Credit card ownership comes with plenty of incredible perks and benefits. Users who select the proper credit card and then utilize it to maximum advantage can obtain rewards to save and exchange for free travel.
If you save up enough of these rewards, you might be able to enjoy a completely free trip. But even if you are not able to travel without paying a dime, you can certainly travel at deep discounts with credit card rewards.
Obtaining Credit Cards for Travel Rewards
In most cases, card ownership for higher-reward offerings is geared towards those with stellar credit scores. If your credit is less-than-impressive, you should focus on improving your credit by eliminating past-due account balances and building up positive payment histories and credit utilization in a lower range.
Two main types of travel reward cards exist:
- General-purpose cards: these usually pay rewards on all general purchases, and sometimes also offer higher rewards for certain categories (e.g. restaurants or travel-related purchases).
- Brand-focused cards: these pay higher rewards on purchases with specific airlines, hotels, rental cars, and the like.
Have you been loyal to certain hotel brands or airlines? If so, you might want to give a branded card a try. Conversely, if you make plenty of travel purchases but spread them out across many different brands, general-purpose cards are a far better solution.
But do you need to stick with just one card?
Absolutely not. Having multiple travel rewards cards (provided your credit score allows it and you pay them all on time) allows owners the option to multiply their reward potential. For example, a user might have one credit card that will pay higher rewards for fuel purchases, so they use that at the gas station. And they might have a different card paying higher rewards for purchases through Marriott hotel properties, so they use that to book a stay.
Additionally, you don’t need to be stuck with specific travel-focused credit cards to obtain rewards that can be exchanged for travel. You could also apply for general cash-back credit cards and use them to help pay for your travel expenses. However, there are two things to pay attention to here:
- Ensure that no caps exist on the amount of cash back that can be earned on the card.
- Select a card that pays greater cash back amounts in areas where you experience more regular spending than areas you do not.
Choose a credit card without any cap on the potential earnings. Also, make sure that there is not a short period for points expiration. Look for additional perks such as:
- Zero fees for foreign transactions (great for international travel)
- Free companion tickets at certain times or after reaching specific goals
- Checked bag fees that are waived
- Bonus reward options when booking with particular travel partners
Avoiding Fees and Other Tips and Tricks
Some of the best travel rewards credit cards come with an annual fee. However, many travel cards will waive this fee for the first year of membership. However, there are very few cards that will waive the annual fee a second time.
If you meet the minimum spend to earn a free flight or hotel reward, you likely will not even notice that the annual fee has come and gone. However, you can usually set up automatic payments to ensure that it is paid off immediately, to avoid paying interest on the charge.
Here are seven solid tips from credit-card-“churning” and travel-reward-collecting aficionados. These tips and tricks will ensure that you maximize your rewards potential.
Use your travel reward cards as often as possible, especially when chasing minimum spend bonuses
To obtain free flights, hotels, and more, you will need to earn enough reward points to make redemptions. The more a credit card is used, the more rewards you’ll collect. Knowing the details of a rewards program front to back will help you determine the strongest and most effective methods for maximizing rewards.
An example of this is a travel card that pays more rewards for gasoline purchases. If you have multiple travel cards to choose from, and one offers 5% cash back on fuel, and the other offers 2% on general purchases, then 5% cash-back option will be the obvious most effective choice at the gas station.
Ensure that you pay balances in full every month
One of the most crucial rules to keep abreast of when utilizing reward credit cards is to pay off your balance in full every month. Doing so will create a waterfall effect of benefits:
- Paying your balance in full helps you maintain excellent credit
- Maintaining excellent credit ensures that you are eligible for better rewards cards in the future
- Better future rewards cards mean stronger chances for points redemption
And the cycle continues. There’s another good reason to pay off your balance in full monthly, though. Those who carry balances on their credit cards beyond a certain grace period, or fail to pay their entire statement balance each month, will need to pay interest charges. These charges will usually negate any received rewards on a credit card. To utilize the card with no charge, it is important to avoid incurring interest. This is simply accomplished by always paying your statement balances by the due date each month!
Avoid balance transfer and cash advance transactions
Balance transfers and cash advances will almost always come with a fee. Even if you utilize a rewards card with a zero percent promo rate on balance transfers, the fee can be upwards of several hundred dollars, dependent on the amount transferred from other cards.
But fees are not the only reason to avoid cash advances and balance transfers. These transactions will not earn any points or rewards with most travel cards. Additionally, they take up valuable credit utilization. This leaves owners with far less available credit for those purchases that do provide reward potential.
Take advantage of sign-up bonuses
Many travel rewards cards offer incredibly lucrative bonuses after you sign up. Some of these bonuses, such as those for the Delta American Express card, can be enough to earn a free first class round-trip flight right off the bat.
To earn these signup bonuses, users will likely need to spend a certain amount of money on their card in a set period after an account is open. Most cards have a time frame of 30, 90, or 180 days.
Some credit cards allow users to earn additional bonuses if they add an authorized user to their account. This user will get their own card, connected to your account, and make purchases to assist you in earning bonuses and rewards. Just ensure that you can handle paying off the purchases made by authorized users on the card, or that they’re willing to pay you back for their purchases.
Select a credit card with simple-to-earn sign-up bonuses. Minimum thresholds for spending should be low enough to not tax you far beyond your standard spending means. Also, attempt to reach the threshold as early as you can. With most credit cards, it takes one month to six weeks for bonuses to be credited.
If the bonus period is the first 90 days and you take your time getting to it, that could mean almost five months before the bonus hits your account.
Join airline and hotel loyalty programs
Credit cards pay for rewards made on purchase. Many airlines and hotels have loyalty programs to pay rewards for flights and hotel stays. These programs are free for signup. Ensure you use a loyalty rewards number when booking, and then compound rewards by using the branded credit card.
Stick with the same airline and hotel brands as much as possible. The goal of these loyalty programs is to reward users for frequent use. The more the same brand is utilized, the more points that can be earned. Additionally, users increase status levels, providing additional bonuses and perks on hotel stays and flights.
Point transferring from program to program
Once a user has accumulated points throughout various programs, they are eligible to potentially combine them into one program, redeeming for a trip or flight. Before you make a transfer, it is important to check out the rules, to learn how transfers of points work, and what volume of points may be lost in the transfer process.
In a perfect world, points should be transferred on a one-to-one ratio. This way, the user keeps all their points they have worked to earn and accumulate.
Don’t wait before redeeming rewards
Depending on the chosen credit card, rewards can be used to book travel either through the online tool for the card or statement credits. If you book through an online tool, the points will automatically be used immediately.
If you select the statement credit option, first book your travel with the card as usual. Once you’ve booked travel with a card, redeem your rewards immediately. The amount you’ve earned in rewards will be applied to your credit card balance, effectively “erasing” your travel charges. If you wait to redeem them, you might need to pay a minimum payment to maintain “good standing” with an account while you wait for statement credits to post to an account.
Cards to Start With
Chase credit cards are considered some of the best for people who pursue credit card rewards as a hobby. If you plan on applying for many cards, it’s a good idea to start with Chase, because of their “5/24” rule. (In short, if you open more than 5 credit cards within 24 months and then apply for a Chase card, you’ll be denied.) By starting with Chase cards before you exceed 5/24, you can qualify for the best deals!
With that in mind, here are three Chase cards you can apply for to start.
Beginner card: Chase Freedom Unlimited
- The Chase Freedom Unlimited is an excellent card to start with. There is no annual fee, and the card offers a $150 sign-up bonus once you spend $500 in the first 3 months you have the card. You’ll also earn 1.5x Ultimate Rewards points on every purchase. Points can be redeemed for cash back or travel through the Chase booking portal. Apply for the Chase Freedom Unlimited here.
Medium-tier card: Chase Sapphire Preferred
- The Chase Sapphire Preferred is a next level up. It has a $95 annual fee, which is waived the first year. You’ll earn 2x Ultimate Rewards points on travel and dining, and 1x on all other purchases. However, you should wait to apply for this card until you have at least $4,000 in expenses coming in the next few months, as that’s what you’ll need to spend to qualify for the 50,000-point introductory bonus (worth $625 in travel). Apply for the Chase Sapphire Preferred here.
Advanced card: Chase Sapphire Reserve
- Lastly, the Chase Sapphire Reserve (or “CSR” as it’s often called), is a good card for people who have well-established credit, spend a lot on cards each year, and travel frequently. The card has a high annual fee of $450, which is offset by a $300 travel credit, 3x points on travel and dining, and many other perks and rewards like lounge access and a reimbursed Global Entry application fee. You also get 50,000 Ultimate Rewards points after signing up and spending $4,000 in the first 3 months, as long as you haven’t earned a different Sapphire card bonus for 48 months. Apply for the Chase Sapphire Reserve here.
Travel reward cards are the strongest and fastest way for those with standard credit utilization to earn free travel. As the cost for hotels and flights climbs, the demand for potential free travel climbs as well. By using the tips and tricks we have mentioned, you will be well on your way to hopping on a plane for a free first-class international vacation.
Looking for similar articles? Here are a few to expand upon the things touched on today:
- 8 Ways to Score Cheap Flights: a Travel Tutorial
- Using Credit Cards to Earn Money and Travel for Free (Without Debt!)