How to Use Credit Cards for Travel Rewards
Those who love to travel are probably aware of credit card rewards programs that help offset travel costs. If you think you’d benefit from such being in such a program,* this overview should give you a good idea of how to get started.
1. Research Rewards Programs
Do your homework to decide which program is best for you.
PROGRAM TYPE | DESCRIPTION | HOW IT COMPARES |
Cash-Back | Lets you book travel and remove the charges from your statement afterward. Typically, your points are worth 1 cent per point — so a $250 flight would take 25,000 points to remove from your credit balance. It’s the same value as getting cash back for your points and buying the ticket with cash. | Usually earns you more points per dollar on all purchases, and can be spent on various travel providers — not just the programs your credit card provider has partnered with. |
Program-Specific | Earn rewards, in the form of miles or points, directly with the partner of your choice. For example, a round-trip domestic flight on Frontier Airlines would take 20,000 Frontier Miles, while a flight on Southwest Airlines has variable point values. | Can earn you more points per dollar spent with your specific travel partner, and often gets you great benefits like priority boarding or free checked bags. |
Hybrid | Earn rewards points that can be transferred to cash at 1 cent per point, or transferred into miles or points directly with your travel partner of choice. These cards are useful because they offer the option of being able to shop around with multiple airlines, with the option of paying in cents or miles.
| May earn fewer points per dollar on general purchases, but usually has multiplier categories. They also allow you to redeem for cash or miles, and give you the flexibility of being able to shop around for the best deals. |
2. Use Cards for All Purchases
Put all of your spending on the cards, and always use the card that gives you the most points for the purchase. To make it easy to remember which cards are good for what categories, write the bonus categories on the cards themselves.
Set up auto-pay for your scheduled payments (subscriptions, memberships, bills, etc.) as well. Then, change your credit card statement dates to work with when you get paid. Adjust your credit card payment dates so that it’s always shortly after payday. In order to avoid interest charges, set your cards to auto-pay the balance in full.
3. Get Points Through Promotions2
Many rewards programs will offer points just for interacting with them online. Just by subscribing to an email newsletter, liking a Facebook post, entering a contest on Instagram, or using their mobile apps, there are a number of ways you can earn points on more than just purchases. Find ways to connect online with the cards you have, and you can benefit.
4. Keep the Big Picture in Mind
Applying for multiple cards in a short amount of time will result in multiple inquiries into your credit history, which can lower your score. This hit lasts a few months, so consider holding off if you are applying for a loan in the near future.
Also, be aware of the requirements for sign-up bonuses. Many cards will offer you a substantial number of bonus points just for signing up, but require a certain level of spending within a certain timeframe. Make sure you are comfortable meeting the spending requirements without making purchases just to meet the requirement.
*If you carry a balance on your credit cards, tend to overspend with credit, or don’t have great credit history, you should hold off on applying for rewards cards.
References
1 Milhan, M. (2014, August 1). How to pick (and manage) credit cards for the best travel rewards. Retrieved March 20, 2015 from www.twocents.lifehacker.com/how-to-pick-and-manage-credit-cards-for-the-best-trav-1612445323
2 Kelly, B. (n.d.). Best ways to earn travel points. Retrieved March 25, 2015 from www.travelchannel.com/interests/deals-and-rewards/articles/best-ways-to-earn-travel-points
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