The best ways to earn free travel

This post comes from Kelli B. Grant at partner site SmartMoney.

Earning a free airline ticket or hotel room has rarely been simple for leisure travelers. Now it's getting even trickier.

Credit card issuers have been pushing travel rewards cards more in recent months -- they represented 48% of offers mailed out in July, up from 30% in June, according to Mail Monitor, a unit of research firm Synovate.

Experts say not only are there now more cards to choose from, but there are also more differences between them -- particularly when it comes to how consumers can earn points or miles and redeem them for free travel. If you pick the wrong card, you could end up on the hook for high interest charges with nary a freebie in sight, says Odysseas Papadimitriou, the chief executive of CardHub.com, a credit card comparison site.

Driving the travel card trend: Credit card issuers are hoping the lure of a free flight or discount vacation will entice desirable cardholders. "The consumers that are interested in those cards are usually affluent customers and big spenders, and that's the lowest-risk demographic that a credit card company can attract," Papadimitriou says. That's more attractive as the economy recovers, and as issuers look for new ways to profit.

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Many travel cards also carry annual fees and have interest rates a few points higher than regular cards, around 13%, he says. That adds to the profit potential for issuers, but it means consumers should be cautious about picking the right card, to avoid costs that could eat into the value of the "free" travel earned.

Offerings in the new crop of travel rewards cards fall into three camps. First, there are the widening ranks of airline and hotel cards that earn points in a single company's loyalty program. The latest: First Bankcard and La Quinta Inns & Suites launched a co-branded Visa card just last week.

Then there are the growing ranks of cards that promise users they can redeem points for any flight, with no blackout dates. (On Monday, Capital One sweetened its deal by announcing that cardholders can book their travel arrangements anywhere, and use points after the purchase to pay for all or part of it.)

Finally, there are general travel rewards cards that let users trade in the rewards points they've earned and get miles or points in their favorite airline or hotel loyalty program instead.

In the last category especially, each issuer is fighting to secure partnerships. Depending on who wins such turf wars, the rewards earned on any given credit card could suddenly become very valuable -- or practically worthless to a flier loyal to one airline, says Brian Kelly, the founder of frequent-flier resource ThePointsGuy.com. Chase recently won deals with United Airlines, Southwest Airlines and InterContinental Hotels Group, the parent company of Holiday Inn, Crowne Plaza and other chains (all three companies previously partnered with American Express); American Express snagged Virgin America.

With so many different cards and redemption choices on the market, picking the right one to snare that free trip is no mean feat. The best value depends largely on your travel and spending habits. It may also shift based on the price of that free flight or room, the availability of rewards and the features of the card itself. "Flexibility is a good thing, but it also creates a need to dig deeper and understand the options," says Curtis Arnold, the founder of credit card comparison site CardRatings.com. "Look under the hood a bit before signing up."

Here's what to consider when picking a card:

Airline or hotel card

Experts agree: This category is usually the best option for frequent travelers who tend to pick the same airlines or hotels time and again, since they can rack up rewards quickly. Most offer bonus miles for travel and a mile or point per dollar on other purchases.

Arnold pegs the Starwood Preferred Guest card from AmEx ($65 after the first year) as one of the most generous, since travelers get up to five points per dollar spent on their hotel stays, and one point on other purchases. There's also a sign-on bonus of up to 25,000 points for new cardholders.

Airline and hotel programs typically value rewards at set rates -- say, 25,000 miles for a free round-trip domestic flight. With each mile worth roughly a penny, that system works out in the traveler's favor on expensive trips. Kelly recently used 125,000 miles to book a $15,000 round-trip, first-class flight to the Seychelles, getting a value of 12 cents per mile. Plus, brands often give valuable extras to cardholders, such as fee waivers and upgrades, says Papadimitriou. The best pick? A co-branded card from whichever hotel or airline you use most frequently, he says.

Cardholders should be aware, however, that taxes and fees typically apply on awards, and can still amount to several hundred dollars. There's also the risk that an award flight or room won't be available during peak travel times, or that it will cost more miles than usual, he says.

A few cards, however, like the United MileagePlus Explorer ($95 after the first year), actually promise users that they can redeem their miles for any flight with open seats and still pay the standard award rate. Of course, that's a perk that elite frequent fliers would get already. (Post continues below video.)

Travel-booking card

With a general travel rewards card, you can redeem earned points or miles through the issuer's site for travel arrangements. For these cards too, each point is usually worth a penny. Most cards offer a standard rate of one point or mile, with some bonuses in select categories like groceries or gas, although the experts' top pick, the Capital One Venture ($59 after the first year), offers two miles on all purchases.

The big advantage: peace of mind for consumers who are worried that their preferred airline or hotel won't have a hard-to-get award seat available for their trip, Arnold says. Issuers including Bank of America and Capital One also offer cardholders the ability to book their travel through any site (not just theirs) and to retroactively use their points to pay for some or all of that purchase. Chase offers a bonus to Chase Sapphire Preferred users ($95 after the first year), making their points worth 1.25 cents apiece.

In any case, you're technically paying for the ticket. "The site is buying it for you," Kelly says. That means travelers can still earn rewards for the trip through their hotel or airline loyalty program, says Kelly.

But the value of rewards can fluctuate. Issuers' systems are often the best value when the price of a flight is less than the value of the miles you'd need in an airline program, says Kelly. So in the case of that typical 25,000-mile round-trip domestic flight, a fare that's cheaper than $250 would be a better deal booked with a general travel rewards card. A $100 round-trip domestic fare, for example, would cost you 10,000 points on an issuer's site.

Infrequent travelers, though, often book during peak times like Thanksgiving week, he warns. Although issuers' "no blackout" systems means you can book any seat, the higher the fares, the more points you need, he says. A $500 round-trip ticket would require 50,000 points, enough for two free tickets in an airline program.

Point-swapping card

Miles junkies like cards that give users the choice to redeem through the issuer or swap points into a travel partner's program. That lets cardholders shift strategies to whichever booking choice gets them the best value, says Kelly. It's also common to see issuers offer bonuses for swapping miles.

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For example, American Express regularly lets users swap 1,000 points for 1,000 British Airways miles (called Avios), but a current promotion adds 40%, netting you 1,400 Avios. Not every issuer offers the ability to swap. Right now, American Express and Chase have the most extensive partnerships, he says. Starwood Hotels also lets members of its free program and users of its Starwood Preferred Guest AmEx card trade points into partner airlines' programs, including some that AmEx doesn't include.

Consumers tempted by one of these cards should review partnerships before applying -- most are exclusive to one card brand, Papadimitriou says. If you want to swap into United, Amtrak or Marriott, you'll need a Chase card, while Delta, JetBlue and Hilton require an American Express card. (The exceptions: British Airways has partnerships with both AmEx and Chase, and the Starwood Hotels card often overlaps too.)

But even if one of these cards suits your purposes, no card is perfect. There are the fees to consider as well, says Kelly. Some airlines charge excise fees for trading points for miles, which can add as much as $99 for one transfer.

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