Travel Reward Credit Card’s

Airfare and lodging are almost always the two largest expenses when traveling and can often force you take a shorter trip then you would like or abandon your travel dreams altogether.  It doesn’t have to be through.  Airfare and hotel stays have the biggest opportunities for the savvy travelers to reduce or nearly eliminate the expense altogether.  The easiest way to do that is take advantage of loyalty programs.

You may wonder “Hey loyalty programs are for frequent travelers only.”  Not true.  In fact, the majority of reward points are no longer accumulated through past purchases with that company.  The best way to accrue rewards points is through normal everyday purchases using credit cards.

However, not all credit cards are created equal.  Some points are more valuable than others.  Each company sets their own value to redeem points.  It may cost you 5,000 points to redeem one free night at a Starwood Hotel Property that is equivalent to $100.  At a Hilton property it may cost you 10,000 points for that same equivalent.  Also keep in mind that some credit cards have annual fees, some do not.  Some have bonus categories and some do not.  Some reward programs are more flexible than others.  The goal is to create the best ROI (return on investment.) You want to spend the least amount of money on fees to get the maximum number of reward points.  You also want to be able to be as flexible as possible with those rewards so you can move them around to where you need them to redeem for the travel you want. 

A word of warning before we begin.  In order to take advantage of these reward programs you need to have good credit.  If your credit score is not above 700, work on getting it above this threshold or you will be denied many of the best cards. Now, let’s get started on lowering your travel costs by explaining how to get travel rewards through credit cards.     

How To Earn Credit Card Reward Points

 

There are two ways to earn reward points through credit cards.  Purchasing and through bonuses.  The first is obvious.  You earn reward points through every purchase you make.  As a baseline you earn one point per dollar spent.  Many credit cards will place certain category’s with a bonus. For instance, gas will earn you two points per dollar or dining will earn you three points.

The second way is through bonus offers.  To entice new customers, credit card companies will offer a one time sign up bonus.  Think of those pro athletes that get a signing bonus for a new contract.  It’s the same type of deal.  Once you sign up and meet a minimum spend requirement, you will receive a large chunk of reward points.  In some cases you can receive upwards of 50,000 or more rewards points.  When the Chase Sapphire Reserve card was first released, they were offering 100,000 bonus points as a sign up bonus.  What does that equate to?  Well a round trip coach ticket to Europe is 60,000 points.  As you can see through a sign up bonus alone you can earn huge chunks of points.

How Does a Sign Up Bonus Work?

When you see an offer you like use the link to fill out the application.  Assuming you are approved, you get a new card within a week or so.  The clock begins ticking the day you sign up.  Let’s say you signed up for a card and will receive 50,000 reward points after you spend $3,000 in three months.  From the day you signed up you have 90 days to spend $3,000 dollars on that card.  Balance transfers do not count.  They have to be new purchases.  Once you meet the minimum spend requirement, the reward points are deposited into your account.  If you do not meet the minimum spend requirement you forfeit the bonus.

Ways To Meet Minimum Spend Requirements

The goal is to obviously meet the minimum spend requirement through the normal course of everyday spending.  Sometimes the minimum spend requirements can be quite high.  Here are some ways to help meet those minimum spend requirements.

  • Make all new purchases using this one card.
  • Transfer monthly auto pay bills to the new card, such as phone and utilities.
  • Instead of making monthly payments on certain expenses such as car insurance, pay in bulk every six months.  You often lower your monthly rate by paying it once every six months.
  • Buy gift cards you will use eventually anyway such as Amazon and keep them until after you hit your minimum spend.
  • Hold off on large purchases until you have a new card to use. if possible, group together several expenses in a a smaller window. 

Binge and Purge Spending

Highlighting the last two points about grouping together larger expenses may not always be possible, but is a good strategy for those having trouble meeting a minimum spend requirement.  With some of the premium credit cards you will have a minimum spend requirement of $5,000 in three months.  That can be difficult to reach for many, but with a little planning it is possible. 

You may feel it is time to buy some new furniture for you living room.  It’s not a necessity, but the time is right.  If you hold off until you have a new credit card you can use it to meet the minimum spend requirement for purchasing something you were going to do anyway.

The other way is to group together several expenses into a small time frame.  Pay your car insurance off once every six months.  Perhaps you can arrange to have that car insurance payment due within the same time frame as your car registration, or some other yearly payment like taxes. 

After setting up some pre-planned binge spending, what do you do when not trying to meet a minimum spend requirement?  You reduce your spending to necessities only.  If your car insurance was $100 a month and you went to a once every six month spending program, remember to save that $100 a month for five months, knowing you will have a $600 payment coming up.  The key to binge and purge spending is learning to control spending.  There are many app’s out there like Mint, that will track your spending and help you stay on budget so that your bank account can handle a sudden binge of pre-planned spending.    

Shopping Portals

One way to rack up points fast is doing your online shopping through shopping portals.  Many of the credit cards you own have a shopping portion of their website.  You may get some email offers from time to time as well, encouraging you to shop through them.  They are easy to use and can grow point totals quickly.

Chase Ultimate Rewards Shopping Portal

Before making an online purchase log into the website of your various credit cards and look for a shopping section.  Chase’s portal for example is under earn points.  You will see a list of online stores.  If you see a way to get the product you want through the online store, click on the store and you will be directed to the companies website where you will complete the sale as normal.  As a reward for going through the portal you will earn bonus points.  For example, make an extra 8 points per dollar spent through the Nike store, simply for going through the portal.  The is on top of your normal credit card accrual.

Choosing The Right Credit Cards

Deciding which cards to prioritize can be daunting with so many to choose from.  The first thing is to figure out where you want to go.  Research the destination and find out which airlines fly to your destination and which hotel chains have locations there.  You will likely find that most of the big airlines or one of their partner airlines will fly there which is a plus.  If you don’t have a specific destination in mind or the answer is “everywhere” you can focus on credit cards with maximum flexibility. 

How Many Cards Should You Get?

The question become with so many credit cards to choose from and knowing that you you will get you biggest chunks of points through sing up bonuses, how many cards should you get?

The answer is as many as possible for your situation.  It is important that you should not apply for any credit card that you cannot hit the minimum spend requirement.  If you can only do one card at a time, then that is all you can do.  If you can afford two at a time, then you should do that.  The key is not not change your long term spending habits above from possibly taking a binge and purge approach.  Do not buy more than you normally would.  Outside of that, feel free to open as many cards as possible to accumulate as many rewards as possible. 

If anything having more lines of credit open will only improve your credit score.  Rarely will having a ton of credit cards open hurt you, unless you are not paying them off.  The only time you should be closing card accounts is to avoid an annual fee.  No annual fee cards should tay open even if you don’t use them.  Showing you are responsible with multiple lines of credit can only help you.

Chase 5/24

You may or may not have heard of the Chase 5/24 rule.  As we will detail below Chase cards will be your most valuable, but also have some strings attached.  They have tried to curb the use of people who are only opening cards for the sign up bonus and then move onto the next.  Obviously they want you to continue to use their cards. 

The result is they will deny new applicants who have opened at least 5 credit cards in the last 24 months.  This includes any branded credit card, not just Chase cards.  For people who are constantly opening up new cards, this means they may not be able to get many Chase branded cards.  Whether you are a beginner or expert always keep track of how many credit cards you have opened on a spreadsheet so you can calculate when you can look at getting another Chase card.  This also gives an advantage to those who open up multiple cards at the same time.  It makes it easier to dip under the 5/24 rule the way if you cluster together all your sign ups.

Can you still get approved if you have gone over the 5/24?  There have been some success stories.  Sometimes the system simply fails to recognize all the cards you have opened during the credit check.  You may also plead your case to chase over the phone or better yet in a Chase branch.  They are more likely to approve an exception if you bank with Chase. 

The other option is to open business credit cards.  The credit check looks at your personal credit cards and any Chase business cards you have opened under your name.  It will not look at business cards opened under other brands other than Chase.

Personal Cards vs Business Cards

Many of the more desirable credit cards have a personal credit card and a business credit card version.  You can double up the sign up bonus by getting both the personal and business cards.  This is in addition to taking advantage of the 5/24 loophole and concentrating on business cards to stay under 5/24.

What if you don’t have a business?  With today’s sharing economy it is getting easier than ever to claim you have a business.  You qualify as having your own business if you have ever sold anything on eBay or Etsy.  If you have ever rented out your house or ran a dog walking service if you have run your own business.  Being able to apply for a business card opens up a whole line of credit cards and many of them are among lucrative to have.  When applying for a business card use your social security number as the Employer ID number (EIN) and the income is your total income from all forms including your regular job.    

Types and Ranking of Travel Reward Credit Cards

There are many different types of travel reward cards.  Some credit card points are tied to the bank themselves.  Other’s have partnered with either an airline or hotel chain.  If the reward program is held by a financial institution your points can either be transferred to a airline or hotel loyalty program or the credit used through a statement credit.  Airline and hotel branded card points will dump the reward points directly into their specific reward program.  Below is an overview of the types of credit card programs you can be a part of.

Flexible Reward Programs

  • Chase Ultimate Rewards – Chase Ultimate Rewards are the gold standard for travel rewards.  First, their cards offer some of the biggest sign up bonuses.  They have some of the best perks.  They have a high cent per mile rate.  Most important they are the most flexible rewards you will find.  While most programs will only allow them to be used within a loyalty program or a statement credit, Chase points can be used either way.  You may make a purchase through the Chase Ultimate Rewards portal site using reward points at a rate of 1.5 cents per mile. You can transfer the points to the loyalty program of some of the heavy hitters including Star Alliance airlines like United as well as Southwest Airlines, or use them on hotels through Hyatt, IHG, or Marriott.
  • Starwood Preferred Guest – Starwood owns some of the top tier hotel brands such as Ritz-Carlton, St. Regis, the W, and Westin.  A recent merger with Marriott brings all of their properties into the fold as well.  They also fit into the flexible reward program mold with some extremely valuable transfer partners such as American Airlines, Alaska, Delta, Japan Air, Singapore, United and many more.    
  • American Express – American Express Membership Reward points can be transferred to several popular airlines such as ANA, Delta, Hawaiian, Singapore, and Jet Blue.  Hotel transfer partners include Starwood, Hilton, and Choice Privileges.   

Airlines

  • United – United Airlines does not have the best reputation and for the most part it is deserved.  However United is part of the wide ranging Star Alliance.  You can use United miles on great airlines like Lufthansa, Singapore, ASA and Air Canada.  The fact is United and its partner airlines fly just about anywhere you will want to go and have some of the most desirable time slots.
  • American Airlines – American Airlines is part of the large One World alliance and you can use AA miles on flights with British Airways, Carthay Pacific, Japan Airlines, Qatar airlines, and many more.  The biggest drawback to using AA miles is they have less award availability than other airlines. 
  • Delta – Delta is part of the Sky Team alliance.  They do not have the reach that Star and One World have, but if you are near a Delta hub like Atlanta, they can be your best bet.
  • Southwest – Southwest is the gold standard of low cost airlines.  They provide a great product at a great price.  They also have perks that many budget airlines or few legacy carriers have like 2 free checked bags.  For couples, Southwest can be a great value with the companion pass.  It can difficult to get with having to acquire 110,000 points to qualify.  Once you do, a designated companion can fly with you for only the cost of taxes and fees.  Better yet, once you qualify you receive the benefit for the rest of the current year, plus the entirety of the next year.  Play your cards right and you can get nearly two years of the benefit.
  • Jet Blue – Jet Blue is a quality experience at a good price.  They have a quality customer service experience, an ever expanding route lineup, and their newly introduced business class Mint is very nice.  The con’s are the limited partners and few credit card options.  One plus is that you can transfer American Express Membership Reward points to Jet Blue.  For those looking to fly Jet Blue take a look at their branded cards or American Express.   

Hotels

  • Starwood –Starwood owns some of the top tier hotel brands such as Ritz-Carlton, St. Regis, the W, and Westin.  A recent merger with Marriott brings all of their properties into the fold as well.  They also fit into the flexible reward program mold with some extremely valuable transfer partners such as American Airlines, Alaska, Delta, Japan Air, Singapore, United and many more. 
  • IHG – InterContinental Hotel Group has a large collection of popular hotel chains under their umbrella including Holiday Inn and Crowne Plaza. 
  • Hilton – Hilton has one of the largest collections of hotel brands out there including Conrad, Double Tree, Hampton, and of course the Hilton brands.  Their reward program is a bit devalued compared to other brands, but it is always a good idea to load up on Hilton points with a Hilton brand hotel being available almost everywhere you travel. 
  • Hyatt – Hyatt is another well known brand with hotels located all over the world.  World of Hyatt points are another great thing to have in hand.

Redeeming 

There are two types of redemption methods for travel reward credit cards.  There are pro’s and con’s to both.

Statement Credit Redemptions

Statement credits are as the name implies a credit issued to your credit card statement once redeemed.  You make a purchase using the credit card and then apply reward points to the purchase and are credited on your credit card account.  You must make a purchase in a certain category to qualify for a statement credit.  For example a travel rewards credit card will require you make a purchase on the credit card that is coded as a travel purchase.

For example if 10,000 points equals $100 in a travel reward program and you book a $200 flight on this credit card, you can apply the 10,000 points towards the purchase and receive $100 off the $200 flight.

Pro’s

– Easy to use and easy to redeem.  Everything can be done online very quickly and the only thing you have to do is make sure your purchase is coded as the appropriate category to receive credit.

– No blackout dates

– Many statement credit programs are low to no annual fee credit cards. 

Con’s

– Statement credit reward programs are not as valuable as transferring them to frequent flyer programs.  Typically they work out to no more than one cent per mile.  With frequent flyer programs you can see a return at two cents or more per mile.

Loyalty Program Redemptions

The other type of credit card redemption program allows you to use the loyalty programs of the companies you are using.  There are two types of way to use loyalty programs.  You may use company branded cards such as using using a United branded card to accrue United points.  You may also use other branded cards and transfer them into the loyalty program.  In this example you would be using a Chase branded credit card and them transferring the points into United’s loyalty program.

Pro’s

  • You see a higher rate of return.  The cent’s per mile is higher using loyalty programs in most cases.  This is especially true if you want to use them on business or first class flights.
  • You can attain status with the loyalty programs you use.  Airlines will provide perks such as lounge access, free checked bags, and priority boarding. 

Con’s

  • More difficult to use than statement credits.  You may have to transfer points and you might have to call in to redeem loyalty points instead of online.
  • Not as flexible as statement credits.  You have a limited number of ways to use them
  • Subject to availability.  Most loyalty programs have blackout dates or only sell a certain amount of award flights.

Beginner’s Gameplan

Budget together large expenses to meet minimum spend – If possible batch together larger expenses into shorter time frames to possibly start doing a binge and purge spend approach if needed.  Determine your monthly expenses that can be put on a credit card. 

Figure out where you want to go and pick cards to make that dream possible – Do some research on your travel destination and see what airlines fly there.  Your first credit cards will be based on using your points on this trip.

Focus on Chase – Chase Ultimate Rewards are the most flexible points and the variety of credit cards along with generous sign up bonuses enable you to rack up points fast.  Also they have the 5/24 rule that limits you from getting their cards after being approved for at least 5 cards in the last 24 months. 

Spread the Wealth – If your first card is a Chase card, then go after a different segment with your second card.  Something like an American Express card will will benefit you greatly.  The third card could be a Starwood card, and then back to Chase for the next.  Continue to build and

create diversity.   

Look Out For Increased Bonus Offers

Many credit cards will increase their bonuses from time to time.  For instance Hilton cards will routinely raise their bonus offers for a limited time.  Follow sites like The Points Guy and Boarding Area on Twitter and Facebook to get the most up to date new on when increased bonuses are offered.

The Ideal Credit Card Portfolio

The ideal credit card portfolio will be well rounded and flexible, giving you as many options as possible when a trip arrises.  Once you have built the portfolio the focus should be on maintaining it by replenishing points as they are being used and continuing to be on the lookout for limited time offers you can take advantage of.  The well rounded travel credit card portfolio should have the following qualities.

One Premium Travel Card (Or at least two for the frequent traveler) – Premium credit cards come with a hefty annual fee but lots of perks and bonus categories that make up for it.  Find a premium credit card you can use as an everyday spend card that can rack up points fast and has perks you will use.  Many premium cards will include airport lounge access like Priority Pass and travel credits.  Premium airline cars include lounge access, elite status, and more.  Hotel premium cards often include free nights stay that is worth more than the annual fee itself, making them a great value.

Cards that Have Flexible points – Focus on cards that are flexible and have multiple transfer partners.  Cards linked to Chase Ultimate Rewards, American Express Membership Rewards, and Starwood have multiple partners that allow you to use them in a variety of ways.  You may have a lot of points through a specific airline card, but if that airline doesn’t fly where you want it to go or their is no award availability for your travel dates, you are out of luck.

Well Rounded Portfolio – As mentioned numerous times Chase points are great, but having nothing but Chase points will leave gaps in your portfolio.  You want to create one that has points everywhere and gives you options. 

Airline and Hotel Cards – Part of having a well rounded portfolio is being able to get both your flight and lodging covered as much as possible through points.  Your two biggest expenses going down to near zero does wonders to your travel budget.  In addition to having credit cards with multiple transfer partners, having airline specific cards allow you rack up points with a specific airline.  This enables you to save those more flexible points for another day along with getting perks such as elite status, priority boarding, free checked bags and more.  Hotel Cards are similarly valuable as they often come with an immediate increase in status and the perks that go with it, along some cards giving away free nights for having the card. 

Bonus Category Reach – Ideally you want to have different cards that cover the major categories covered  with bonus points.  Having one card that gives you 2 or 3 times on travel and dining, followed by another card that gives you 3 times on gas, another one that gives you 5 times on your utilities.  Try and make most of your purchases with a card that will give you 2 points or more.