What’s the Latest on Travel Credit Cards?

The relationship between travel and credit cards may be longstanding, but it continually evolves and changes. Knowing my ongoing interest in the subject, a reader asked me:

“What’s new with credit cards for travelers?”

The short answer is, “Some key issuers have added important benefits to at least a few of their cards. But there’s no news yet on the chip-and-pin front.” Here’s a look at some of the latest developments.

Chase and Citi Drop Foreign Surcharges on Premium Cards

Two big banks are dropping the 3 percent surcharge on foreign purchases on at least some of their premium-level cards:

• Citi has dropped the charge on its Thank You Premier and Thank You Prestige cards.
• Chase previously dropped the surcharge on its British Airways Signature Visa card and Hyatt Visa card ($75 annual fee), and is now dropping it on the Continental Airlines Presidential Plus and the United Mileage Plus Club Visa cards.

{{{SmarterBuddy|align=left}}}These two banks join Capital One in eliminating not only the bank-imposed 2 percent surcharge but also the 1 percent conversion fee nominally charged by the international MasterCard/Cirrus and Visa/Plus networks, resulting in a zero fee. American Express has also recently dropped the surcharge for its Platinum card.

I know of no other banks that assess neither their own nor the network fees, but several niche banks, including USAA and many credit unions, add only the networks’ 1 percent charge, as do some other cards limited to a few banks’ preferred and high-value customers. But on most cards, the giant banks – Bank of America, HSBC, US Bank, Wells Fargo – still add a 3 percent surcharge to all foreign purchases, as do Citi and Chase on other cards.

“Free” Checked Baggage

Three card issuers have noticed the public resentment about baggage charges and are offering relief from these offensive fees:

• When you buy tickets with any of the three American Express Delta SkyMiles Credit Cards, Gold, Platinum, or Reserve, Delta waives the usual $25 fee for the first checked piece of baggage. This benefit is available an unlimited number of flights per year, for the cardholder and up to eight other travelers on the same reservation.
• When you buy tickets with Chase’s several Continental Airlines cards, Continental waives the usual fees of $23 for the first bag, $32 for the second, for up to two checked bags. This benefit is available an unlimited number of flights per year, for the cardholder and others in the travel party.
• As I noted in an earlier post, the American Express Platinum card absorbs the first $200 each year in baggage and other similar fees on any airline the cardholder designates – but only on that airline.

I know of no other cards that waive or absorb baggage or other fees. In this competitive environment, however, a few other cards may follow.

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Lounge Membership

Five premium cards now provide for access to airport lounge clubs as a no-extra-cost benefit:

• Chase’s Continental Airlines Presidential Plus card gives holders full membership in Continental’s Presidents Club airport lounge system, along with complimentary access to United’s Red Carpet Clubs and many lounges operated by partner airlines in the Star Alliance. Given that the annual fee for the card is $395 and the annual cost of Presidents Club membership is $475, plus an initial $50 for a single membership, applying for the credit card is a no-brainer for anyone who wants to be in the club – provided they can pass Chase’s credit requirements.
• The deal on Chase’s United Mileage Plus Club Visa is about the same: The annual fee of $375 includes membership in the Red Carpet Club, and access to Presidents Club and partner-line lounges. Regular membership costs are the same as for Presidents Club. Presumably, as the airlines more fully integrate their merger, both of these card programs will merge into one as well. As with Continental, the card is a no-brainer for those interested in the Red Carpet Club.
• The American Express Platinum ($450 per year) card admits holders to airport lounge clubs operated by American, Delta, and US Airways, plus Continental, but only through next September. This isn’t full membership. You can access the club only when you have tickets for a flight on the same day on the sponsoring airline. And a United ticket doesn’t get you into a Continental club.
• The Citi Thank You Prestige Card ($500 per year) provides access to 600 airline clubs and VIP airport lounges around the world through Priority Pass, including 37 in the U.S. Diners Club/Carte Blanche cards provide a similar benefit.

I know of no other cards issued by U.S. banks that provide for no-cost airport lounge access.

Other Benefits

Virtually all of these cards claim big mile/point bonuses for initial enrollment, first purchase, and reaching a purchase plateau, as well as mileage bonuses for various classes of purchases. I downplay those claims, mainly because amassing lots of miles doesn’t gain you much if you can’t use them. These cards also typically include a laundry list of standard benefits, including buyer protection, rental car collision coverage, overseas assistance, and such.

For the most part, cards that offer a high level of travel benefits generally entail relatively high annual fees and good credit scores. You have to check each card individually for the right mix of benefits and requirements.

Chip-and-Pin: No Progress

With all the competition among cards for travel benefits, I’m still stumped to figure out why no big U.S. bank has started to offer dual-mode credit cards that travelers can use in both the stripe-and-sign system in general use in the U.S. and the chip-and-pin system that is quickly becoming the standard in Europe and many other overseas areas. The banks say they can’t convert to chip-and-pin completely because of the prohibitive cost of converting all individual merchants to the new technology. Fine, I’ll accept that. But I don’t see why they can’t issue cards enabled for both systems. They’re already issuing such cards overseas. Dual cards wouldn’t require any changes among U.S. merchants and would probably cost no more than a one-time extra charge of a dollar or so to issue such a card upon cardholders’ request. Go figure.

Your Turn

Would you change credit cards for the travel perks? Tell us about it by adding a comment below.