Travel Hacking: Rewards Credit Cards

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Image taken from TheStreet

Who wants to travel for free? I sure do, but unfortunately there is no such thing as a “free” trip. Somebody has to pay for something. The goal when you travel is to travel smart and always look for the best deals out there.

The Credit Card Game

The most popular way to earn rewards and points to cover a large amount of travel expenses is with travel credit cards. There are co-branded credit cards for airlines and hotels, and then there are the cards that are just geared toward the traveler. These cards either come with an annual fee that you have to pay in order to keep the card every year or they don’t.

I used to be a person who was totally against paying to keep a credit card, but then I started watching videos on Youtube by two people: Ask Sebby and The Credit Shifu. Both of these gentleman are experts at being able to maximize your credit card rewards and they really changed my perspective on what they call the credit card game.

The only apply for credit cards that have rewards and will give you what they call positive expected value. What this means is that it’s only worth getting a credit card if what you get in return is worth more than it costs to keep the card. You always want to come out ahead. What cards might interest you?

Sign Up Bonuses and Minimum Spending Requirements

The first thing to look into is the type of sign up bonus that the credit card is offering. Is it points, cash back, a free flight? What makes the most sense for you? It all depends on your end goal. Most credit cards offer a huge sign up bonus after you spend a certain amount of money. The next question you have to ask yourself is will you be able to meet the minimum spending requirement in the time frame allotted by the card to get said bonus. 

It’s really important that you only spend money you would otherwise be spending. The absolute last thing you want to do is to go into debt. I struggled for a couple of years with being able to pay off debt. You never want to be in a position where you’re stuck only being able to pay the minimum balance each month and never able to get ahead and make a dent on the money you owe.

The bigger the sign up bonus, the bigger the minimum spending requirement usually is. For example, the United Airlines card from Chase bank was offering a 40,000 point bonus after you spend $2000 in 3 months after account opening. If you compare it to the Chase Sapphire Reserve credit card, you need to spend $4000 in 3 months after account opening for 50,000 ultimate reward Chase points. 

The 40,000 points from United Airlines will probably only get you a round trip domestic flight where as the 50,000 ultimate reward points from Chase are worth more money and might get you 3-4 domestic flights. You need to do your homework ahead of time and see what card might give you the best benefits towards what you want. The two websites I linked earlier for Ask Sebby and the Credit Shifu will help you get started. 

Annual Fees

As I mentioned earlier, the annual fees used to scare me, but now they don’t. From what I’ve learned, you can get more value out of your credit card that justifies the annual fee. I fly Southwest Airlines a lot. It made sense for me to get their co-branded credit card in order to help me earn more points with all the flights I was taking.

The card I have has an annual fee of $149 a year. But for that money, you get a $75 credit to use towards the cost of a Southwest ticket once a year, and 7500 points once a year. Those 7500 points are worth about $75. So if you are able to use the credit and the points, you break even. I would have spent $149 on a flight anyway, but I can really stretch out the points and get maybe $200 in value if I buy a ticket with points during a sale. Some cards will even waive the annual fee for the first year! Just make sure you understand the fine print and the perks the card come with.

Airline Card, Hotel Card or General Card?

This is the hardest question to answer. Airline cards can have a lot of value to them if they come with free checked bags or even priority boarding. Most airlines charge for domestic travel and some are even beginning to charge for international travel. It might be worth getting a card if you fly a lot and want to at least have the cost of checked bags covered. This makes more sense for solo travelers.

Hotel cards I’d say tend to be better for families. Some hotel credit cards come with free nights once a year. It might be better to have something you can use for everyone instead of just one person. If you tend to stay at the cheapest hotel or don’t have loyalty toward a specific chain, this might not be the answer either. 

A general travel card if often your safest bet! This is the one I have. I’m a solo traveler (most of the time) who prefers more flexibility. I like being able to redeem my points for either hotel, airfare or cash back. I never know what I’m going to need until I do the math or begin planning a trip. When I went to LA last week, it was really last minute. I used points to buy an airline ticket that was ridiculously overpriced. I love that I don’t have any blackout dates to worry about with reward redemptions.

Applying for a Credit Card

So you’ve done your homework, know what type of awards you are looking for and are ready to apply for a credit card. Great! Just a few more points for you to consider here. 

  1. Don’t apply for too many cards at once as some companies will automatically decline your application and you are blocked out.
  2. Make sure you can meet the minimum spending requirement. You want to be able to use your rewards
  3. Allow enough time for your card to arrive. If you are going on vacation, don’t apply the week before. It may take 5-7 business days to receive it.
  4. If you’ve never had a credit card or have had a short credit history, don’t apply for the fancy cards with a $10000 credit limit. 
  5. Allow enough time for the awards to make it into your account. Sometimes it takes 2 billing cycles after you hit the spending requirement.
  6. If you travel internationally, consider a card with no foreign transaction fees! It makes a big difference to not be charged 3% everytime you buy something.

Closing Thoughts

The credit card game isn’t for everyone and that’s ok! The thought process is that if you are spending money anyone, you might as well be rewarded for it. These thoughts here are just my own musings on how to help fund my own travels and adventures. I’m new to the game myself and am always learning as a novice traveler. Hope this helps you! Drop me a line if you have any questions. Until next time, happy travels!