Belle and I explored Houghton Lodge Gardens in Hampshire, England over the summer. A nice reminder of life once it returns back to normal.
This article shows how credit cards can give money back for not only those who are living abroad as expats like me, but also for people on vacation or business travelers who use these cards often. Credit cards can earn cash back while we spend, so let’s see which one gives us the most cash.
Travel has been limited lately, to say the least. However, this is the best time to get a travel credit card with a hefty sign-up bonus because it takes up to 3 months to meet the spending threshold. During this time already, I've opened two credit cards and made 100,000 points in bonuses worth $1,750 in travel redemptions to use once travel resumes.
When I moved from the USA to England and Belle and I were married, the best way I found for paying travel expenses was a high-earning cash back travel credit card. I put the flights, visa expenses, Airbnb's, and and most of the moving costs on the card, and it paid off at the end of the year by paying off the cost of entire flights.
I’m also a financial manager who verifies that we get the best deals for our private investment clients. This aligns well with the goal of this article since I'll use my own research on travel credit cards to help you find the best deal.
When I first traveled internationally, I had no idea foreign transaction fees existed until I read my credit card statement after a 2-week trip to Tokyo, Japan and found many obnoxious 3% surcharges. Sure enough, buried in the agreement paperwork was this pointless fee. Was it really worth it to pay an extra 3% for a stretchy fake banana from Japan? Airport security flagged a fake banana I bought in Tokyo as suspicious, then gave me the full patdown, bag searches, and called in an explosives specialist. The banana was confiscated after some questioning and I missed my flight. I feel like many valuable lessons were learned here.
If you ever decide to import a stretchy banana from Japan, I'd recommend Amazon.
We’re going to focus on making the most of our money and purely receive cash, statement credit, or cashable points for this comparison. The idea is, once you have cash, you can do anything you want with it, whereas you may not use the perks, even if you’d paid for them with an annual fee. I focused on cards that specifically have the most monetary benefits while traveling.
None of these credit cards have the notorious 3% foreign transaction fee because those charges destroy any value the credit cards might provide. What if they have an annual fee? I’m introducing an idea which we’ve used for a long time in investing: Cash Back After Fee. This is what you actually receive if you subtract the annual fee.
I've always wanted to know, are these flashy travel credit cards with annual fees worth it to pay up each year? Now we’ll find out.
From my research, these are the top cash back travel credit cards available today, ranked by cash received every year (not including sign-up bonuses, which we'll get to in a minute):
The Best 10 Cash Back Travel Credit Cards Minus Fees and Bonuses
Note: For the credit cards that set percentages by category, I used the Bureau of Labor Statistics’ Consumer Expenditure averages to calculate the actual percentage you’d earn if you spent like the average American, except that you spend $2,000 on travel each year. Then I used a big spreadsheet I created to add all the cashable rewards and subtract all the fees.
These results surprised me. Even the Apple Credit Card made the list. What if we use the above list and include the sign-up bonuses, then how does the list look just for the first (bonus) year?
The Best 10 Cash Back Travel Credit Cards Minus Fees and With Bonuses (First Year)
Now we can see why the Chase Sapphire and American Express Gold cards are some of the most-talked about travel credit cards. But wait, there’s a catch for many of these. Here are the good and bad for each:
Capital One Savor Cash Rewards
Sign up bonus: $150 credit if you spend $500 in 3 months.
Features: Unlimited 3% cash back on dining and entertainment, 2% at grocery stores and 1% elsewhere.
The Good: No annual fee, large Mastercard network, no rewards cap.
The Bad: Sign-up bonus isn’t as generous as other cards, although easy to achieve.
Cash Back After Fee: 1.5% (#1)
Cash Back After Fee & Sign-up Bonus: 2.34% (#9)
Golden Goose Guide Recommendation: Best cash back travel credit card for families with high spending on dining and entertainment.
If dining and entertainment is a large expense when you travel, or you have a big, hungry family, this credit card was made for you. It made the top of our list because it offers the combination of the most cash back on two high-spending categories (food and entertainment), with no annual fee. Interestingly, Capital One offers another version of this card called SavorOne with a higher 4% cash back on dining and entertainment, but with a $95 annual fee. What if you’re trying to choose between the two? I estimated using my magical spreadsheet that this credit card earns more if you spend less than $25,000 per year on it if you spend like the average person, or if you spend less than $2,375 on dining and entertainment. If you spend more, go for the SavorOne.
American Express Gold Card
Sign up bonus: $350 in points if you spend $2,000 in 3 months.
Features: 4% cash back on US supermarkets and dining, 3% flights, 1% elsewhere.
The Good: $100 airline fee credit, $120 dining credit.
The Bad: $250 annual fee, American Express network, forced loyalty for brands in portal to redeem points, $25,000 rewards spending cap.
Cash Back After Fee: 1.72% (#2)
Cash Back After Fee & Sign-up Bonus: 5.62% (#2)
Golden Goose Guide Recommendation: Best supplementary premium travel credit card for food and flights.
The American Express Gold Card ranks highly no matter which way you look at it, whether it’s cash back, credits, perks, and a generous sign-up bonus. The downside is that the American Express network is the smallest of all the networks, so you can’t depend entirely on it while traveling. However, paired with a backup Visa or Mastercard, this card can be a solid moneymaker, at least up to the $25K spending cap. For our non-US readers, because the other cards in my list are US-only, this is your best choice as all other travel cards I’ve researched which are issued outside of the US are not high earners.
Wells Fargo Propel
Sign up bonus: $200 credit if you spend $1,000 in 3 months.
Features: Unlimited 3% cash back on dining, transport, and travel, 1% elsewhere.
The Good: No annual fee, no rewards cap.
The Bad: No annual fee, small American Express merchant network.
Cash Back After Fee: 1.61% (#3)
Cash Back After Fee & Sign-up Bonus: 2.34% (#5)
Golden Goose Guide Recommendation: Best as a supplementary travel credit card for 3% cash back on dining, gas, rideshares, transit.
The Wells Fargo Propel credit card uniquely offers the highest percentage of cash back on transportation in the form of gas, rideshares, and transit. It’s high percentage in these big categories made it one of our top 3 cash earners, and it has no annual fee. Their Go Far Rewards points can be redeemed 1:1 for cash or statement credit. However, because it’s on the small American Express network, you may not be able to use while traveling for all of these things and I’d only recommend it as a secondary credit card.
Chase Sapphire Reserve
Sign up bonus: $750 in points if you spend $4,000 in 3 months.
Features: 3% on travel and dining, 1% elsewhere, $300 annual travel credit.
The Good: Visa network, no rewards cap, 50% travel redemption bonus through portal, trip insurance, airport lounge access.
The Bad: $550 annual fee, points only earned after $300 annual travel credit, forced loyalty for brands in portal to redeem points, high credit requirement.
Cash Back After Fee: 1.58% (#3)
Cash Back After Fee & Sign-up Bonus: 5.77% (#1)
Golden Goose Guide Recommendation: Best premium travel credit card.
At first glance, everyone notices the eye-popping $550 annual fee for this card, but the annual fee is $250 after you’ve spent $300 on its annual travel credit. An interesting result of my estimates for this article is that even average spenders will come out ahead when using the premium cards in my list, but for this one in particular because it’s the credit card with the most generous sign-up bonus and the credit card with the second-highest cash back on a large merchant network (Visa). The main reason this card ranks higher than its sister card, the Chase Sapphire Preferred, is that all points earned in the program can be redeemed with a 50% bonus for the Reserve, versus a 25% bonus for the Preferred. Not only that, but it offers more perks, with a Priority Pass airline lounge membership, fee credit for Global Entry or TSA PreCheck, and trip delay insurance.
Apple Credit Card
Sign-up bonus: None.
Features: 3% cash back on Apple purchases, 2% on Apple Pay, 1% on everything else.
The Good: No annual fee, nice app to track spending, low credit requirement, Mastercard network, no rewards cap.
The Bad: Forced loyalty to Apple, small Apple Pay network (2% cash back).
Cash Back After Fee: 1.58% (#5)
Cash Back After Fee & Sign-up Bonus: 1.58% (#10)
Golden Goose Guide Recommendation: Best travel credit card for Apple lovers.
One of the most interesting credit cards issued recently, this card isn’t even designed by a bank. If Apple didn’t ask for your loyalty before, this card ties your wallet to them. The lack of fees here is refreshing, as Apple makes it up on selling their services at a 3% discount. While this is currently only available in the US, Goldman Sachs (their partner bank) has indicated this may be rolled out to more countries. To earn 2%, you must use Apple Pay, which isn’t an option for everyone. If it was, it’d be an easier card to recommend, but other cards earn nearly the same with more freedom. Apple is counting on brand appeal to bring in customers, but since all the other credit cards in our list offer sign-up bonuses, the Apple Credit Card is lagging in this area.
Discover it Cash Back
Sign-up bonus: None.
Features: 5% cash back on different places each quarter, 1% elsewhere.
The Good: No annual fee.
The Bad: Discover network, Quarterly categories require activation each quarter, some categories not relevant, spending cap of $1,500 per quarter, forced loyalty to brands.
Cash Back After Fee: 1.56% (#2)
Cash Back After Fee & Sign-up Bonus: 3.12% (#6)
Golden Goose Guide Recommendation: Best as a supplementary travel credit card for rotating categories.
No Discover card has foreign transaction fees, and they’ve been expanding their international network, so it’s best to research by country if you want to use it for your next trip abroad. Even so, I’d only recommend using this as a supplementary card for the 5% categories, as other cards can easily do better than 1% cash back and the categories are sometimes limited to specific brands. Discover offers an interesting Cashback Match, where after the first year that your new account is open, they match all of the cash back rewards you’ve earned as a sign-up bonus.
Bank of America Travel Rewards
Sign up bonus: $250 credit if you spend $1,000 in 90 days.
Features: Unlimited 1.5% cash back on everything, 25-75% bonus if Preferred Rewards member (up to 2.625% cash back if more than 100K on deposit/investments).
The Good: No annual fee, large Visa network, no rewards cap, 3% travel rewards through portal.
The Bad: High credit requirement, forced loyalty for Bank of America to receive Preferred Rewards, must redeem for statement credit for travel expenses, which they consider as flights, hotels, vacation packages, cruises, rental cars or baggage fees.
Cash Back After Fee: 1.5% (#7)
Cash Back After Fee & Sign-up Bonus: 2.34% (#8)
Golden Goose Guide Recommendation: Best premium travel credit card for high net worth Bank of America customers or potential Preferred Reward members.
Another card that gives you 1.5% cash back, but that’s just the beginning. Points are as good as cash in this program, worth 1:1 at redemption, but you can only redeem it toward statement credit for your travel expenses. If you have a Bank of America account, you’ll earn a 25% bonus, bringing cash back to 1.875% which moves this card up to #2 on the list. If you have more than $100,000 with Bank of America or Merrill Lynch (think IRA transfer), you’ll earn 75% and a spectacular 2.625% cash back and this card becomes the #1 cash earner. Because this is a premium card, it does require high credit for approval.
Capital One Quicksilver Cash Rewards
Sign up bonus: $200 credit if you spend $500 in 3 months.
Features: Unlimited 1.5% cash back on everything.
The Good: No annual fee, large Visa network, no rewards cap.
The Bad: Sign-up bonus is on the smaller side.
Cash Back After Fee: 1.5% (#4)
Cash Back After Fee & Sign-up Bonus: 2.34% (#8)
Golden Goose Guide Recommendation: Best cash back card for those who just want cash.
This card does nothing more than what it claims to do. It gives you 1.5% cash back with no games, just cash. For the average person, this offers all of the benefits of a high cash return while traveling or at home with none of the complication of redeeming points, category spending, or forced loyalty. You get to choose when and where to spend your money with no limits. The only downside to this card is that the sign-up bonus is not spectacular, but it is entirely in cash as well.
Capital One Savor Cash Rewards
Sign up bonus: $300 credit if you spend $3,000 in 3 months.
Features: Unlimited 4% cash back on dining and entertainment, 2% at grocery stores and 1% elsewhere.
The Good: Visa network, no rewards cap.
The Bad: $95 annual fee, very food-focused.
Cash Back After Fee: 1.50% (#3)
Cash Back After Fee & Sign-up Bonus: 3.51% (#5)
Golden Goose Guide Recommendation: Best cash back travel credit card for families spending highly on dining and entertainment and over $25,000 on this credit card per year in total.
This raises the stakes for the Savor card with Capital One offering this version called SavorOne with a higher 4% cash back on dining and entertainment, but with a $95 annual fee. What if you’re trying to choose between the two? I estimated using my magical spreadsheet that this credit card earns more if you spend more than $25,000 per year on it if you spend like the average person, or if you spend more than $2,375 on dining and entertainment. If you spend less, go for the Savor.
Chase Sapphire Preferred
Sign up bonus: $750 in points if you spend $4,000 in 3 months.
Features: 2% on travel and dining, 1% elsewhere.
The Good: Visa network, no rewards cap, 25% travel redemption bonus through portal
The Bad: $95 annual fee, high credit requirement, forced loyalty for brands in portal to redeem points.
Cash Back After Fee: 1.10% (#10)
Cash Back After Fee & Sign-up Bonus: 5.77% (#3)
Golden Goose Guide Recommendation: Best value for a premium travel credit card sign up bonus.
The annual fee for this premium travel credit card is only $95, even with the same generous sign-up bonus as the Chase Sapphire Reserve. The tradeoff is that all points earned in the program are redeemed with a 25% bonus for the Preferred, versus a 50% bonus for the Reserve. If you want to experience the benefits, but don’t want to commit to the higher annual fee for the Reserve, it’s possible to sign up for this card, earn the sign-up bonus, and upgrade it to the Reserve later if you travel often enough to use the benefits (although you only earn the bonus once). Just keep in mind that cards issued by Chase are limited to 5 new accounts in 24 months per person.
Which travel credit card looks like the best option for you? I chose the best 10 cards for 2019, so if you don’t see a card, it’s because it didn’t make the cut given the cash redemptions after deducting the annual fee (sorry, American Express Platinum holders)! Personally, I use two of the ten credit cards in this list, and enjoy the combination of high cash back and generous benefits. Think you know of a cash back travel card worth reviewing? Let me know in the comments below.
A Word of Caution
Notice that I didn’t discuss APRs or cash advances because even though this is a credit card, we never want to use it for borrowing money. One of the reasons banks are able to give you cash back is not only merchant fees, but because some people kill their Golden Goose by paying the banks 20% interest or more by borrowing with a credit card. By paying off the card every month, we stay out of trouble and make money instead of giving it to the bank. This is Golden Rule #6: Debt is ownership. Don’t let anyone own you.
Many cards partner with specific brands (airline, hotel, etc.) and are difficult to analyze what you’re sacrificing by choosing them because they force your loyalty to a specific brand, regardless of the price. However, The Golden Goose Guide prefers to leave our options open, because we want to shop around for the best deal. Cash has universal brand appeal. That’s why I use it as my primary ranking tool.
Merchant Networks Matter
Visa and Mastercard are well-known and widely used among many countries. If you decide you want to have the benefits of a Discover or American Express card while traveling, my recommendation is to always bring a Visa or Mastercard just in case they don’t accept Discover or American Express, because sometimes merchant networks are specific to the country.
While I don’t have an Apple Credit Card, I do use my other credit cards with Apple Pay on my iPhone for contactless payments everywhere in the US, UK, and Europe, sometimes even at food trucks and farm stores, but it's not accepted everywhere and in that case the chip or swipe method works just fine.
Foreign currency conversion rates differ by merchant network. At first, I thought this might be how the credit card companies make back their lost fees. However, as I compared the rates charged on my cards to the market rates, I found that the differences are very small. My research confirmed that regulators have effectively squashed the credit card companies’ abilities to embed fees into the rates, which is good for all of us. Now, rates for all providers are approximately on par with market rates. If you’re curious, you can check the published rates for Visa or Mastercard, which are the only two providers that publish their rates, which are fixed once a day.
The Final Word
Before you travel, you’ll want to get at least one of these cards so you can avoid the foreign transaction fees. Don’t be like me and find out you’re actually adding a 3% cost to your vacation when you’re already in a foreign country. If you consider the money you’re not only saving, but earning, the top card on this list earns about 2% every year (2.625% if you qualify for the Bank of America Travelcard's bonuses). In total, that can be a 5-6% improvement in the cost of your vacation expenses!
Many of these cards save you even more with the travel and purchase insurance coverage. For example, I’ve never paid for rental car insurance while traveling because my credit card offers it free if I purchase the rental through the card. You can then decline the pushy sales-oriented rental car companies when they try to make you buy this coverage and save even more.
On top of all that, the sign-up bonuses for some of these cards are so generous that it may actually give you the means to plan your next trip. I highly recommend making the most of your credit score so you can take advantage of the higher-earning cards, if possible.
Save yourself a bundle before your next trip and by building points now. Since I've signed up for these credit cards, I haven't paid for a hotel stay and have paid for entire round-trip flights using redemptions. The US has the most generous cardmember programs in the world. Start building up cash back or points now and see for yourself!
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-Golden Goose Guy
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