards Credit Cards Worth It?

As we all know, there are a plethora of reward cards on the market. Those that give cash back and airline miles tend to be the most popular, but what about hotel rewards credit cards? Are their rewards worthwhile? To find out, consider the following:

Do you always stay at the same hotel chain?

Hotel rewards credit cards are typically associated with a specific hotel chain. For example, there is the Marriott Rewards Visa, Starwood American Express, Choice Privileges Visa, and so forth.

With these, any rewards you earn can only be used at the card’s affiliated hotel chain. So if you always stay at Marriott, for example, then their card might be worth looking into. But if you find yourself staying at different chains all the time, then it probably wouldn’t make sense to get a credit card that’s only affiliated with one of them.

How much will you be charging per year?
With the exception of the Choice Privileges Visa and the Best Western MasterCard, almost every hotel credit card on the market charges an annual fee. Fortunately it’s not that much – usually around $45 to $65 – but it’s still something you need to take into account.

Let’s say your card had a $65 annual fee and the rewards were only worth 1 penny per dollar spent. If that were the case, that would mean the first $6,500 spent each year would just go towards breaking even on the annual fee. So it’s important to weigh your expected spending, the rewards, and the annual fee to see if a card is worth it.

How does the rewards program work exactly?
Of course the most important thing is the rewards program, but get out your calculator to figure out if they’re really worthwhile.

Take the Choice Privileges card; it gives 2 points per dollar spent which sounds nice at first (most people assume that would mean 2% on spending). But allegedly, the value of these points may only be worth as little as 0.6 to 1.0 cents each when you redeem them. The online source which claims this got the figure by comparing how many points it would take to get free rooms, compared to the price if you simply paid for the same rooms with cash. So make sure you take a close look at what your points will actually buy you before you apply for a hotel rewards credit card.

Do you want the ability to exchange points for airline miles?

The high-end hotel credit cards give you the option of converting reward points into airline miles. If this is something you plan on doing, make sure you pay attention to each card’s conversion formula. Only the Starwood American converts on a 1 point = 1 mile basis. The others penalize you big time. For example, with the Hilton credit card, 6.7 points = 1 mile.

What other perks does the card give?

Hotel rewards credit cards often give perks like free room upgrades, free breakfast, late checkout, and more. If you stay at their hotel frequently, those perks alone may be worth the annual fee.

Some cards also offer special benefits outside of the hotel. For example, the Best Western card includes an AAA basic annual membership; this gives members discounts at restaurants and various attractions. Benefits like these are something to take into account when trying to decide if a card is worthwhile.

What are the online credit card reviews saying about them?

There are a number of websites which feature credit card reviews. Check out the user-submitted comments to see what people are saying about a given card. Sometimes, a credit card may look good on the outside, but you may research it and find out that there are a lot of complaints about bad customer service or some other problem.

If you travel frequently and often stay a specific hotel chain, it may be worth checking out their credit card if they have one. But just make sure you do your research to determine if the rewards and benefits truly outweigh the annual fee.

About the Author
This guest post was written by Michael from Credit Card Forum, a social media site for credit card reviews and discussion. He regularly writes on the site’s credit card blog and also assists with forum moderation.


John Lair said...

I agree that hotel reward cards can be truly beneficial for individuals who regularly travels and stays in a particular hotel. Since reward points are accumulated, one has to earn them through constantly checking in at a particular hotel chain. Business wise, I can say that it truly is beneficial.

Hotel cards are one of the most innovative forms of credit cards today. Other forms include credit card financing which is usually used together with merchant loans to fund the business. Indeed, cards are adapting to the lifestyle of its users. For enterprises, they are becoming a dependable source of money and other rewards. Thanks!

real estate directory said...

Some are , and some dont. I had myself once a bad experience like this.

merchantjhon said...

Don't rush. Decide exactly what you would like in your hotel rewards card. Do your background research, and then pick a card with the features that will benefit you the most.