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📂 Category: Credit Cards,Personal Finance
📌 Here’s what you’ll learn:
Key takeaways
- If you’re shopping for a new travel rewards card, compare any sign-up bonuses they offer and what you’ll need to do to earn them.
- Some cards have special reward categories that reward certain types of spending at a higher rate, while others pay a higher fixed reward on all categories.
- Plan to put your purchases on whichever card offers the best reward for that specific transaction.
- When it’s time to redeem rewards, try to use them in a way that gives you the most value for your points or miles.
- Your rewards will often go further if you use them on flights and hotels instead of gift cards or merchandise.
Traveling can be difficult, but using the right credit card (or cards) will at least make it more rewarding. With so many travel rewards cards on the market and new ones popping up all the time, consumers are faced with a dizzying array of choices. Here’s how to play your cards right and maximize your travel rewards.
Grab your sign-up bonus strategically
Many issuers offer bonuses upon registration to attract new customers. Some cards deliver their rewards in cash, while others pay with points or miles. If you’re shopping for a new credit card with a good sign-up bonus, you’ll need to pay close attention to how much you have to spend — and in what time frame — in order to get it.
Travel cards with sign-up rewards typically require you to spend a certain minimum dollar amount on the card within a limited period of time, such as three to six months. For example, the Delta SkyMiles Blue American Express card recently offered 10,000 bonus miles if the cardholder makes $1,000 in qualifying purchases within six months.
If you don’t normally spend that kind of money that quickly, it’s not worth overspending just to get a reward, especially if you expect to run a balance rather than pay off your card in full each month. (Many of these cards have interest rates exceeding 20%). But if you have a big purchase or two coming up, applying for the card ahead of time may make sense. Just make sure you don’t miss the spending deadline, so you don’t miss it.
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Also, take note of any annual fees. Some cards have fees that reach hundreds of dollars.
Use the right card for the right purchase
Many cards reward spending in certain categories, such as travel, dining, gasoline or groceries, at a higher rate. In some cases, these categories can change periodically.
For example, the Chase Sapphire Preferred Visa card was recently offering 5x points per dollar on most travel purchases through Chase Travel, 2x points on other travel expenses, 3x points on dining and some food delivery services, and 1x points on everything else that qualifies.
Other cards offer points at a fixed rate, regardless of what you buy, often exceeding one point per dollar. For example, the Bank of America Travel Rewards Visa card recently offered 1.5x points on all purchases.
For many consumers, it makes sense to carry at least one card of each type and to use the card that offers the most points on any given purchase.
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Credit card issuers often reserve “the right to change their rewards program at any time, for any reason, and in many cases without notice,” according to the Consumer Financial Protection Bureau.
Redeem points or miles for maximum value
The value of points can vary from one rewards program to another. Even within the same software, they will likely vary depending on how and where they are used.
Travel portals
Many card issuers have online portals, much like travel agencies, that offer incentives for cardholders to book their trips through them. For example, Chase Ultimate Rewards points are generally worth 1 cent each. But by booking through the Chase travel portal, cardholders can get 1.25x or 1.5x the value of their points, depending on the specific card.
Transfer partners
While some travel credit cards restrict you to a specific airline or hotel chain (or that brand plus a limited number of partners) in using your points, others allow their points to be transferred into the rewards programs of many different travel providers, usually on a 1:1 basis. This can give you extra flexibility when you want to book your travel on points.
For example, Capital One, which offers several travel credit cards with different rewards and fees, lists 15 airlines and three hotel transportation partners on its website.
Avoid low value refunds
Travel rewards points tend to be more valuable when redeemed for actual travel and less valuable when used for things like gift cards, magazine subscriptions, and merchandise. For example, American Express Membership Rewards points are worth 1 cent each when booking flights through Amex Travel, but vary from about 0.7 cent to 1 cent when used for a gift card. You can also use it to pay your American Express credit card bill, but in this case, it’s only 0.6 cents.
advice
Not all points or miles are worth the same amount of money. You can find estimates of their value online at the websites of some issuers and many independent sites.
Take advantage of cardholder privileges
Credit card issuers like to advertise the long list of perks that come with their cards. There are often conditions, and any perk, no matter how generous it may seem, will have no value to you if you never use it.
Some of the most useful things to consider when comparing card offers are:
Some of these benefits can provide real value before you even start redeeming your points. For example, foreign transaction fees can add between 1% and 3% to every purchase you make while traveling abroad, so the card you waive could save you a significant amount of money, especially if it has a low or no annual fee.
Get organized with your rewards
One secret to maximizing your rewards is simply tracking them. You can create a spreadsheet for this purpose or use any of the many free applications available now. In particular, make a note of their expiration dates so that you do not lose any points you have accumulated.
Also keep an eye out for special offers from your card issuer, which may allow you to extend your rewards when you redeem them. Some issuers will let you combine points from multiple credit cards if you have multiple accounts with them, such as a personal card and a business card. Chase allows cardholders to combine points with another family member.
What is the best way to earn points faster?
Put as much of your spending as possible on this credit card (of course, make sure you pay your bill in full each month). Take advantage of any bonus offers that make sense to you. If you have multiple cards, pay close attention to which cards offer the biggest rewards in a particular spending category and use your cards accordingly.
Is it better to use the points through the travel portal or transfer them?
As a general rule, going through your card’s rewards program’s travel portal will be more convenient, while transferring points to another program will give you a wider choice of travel providers and may provide more value per point. However, keep in mind that once you transfer points, you will not be able to transfer them back to your original program, so you should be completely sure of your travel plans before acting.
How do I keep my travel points from expiring?
First, keep an eye on the expiration dates of your points (this is a good argument for not loading too many different cards). Then find out what you should do to prevent it from expiring. This usually means earning or redeeming some points before the expiration date. Even if you’re not planning any trips by then, you can often earn some points by making a small purchase through their online shopping portal. For example, American Airlines’ AAdvantage shopping portal offers miles for purchases at more than 1,200 different stores.
Also note that points for some programs never expire in most circumstances. This includes Delta SkyMiles, JetBlue TrueBlue points, United MileagePlus miles, and more.
Bottom line
Maximizing your travel rewards is a matter of choosing the right card or cards, knowing which card offers the best rewards in a given spending category, and putting the right fees on the right card — while not going crazy and overspending just to earn rewards. Also pay attention to expiration dates (if applicable), so your hard-earned points don’t disappear before you get a chance to enjoy them.
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