What's in your wallet may be burning up travel dollars

Banks, airlines, even the U.S. government are pushing plastic harder than ever. The marketers like to toss around words such as "security" and "convenience," but it always pays to do a little homework before deciding to fatten your travel wallet with another card.

Here are three you'll be hearing more about in the coming months:

• Airline-affiliated credit cards. Airlines are diluting their frequent- flier programs with new fees, fewer available seats and higher mileage requirements. It's time to examine whether it's worth paying a $75-$90 annual fee and a high-interest rate for a credit card that allows you to accumulate miles you might not be able to use.

Most of these cards are issued by bigger banks that charge a 3 percent foreign transaction fee on purchases made in other countries.

It might make more sense to sign up for a no-annual-fee credit card that gives a cash rebate on purchases, and to use the money to buy whatever you want.

If you travel in Canada, Mexico or overseas, find a card that carries a maximum 1 percent foreign transaction fee (available from credit unions and community banks). Capital One (www.capitalone.com) issues a MasterCard with no foreign transaction fee and no annual fee. I use a rebate card for everyday purchases and a Capital One card for foreign travel.

Whatever you decide works for you, be on the lookout for bogus promotions.

Continental Airlines became the first to throw in a new sweetener last week when it announced it will waive its $15 checked baggage fee for holders of its Chase credit and debit cards.

The offer's legit, but Joe Brancatelli, the publisher of joesentme.com, an online newsletter for business travelers, warns people to keep track of what's being promised. He reports signing up for an airline card that promised no annual fee and a 20,000-mile welcome bonus.

"When I got my first bill, there was a $40 charge for an annual fee and just 10,000 miles," he reports. "I called the customer-service agent and she had no knowledge of the offer. I had to fax her a copy of the promotion."

• The U.S. Passport card: The U.S. State Department has come up with a wallet-sized plastic card embedded with an electronic chip that U.S. citizens can use when the U.S. government starts requiring passports next June for car, bus, train and ferry crossings between the United States and Canada, Mexico, Bermuda and the Caribbean.

The main advantage is that it's more convenient to carry and cheaper than a passport ($45 for adults and $35 for minors compared to $100 for an adult passport and $85 for minors).

The application process and wait time is the same as it is for a passport, and the cards are valid for the same amount of time — 10 years for adults and 5 for children. But here's the catch: It's not valid for air travel to and from countries where passports are required, including Canada and Mexico.

If you think you or your children might be flying out of the country in the next 5-10 years, spring for the extra money and get a passport.

• Prepaid travel money cards: Marketers tout preloaded cash cards as the new alternative to travelers checks.

The problem with these cards is that they carry hefty fees for taking your money and handing it back to you in the form of a Visa or MasterCard debit card good for purchases or withdrawing cash from an ATM.

Travelex sells its Cash Passport cards online in euros or British Pounds, but the poor exchange rate used to covert dollars into foreign currency makes this an especially bad deal.

As of mid-week, the official exchange rate on the euro was $1.29, but Travelex was quoting $1.40, meaning that $1,000 put on a Cash Passport card netted just 714 euros vs. 775 at the official rate, a surcharge of 61 euros or $79, not including a $15 delivery fee if you buy the card online and a 1.75 euro ($2.25) fee for each ATM withdrawal.

AAA's Visa TravelMoney card also comes loaded with fees. You'll pay a $4.95 purchase fee plus $1.50 for domestic and $3 for international ATM withdrawals.

There's a 3 percent foreign-currency-conversion fee on overseas purchases and ATM withdrawals, and depending on the amount you load on the card, a $10-$20 fee (similar to a cash-advance fee) if you buy the card online and pay for it with a credit card.

Most people would be better off using their own bank debit or credit card for purchases, and using a low-fee or no-fee ATM card to withdraw cash from their checking account as needed.

I take traveler's checks as a back-up in case the ATM machines are down or the cards fail. AAA offices in Washington and Oregon used to sell Visa traveler's checks, but no longer. Problems with fraud and counterfeiting were increasing, and some travelers reported hassles cashing them.

American Express checks are the most widely accepted and easily replaced. Currency-exchange bureaus and hotels usually will cash them, sometimes for a fee. American Express publishes a list of banks around the world that cash its checks. (www.aetclocator.com) without a charge.

My favorite airline

Continental Airlines has been winning my vote lately. It's among the healthiest of the major carriers, yet its fares are often among the lowest and its service is good.

Remember a couple of years ago when American Airlines left passengers stranded on the tarmac in Austin, Texas, for eight hours without food? Continental still serves free food at meal times on domestic flights. A flight attendant passed out sandwiches, coffee and soft drinks when my plane sat on the tarmac in Houston recently for four hours in a rainstorm. When I arrived home, I found a letter of apology for the delay and a note awarding me 4,000 bonus miles.

Continental next year plans to break away from the SkyTeam Alliance and join the Star Alliance, which includes Air Canada, SAS, United and Lufthansa, all major players in the Seattle market.

Alaska Airlines, a mileage partner with Continental, plans to continue that partnership even though Star Alliance includes United, an Alaska competitor, a spokeswoman said.

Carol Pucci's Travel Wise column runs in The Seattle Times Sunday travel section and online at www.seattletimes.com/travel. Comments are welcome. Contact her at 206-464-3701 or cpucci@seattletimes.com.