I've read the description on line but am still confused. We will be in London in August - arrive at Heathrow on day 1 - to London for hotel; days 2,3,4 in London; day 5 back to Heathrow to get rental car. We are staying in Kensington but will be traveling to various sites, e.g. the Tower, Westminster, etc. in area. I had come to the conclusion that perhaps the Travel Card might be better for this short time frame. Any thoughts? Thanks.
You can buy a 1 day transit pass in London. This would be the best option for you, I think. Just buy it before your first trip of the day and use it all day. Then the next day buy a new one. Oyster Cards are very convenient, just tap and go, but they still incur fees (2 pounds for each tube ride and 1 pound for each bus ride). An unlimited 1 day pass is the best value.
It depends how much time you have for wandering on days one and five. You can get a seven-day Travelcard for central London (zones 1-2) for £27.60 which is cheaper than five one-day Travelcards. However, you will still have to pay extra to travel to Heathrow and back. If you won't have time for much sightseeing on the first and last day, then rather than getting one-day Travelcards each separate day it will be more convenient for you to get a stored-fare pay-as-you-go Oystercard. There is an automatic system to make sure you aren't charged more in one day that the price of a one-day Travelcard for the zones you've travelled within. The only disadvantage with a stored fare Oyster is that if you are travelling by train or subway you MUST check your card at both the beginning and end of your journey or you will be charged a penalty fare.
National Rail has some very good 2-for-1 offers (including the Tower of London). To get them you must have either a regular train ticket or a travelcard sold at National Rail stations (not Tube stations) with the National Rail logo on it. The travelcards cost the same as those sold at Tube stations and cover the same modes of transportation. To see the offers and to print vouchers for the ones that interest you, go here. My suggestion would be to buy Oyster cards at Heathrow and load them with some pay-as-you-go pounds. Use them to get from the airport to your hotel and for any other rides you take that day. Use them on any day you don't take advantage of 2-for-1 offers and for your return to Heathrow. Buy one-day, zone 1-2 National Rail travelcards for each day you will use one of the offers.
Dave, Your prices are a bit out of date. Oyster PAYG (Pay As You Go) bus fares are £1.30, Underground varies wildly by peak/off peak and which zones. A great advantage of Oyster PAYG is that it is guaranteed to have a daily cap lower than the comparable Travelcard. The only advantage IMHO of a Travelcard is when one is issued by a National Rail outlet and the traveler makes plenty of use of 2 for 1s offered in the scheme.