It’s every would-be jetsetter’s fantasy to score an unbelievable deal on their dream vacation, but even if you do find a bargain tour operator or an all-inclusive resort calling your name, the airfare obstacle can seem insurmountable. Between the constant flux of fuel prices and the lack of bargain carriers serving the U.S., most Americans write off the high cost of plane tickets as a necessary evil.
Whatever your destination, there’s no need to shell out an arm and a leg just to get there. Though the field may be intimidating to the first-time travel hacker, travel rewards cards will save your hard-earned cash and win you extra perks.
Many credit companies tie their cards to airlines’ frequent flier programs, allowing you to reap the benefits of a constant globetrotter from the comfort of home. Most cards offer large sign-up bonuses, of 20,000 to 40,000 miles or points, as well as 1 mile per dollar spent, which you can then redeem with the affiliate airline. Two of the most popular programs on the market are Citibank’s AAdvantage Platinum Select MasterCard, which is connected to American Airlines, and Chase’s United MileagePlus Explorer Card, which is connected to United Airlines.
Smart travelers have been using these credit cards to maximize their budgets and earn incredible perks for years. In just a few months, you could even cash in a free flight to Europe!
Using Your Card Responsibly
A critical rule of thumb for all travel rewards cards is to keep a very close eye on your spending and pay off the balance of the card in full each month. Without taking these important precautions, you do run the risk of putting yourself in stormy financial weather. But, with a little extra vigilance, you can easily manage your card and rack up rewards. That frequent responsible credit use could even boost your credit score.
Naturally, these programs do come with a catch or two. Those tempting sign-up bonuses only become available to card users after they hit a minimum spending limit, but fortunately, such spending limits are typically quite reasonable. You can probably spend $1000 over the first three months of card ownership – the most common minimum spending limit – by using your new card for all your groceries or fill-ups at the gas station.
If you treat your credit card as your debit card and pay off each simple everyday purchase as you make it, you can rack up points at warp speed and be on the road in no time!
Selecting the Right Card for You
The greater limitation of an airline rewards card is that it will be tied to only one airline’s frequent flier program. For example, miles earned on a Citi AAdvantage card can only be redeemed with American Airlines, not on a flight with United Airlines, while the reverse is true of miles earned on the Chase United Explorer card.
If you have a preferred airline whose loyalty program you want to participate in, this can still be extremely useful. Many major US carriers are also part of airline alliances and can therefore offer you rewards on partner airlines. For instance, American Airlines and British Airways are both part of the oneworld Alliance, so your Citi AAdvantage card can earn you benefits on both airlines, affording you a few more options in redeeming your rewards.
For the greatest flexibility in your travel savings, however, you should look into a credit card that will allow you to use your points or miles to reimburse yourself for travel purchases. Some of the best options include the BankAmericard Travel Rewards Credit Card, the Capital One Venture Rewards Credit Card, and the Barclaycard Arrival Plus World Elite MasterCard. Not only do these programs help you save on any kind of travel purchase, including tickets for any airline and stays at any hotel, but they frequently also allow users to earn more miles per dollar spent. Where most airline rewards cards offer a simple 1:1 ratio of miles earned per dollar spent, all three of these general travel rewards cards, and many other cards like them, offer 1.5 or even 2 miles for every dollar spent.
When choosing a travel rewards card, first consider what kind of rewards you’d like to earn. If you have a strong preference for one airline, join their frequent flier program with a branded credit card, like Citi AAdvantage, Chase United Explorer, the British Airways Visa Signature Card, or the Southwest Airlines Rapid Rewards Premier Credit Card.
If you’d like to keep your ticket purchasing options open, opt for a general travel rewards card, like BankAmericard, Capital One Venture, Barclaycard Arrival, or DiscoverIt.
Say you’re less concerned about airfare than you are your hotel stay. Choose the Starwood Preferred Guest Credit Card from American Express, which works just like most airline rewards cards, but is connected to the Starwood line of hotels, which includes Westin, Sheraton, and seven other distinct brands. You can also opt to transfer your Starwood points to an airline, if you’d like, so this AmEx card is a popular choice for business travelers who need both airfare and hotel rewards.
While this article and others like it may be a good starting off point for finding brands, it is crucial that you conduct your own research on the particulars of each card. Many factors, especially sign-up bonuses and spending limits, can change at a moment’s notice, so invest a little time and energy to consult multiple resources and get the most important pieces of information firsthand, to ensure you pick the best card for you.
Digging into Card Perks
Once you’ve narrowed the field to a handful of potential cards, read the fine print very carefully. Make sure the card you invest in has all the benefits you want and none of the drawbacks you don’t. Always keep your goal in mind and ensure the card you acquire will help you achieve it.
A large sign-up bonus is good, but double check that it doesn’t come with a spending minimum that’s too steep for your budget. You should never let possession of a credit card drive your spending habits – the beauty of a travel rewards card is that it should reward you for spending you would undertake anyway. Try to find an optimal balance between a high sign-up bonus and a low minimum-spending limit.
Miles Earned to Dollars Spent
Next, look at the ratio of miles earned to dollars spent. A 1:1 ratio is common and certainly doesn’t mean that card is worthless, but a 1.5:1 or even 2:1 ratio is better and will help you earn miles and rewards faster. If you have a particular timetable in mind, opt for a higher miles earned to dollars spent ratio so you can get on the road in the blink of an eye.
Foreign Transaction Fees
Another very important piece of the puzzle to consider: foreign transaction fees. If you’re a frequent domestic traveler, having an extra 3% tacked onto an overseas bill may not irk you, but if you’re planning to go abroad, make sure the credit card you choose has no foreign transaction fees attached.
The vast majority of travel rewards cards will waive the annual fee for the first year of card membership, but you should still review that number before signing up to ensure you can afford the extra cost in future years. If you love the card, you may decide that $95 a year is worth your while.
If you consider the annual fee to be prohibitive, however, take your current credit score into account. With a good score, you can choose to earn your sign-up bonus and cancel the card within the first 12 months, before you incur the annual fee. If your credit score has seen better days, however, don’t risk getting a blemish on your record – opt for a card with a lower annual fee.
This same logic should apply to considering your credit history. “Churning and burning,” or opening and closing several credit cards in a short period of time, can put a dent in your credit rating, so keep a careful eye on the timing of your new credit applications and space them out appropriately.
Don’t gloss over the extra perks. If you’re signing up for a branded airline rewards card, like Citi AAdvantage or Chase United Explorer, you’ll also get many of the benefits awarded to those airlines’ frequent fliers, like a free checked bag, priority boarding, discounts on in-flight food and beverage purchases, and more. It’s these additional perks that make signing up for a branded airline rewards card, as opposed to a general travel rewards card, so worthwhile.
Finally, the best card will reward you for redeeming your rewards. Citi AAdvantage and Barclaycard Arrival both give travelers 10% of their miles back when they redeem, so you don’t have to start saving from scratch all over again. For example, if you redeem your 30,000 mile sign-up bonus on American Airlines, you’ll get 3,000 points returned to you for the next milestone.
Juggling Multiple Cards
If you have very good credit and trust your own fiscal responsibility, you can take even greater advantage of this system by signing up for multiple cards at once. One particularly good combination is to sign up for a Citi AAdvantage card, a Chase United Explorer card, and the Barclaycard Arrival MasterCard. This system will help you maximize your available rewards by earning you large sign-up bonuses, which can then be redeemed with both American Airlines – or its partners in the oneworld alliance – and United Airlines – or its partners in the Star Alliance. Star and oneworld don’t overlap at all, so you’ll have the greatest possible cross section of available airline rewards.
By also signing up for Barclaycard Arrival MasterCard, you’ll have a bevy of other general travel rewards points, which can be used on any airline, hotel, tour operator, or other travel purchase. The sign-up bonuses alone from these three cards will earn you 100,000 miles. With that kind of frequent flier balance, you could even consider leaving the corporate grind for a year and traveling full-time on a career break – the kind of travel most Americans don’t get to see until retirement.
Another good combination to consider is getting one branded airline card for domestic use, to earn you frequent flier miles, and a different card that has no foreign transaction fees, to be used exclusively overseas.
Be warned, though. Juggling multiple credit cards is not for the faint of heart, and this level of travel hacking is to be undertaken with extreme caution.
If you have multiple credit cards, use an Excel or Google spreadsheet to keep track of each card’s benefits and requirements. Include the date you signed up for the card, the amount you need to spend to receive the sign-up bonus, the deadline for that spending minimum, and how many miles you’ll receive. You should also have fields showing the card’s annual fee, to ensure you can afford the cumulative sum of those card fees, and it may even be helpful for you to list other perks like how many miles you earn per dollar spent, whether you get a percentage of your redeemed miles back, or if there are foreign transaction fees charged. This will become a very important reference document for you in your first months of card ownership.
Redeeming Your Miles
When it’s time to cash in your miles for that coveted free flight, call the airline instead of relying upon their online interface. While you can certainly book an awards flight with the airline’s official online booking engine, their agents are trained to help you find extra special deals. Trust their employees to navigate the ins and outs of booking you the best possible flight and get on the phone. You will in all likelihood find their customer service is helpful and friendly and can score you an unbelievable bargain that gets you the biggest bang for your miles’ buck.
With these basics of travel rewards cards under your belt, you could be on a free flight in less than 6 months! Get planning.