How It Works, Cards That Have It

With the start of summer just a few weeks away and vaccine distribution in full swing, the open road is calling out to many Americans. A spring or summer road trip is becoming a popular, socially-distanced alternative to flying, and it can be a great way to spend quality time with family or friends.

If this road trip requires a rental car, you’ll want to make sure that you’re covered by either your personal auto insurance policy or by your credit card. Most travel rewards cards come equipped with special car rental insurance which allows you to skip the rental company’s insurance.

Ahead, Select explains how credit card car rental coverage works, and reviews the best credit cards for road trips, with information on the car rental insurance coverage you get with each.

The Chase Sapphire Reserve® and its lower annual fee cousin, the Chase Sapphire Preferred®, both provide primary car rental coverage for car rentals in most countries. These cards offer coverage for rentals of up to 31 consecutive days at a time. The Sapphire policy covers losses, including physical damage and/or theft of the rental vehicle, valid loss-of-use charges assessed by the rental company and reasonable and customary towing charges related to a covered loss.

View the Sapphire benefits guides for more in-depth info on rental car coverage:

The PenFed Platinum Rewards Visa Signature card comes with Visa Signature perks including a secondary auto collision damage waiver (CDW) that reimburses cardholders for the covered theft or damage as well as valid administrative and loss-of-use charges imposed by the auto rental company and reasonable towing charges that occur while you are responsible for the rental vehicle.

Coverage lasts up to 15 consecutive days within your country of residence or 31 consecutive days outside the U.S.

To determine which cards offer the best value, CNBC Select analyzed 234 of the most popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.

For balance transfer cards, we used a Bankrate calculator to tally the interest rates and fees you could incur if you transferred $6,028, the average balance Americans carry on their credit cards in 2019, according to Experian.

If the average consumer with a $6,028 balance on their credit card pays $200 each month, they will spend $1,911 in additional interest, assuming the average 17.7% APR. And it will take them 40 months — more than three years — to pay off that debt.

With four of the five cards featured on this list, if you take full advantage of the intro APR period and pay $200 per month, you’ll pay less than $450 in interest and cut your repayment time in half to 20 months. That’s a significant savings.

For the cards that offered a rewards program, we also estimated how much cash back you might earn over a five year period. CNBC Select teamed up with location intelligence firm Esri. The company’s data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.

Esri’s data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.

CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.

It’s important to note the value of a point or mile varies from card to card and based on how you redeem them. When we calculated the estimated returns, we assumed that cardholders are redeeming points/miles for a typical maximum value of 1 cent per point or mile. (Extreme optimizers might be able to achieve more value.)

When choosing the best balance transfer card, we focused on the card that provides consumers with the cheapest way to pay off their debt rather than the number of rewards they could potentially earn. When you’re in credit card debt, your primary focus should be repayment. Earning rewards should be seen as a bonus, and you don’t want to spend beyond your means in order to earn points.

The five-year rewards total and the interest rate and fees estimates are derived from a budget similar to the average American’s spending and debt. You may earn a higher or lower return depending on your spending habits.