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Credit Card Rewards: Hidden Bonuses in Your Pocket

From cheaper gas and free car-rental insurance to bonus points for dining out, don't overlook the travel perks that come with many credit card rewards programs.

When used the right way, credit cards can help you save -- not merely spend -- money. Here's a quick refresher on the travel-related freebies and discounts that can make your "plastic" seem fantastic.

Fuel up on cheaper gas. The nation's top warehouse clubs, such as BJ's (, Costco (, and Sam's Club (, sell discounted gas only to their club members. Members may save up to 10 cents per gallon when they make a detour to one of these stores.

Club stores have hundreds of locations nationwide, so chances are high you'll pass one on your next road trip. Use Google Maps to look up driving directions and to check if one of the stores may be along your route. (Try a search term like "BJ's wholesale club.")

Costco members can receive an additional 3% cash back (up to the first $3,000 spent on gas) if they pay with a TrueEarnings card from American Express. Cardholders earn 2% on travel purchases and 1% on most other types of purchases. The card has no annual fee, besides the $50 Costco household membership cost.

Would you rather save on all brands of gas, rather than be limited to box store stations? Then consider applying for the PenFed Visa Platinum Cashback Rewards credit card ( It offers 5% cash back on any brand of gas. (Plus, it returns 1% on other types of purchases.) It has a variable interest rate of 13.99%, which is unusually modest for a rewards card. To qualify, you need to become a member of the PenFed credit union. It's free for U.S. Military service members, and it costs $15 for Americans who aren't.

Get reimbursed for lost luggage. We're talking about when your baggage is truly gone for good, not merely delayed by a few days. File a report with the airline first. The airline will typically pay compensation up to roughly $3,800 per passenger for luggage lost on domestic flights. But your carrier's policy isn't likely to cover valuable items, such as jewelry and camera equipment. Plus, the airline may value your lost items for a lower dollar value than you do.

This mismatch in value is where your card comes in. Many card companies will reimburse you for what the carrier refused to reimburse (and the amount that you don't want to bother trying to claim under your homeowners' policy). You don't need to have bought the bag (or the items inside) with the card to benefit from this coverage -- just the plane ticket. Some lines of cards that provide this lost baggage coverage are Visa Signature and World MasterCard.

Don't overlook free car-rental insurance. At the rental car counter, the clerk will offer you a collision damage waiver (a.k.a. a loss damage waiver). If the rental car is stolen or harmed, this "CDW" (or "LDW") will cover the cost of fixing or replacing the vehicle.

But you may not need this costly waiver. Many cards automatically offer this coverage to cardholders, including most gold MasterCard, Visa, Discover and American Express cards. Assuming you have collision coverage on your own car (and that you're driving for personal -- not business -- reasons), your own insurance will cover the rental car with the same deductibles -- and points against your record -- that apply to your own car. You'll spare yourself the cost of the waiver, which is $10-$20 per day.

As with any insurance, there are exceptions and pitfalls. Case in point: Credit card insurers don't offer insurance protection in some countries, such as Ireland and Israel. Check with your credit card company before you plan to drive overseas.

You should also know that, when a car is damaged or stolen, many car-rental agencies hit customers with large "loss of use" and other fees. Paying these fees won't be covered under most standard auto policies in many states. So the credit card's coverage isn't as complete as it may at first appear.

Your credit card may offer automatic travel insurance. Under many circumstances, if you book a vacation with your credit or charge card, it will be automatically insured by the card issuer. You can probably spare yourself from buying a separate trip insurance policy that's typically about 5%-10% of your trip's cost.

Credit card travel insurance generally covers cardholders for injury or -- heaven forbid -- death on your flight. The coverage is generally up to a certain amount, such as $150,000. There are other perks, too. American Express, for one, guarantees any hotel room booked with most of its cards, such as Blue. If you use the card to book a room as an "American Express Assured Reservation," show up to your hotel late, and find that the hotel hasn't kept your room, AmEx will make sure you get a similar room nearby at no additional cost. In other emergencies, AmEx employees excel at assisting their customers by phone, such as when a purse is stolen or there's a medical problem.

The fine print: Not all travel problems are covered by credit and charge cards. For example, if you are hopscotching airports, you may not be covered in case you miss a connection because "trip interruption" insurance isn't usually offered by card companies. For complicated trips, opt for independent travel insurance coverage instead. Compare policies at sites like ( and SquareMouth (

Cut the fees overseas. Your piece of plastic could spare you fees when you exchange your money for local currency abroad. As a rule, your credit card delivers a better exchange rate than your local bank debit card. Visa, MasterCard, and American Express use their size to push for the best deal on their profitable credit cards.

Avoid currency exchange fees. AmEx slaps on 2% to any foreign purchases. Visa and MasterCard tack on 3%. Only one major credit card issuer, Capital One (, has consistently swallowed these fees, saving its customers the money. Capital One has several credit cards that spare you the foreign-currency conversion fee when you use a card abroad. Some of these cards carry no annual fee. Others have reasonable interest rates, such as the Capital One Venture Rewards card, with its recent 13.9% variable rate and $59 annual fee, waived in the first year.

In late 2010, Chase ( dropped foreign currency fees on its co-branded cards with Hyatt, British Airways, and Intercontinental Hotels. Citibank also unveiled two new ThankYou cards that don't charge fees for foreign transactions: the Premier and the Prestige cards. One caveat: Chase's and Citi's cards typically slap you with an annual fee.

Many credit unions waive the foreign exchange fee and have favorable terms and conditions.

Get rewarded for dining out. Some loyalty programs give you bonus points if you dine out, meaning your rewards balance can expand with your waistline.

The Hilton HHonors loyalty program, for instance, lets you tie your points-earning rewards account with your credit or debit card. Then, whenever you eat at one of 9,500 participating restaurants, you will earn up to eight HHonors points. To be clear, being a member of HHonors isn't enough. You have to also sign up for this dining program at

American Airlines ( and Delta ( offer similar programs. They'll credit your frequent-flier account for up to 5 miles per dollar spent at restaurants. In each case, you first need to associate your debit or credit card with your frequent-flier account. For AA, visit For Delta, visit

Some credit cards take the automatic approach. For example, the United Mileage Plus Select Visa card gives you double reward miles whenever you use it to pay for a restaurant meal.

Websites & Other Resources for Frequent Fliers

If you're like many readers, you're probably sitting on miles in multiple accounts. But you may not fly often enough on any one airline to pile up enough miles to pass the threshold for a free ticket. So how can you beat the airlines at their own game?

You need to keep track of earning rewards opportunities that don't involve travel, such as shopping with an airline's partner program. You also need to be smart about cashing in your miles, such as by taking advantage of the occasional promotional events when airlines allow you to redeem for fewer miles than usual for certain dates or routes.

For example, airlines periodically run frequent-flier mile promotions with partner stores from time to time. In December 2010, US Airways partnered with FTD, the flower retailer, to let members of its frequent-flier program earn up to 20 miles for every dollar spent on flowers. Here are some resources to use:

  • MilePoint ( New in 2011, this free site is great for travelers who are new to playing the frequent-flier game. You can quickly learn everything you need to know about earning and redeeming frequent-flier points wisely.
  • Travel Hacking Cartel ( New in 2011, this site is aimed at people who don't have time to learn the ins and outs of frequent-flier redemption programs and are willing to pay a monthly fee (from $15) to receive text or e-mail alerts of deals. The fee also provides access to brief video tutorials and a community of like-minded travelers.
  • WebFlyer ( This free site publishes an e-mail newsletter alerting you to airline bonus promotions and deal announcements in easy-to-read format. Use the site's mileage calculator and converter tools to max out the value of your miles.

Cruises: Earn onboard spending credits, and more. Frequent-flier rewards cards grab all of the headlines. But cruise line affinity cards can earn you cruise travel rewards faster than the typical air miles card. Case in point: Bank of America offers a no-annual-fee Norwegian Cruise Line MasterCard rewards card. One buck in purchases translates to one point in NCL's rewards program. For only 5,000 points, you could earn a $50 onboard cruise credit. See full rewards on NCL's site and check out your favorite cruise line for its preferred affinity card deals.

How to get a more rewarding card: We've focused on maxing out the cards you already have. But you may be better served by applying for a new card that's loaded with fat perks. In fact, many Americans are awash in card offers right now. Banks direct mailed more than a billion credit card offers in autumn 2010 alone, three times as many as they did a year earlier, reports Mintel, a market-research firm.

A prime example: JPMorgan Chase is currently offering qualified customers a Chase Sapphire charge card with no annual fee that lets you earn $150 in cash back or travel rewards after spending your first $500.

Discover has a new CardBuilder tool to help you pick the best card for you. Specify your spending style, the types of rewards you prefer (such as double miles on travel purchases), and any preferences about the kind of interest rate charged. The tool then recommends the best card to match your needs.

To find the best cards, try editorially independent review sites like ( and Kiplinger (

As always, watch out for the fine print on any offer. Rewards cards usually charge heftier interest rates than standard cards do. Whatever you earn in perks would likely be eaten up by interest payments. So only go for a new rewards card if you tend to pay off your monthly balance.

Sean O'Neill recently wrote about the Best Smart Phone Apps for Business and Frequent Travelers. Follow him on Twitter at @sean_oneill to learn more practical travel tips.