Despite the fact that travel credit cards can offer travelers the opportunities to travel for free, a new report by U.S. News and World shows that 61 percent of Americans don't have a travel credit card.
It seems credit cards still worry Americans as 70 percent said they wouldn't open a credit card to pay for their vacation and about 45 percent said they wouldn't pay for an upcoming trip with a credit card they do have.
This is surprising when you consider that 49 percent who have travel credits have redeemed $1,051 on free travel over the past year, which is pretty big savings. The U.S. News Summer Travel Survey also found that travelers are looking for ways to save on travel and one-third of respondents are booking budget-friendly vacations that cost less than $500.
While they seem to want to save on travel, 31 percent of travelers surveyed said they don't shop around to save on travel costs, which seems to include not being interested or looking into the savings that travel credit cards can offer. Ultimately, too many Americans are losing out on travel savings and free travel by not opening a travel credit card.
"Purchasing big-ticket items like vacations on a credit card may seem intimidating, but it can actually be financially savvy," said Beverly Harzog, best-selling author, credit card expert and consumer finance analyst at U.S. News. "Using a credit card responsibly can mean consumers benefit from travel rewards like cash back, free nights at hotels or free flights. If you're planning on spending the money, you should reap the rewards."
The only group that seems to be taking advantage of travel credit cards the best are millennials, according to a CreditCards.com study. Thirty-one percent of Americans are attracted by cash-back features, but not millennials. They're interested in sign-up bonuses that allow them to book travel.
About 36 percent of millennial travelers are looking for sign-up bonuses that transfer to $500 in cash or $1,200 in travel credit. Travelers who are age 39 or older tend to look for credit cards with zero-percent offers - 30 percent, in fact. Sign-up bonuses may not appeal to that generation as much as they do to millennials, because millennials seem to travel more. Fifty-seven percent of millennials took at least one trip last year and many used their sign-up bonuses to assist with their vacation.
"Credit card rewards are not a 'one size fits all' proposition," said CreditCards.com analyst Ted Rossman. "When comparing credit cards, ask yourself two key questions: How do I spend my money? And what do I want to get out of my rewards? Matching a card to your lifestyle will reward you for things you buy anyway, provided you pay your bills in full every month."
While it's a little unclear why so few Americans open travel credit cards, it's most likely because many travelers, especially Gen X and Baby Boomers, don't know how to use travel rewards programs, which can be somewhat difficult to learn, and thus are attracted to cash-back rewards which appear more pretty straightforward.
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