Whether it’s a relaxing all-inclusive beach stay, a city break in Europe or hiking the U.S. National parks, your dream summer trip could be more attainable than you think. How so? By responsibly using your credit card to earn points and miles that can be redeemed for travel.
Before we go further, a very important caveat: if you currently carry a credit card balance month-to-month, struggle to pay off your card(s) each month or are planning a major purchase soon (such as getting a mortgage or car loan) then this article is NOT for you. Stop. Do not pass go.
However, if you pay your credit cards off in full every month, or haven’t yet waded into credit cards, the following could be a helpful tool.
Part 1: An Introduction to Credit Card Points and Miles
What are credit card points and miles?
Many credit cards will offer you ‘points’ for every purchase you charge to them. You can think of these points like a currency that can then be redeemed for travel-related expenses.
What can you use points and miles for?
In general, you can use points and miles to book hotels, flights, to ‘wipe out’ travel costs on your card, or for cash back. The specifics will depend on which card you select.
How many points can I earn for my purchases?
The points you earn for a purchase can vary widely. Points earnings can range from 1 point per dollar spent to 5 points per dollar – or more! The average is usually 1-3 points per dollar. This means that if you pay $75 for your weekly groceries and use a credit card with points, you could earn 75 points or more on that purchase. While this may seem small, over the course of a year or two, your everyday spending could earn you thousands of points.
What is a sign-up bonus?
In addition to earning points on your everyday spend, most travel cards offer sign-up bonuses. These bonuses can be substantial, with some reaching 150,000 points or more! To earn them, you must spend a certain amount on your card within the first few months of opening it. While the amount and timeframe vary by card, it is common to see spend requirements of $3,000-$4,000 within the first 3-4 months of owning the card. These sign-up bonuses are very valuable. For example a 75,000 point sign-up bonus could be worth $750 of travel or more. If you don’t think you will spend the required amount through normal expenses within the first few months, it is a good idea to wait until you know you have a big expense coming up before signing up for the card. Expenses like a home repair, flights to visit family or wedding expenses could be easy ways to hit that minimum spend.
Are there other perks to these cards?
Yes! This will vary greatly between cards, but it is common to see perks such as:
- No foreign transaction fees on purchases
- Annual credits to use at hotels
- Lounge access
- Credit for Global Entry/TSA Pre Check expenses
- Elevated status at airlines and hotels
- Travel and/or car rental insurance
Part 2: The Different Types of Cards and How to Pick One that Works for You
So, you’ve decided that you’d like to wade into the points and miles game, but which card should you start with? A simple search online will turn up dozens of options. It can be overwhelming to sort through them all and decide which is best for you, so here is some information to guide you.
What type of travel credit cards are out there?
In the world of travel credit cards there are two main types of cards: those with flexible points and those whose points are specific to a hotel or airline brand. We call either of these points ‘currency’.
Here are some popular examples of each type of card:
Flexible Currency Cards
- Chase (Chase Ultimate Rewards)
- Capital One (Capital One Rewards)
- American Express (American Express Membership Rewards)
- Citi (Citi Thankyou® Rewards)
Branded Cards
- Hotels: Marriott, IHG, Hyatt, Hilton (and more!)
- Airlines: Delta, United Airlines, American Airlines, JetBlue (and many more!)
How do flexible and branded cards differ?
The key difference between flexible currency cards and branded cards is that flexible currencies can be used to book a variety of hotels, airlines and other travel-related expenses, whereas branded card points can usually only be used to book their respective brand. Meaning, you can use Chase Ultimate Reward Points to book a number of airline or hotels, but if you have a Hyatt card, you are generally limited to using those points to book Hyatt stays.
Which should I pick?
Generally, it is best to start with flexible currency cards first as they offer you a broader range of redemption options. Additionally, some of these cards are a bit more selective with approvals. A card like Chase or American Express may reject your application if you have applied to too many cards recently. The classic example of this is Chase’s 5/24 rule, where they will reject your card application if you have applied to more than 5 cards in the past 24 months (not just from Chase, but any 5 credit cards). Because of this, it is usually better to sign up for the flexible cards first, before moving on to branded cards. The exception may be if you are very loyal to a single airline or hotel and believe the status benefits are worthwhile for you.
Are there any fees associated with these cards?
Yes. Most travel credit cards charge an annual fee. These fees generally start at $95/year and can go up from there. It is not uncommon to find some charging $500/year or more. Some cards will waive the fee for your first year, but it is important to take these fees into consideration as you evaluate which card is right for you.
Part 3: Redeeming Points and Miles
So, you’ve signed up for your first travel credit card and have started accumulating a nice bank of points and miles. Now what?
How many points do I need?
This can vary wildly depending on your style of travel (first class or economy), when you decide to travel (peak season vs. off season), how flexible you are and how willing you are to do a little extra legwork on transferring points. That being said, a good rule of thumb is to try and get at least 2 cents of value for every point. So, for a $1,000 flight, you could reasonably expect to use 50,000 points. Different hotel chains also have very different points prices. Hyatt is known to require fewer points to book a stay (their middle range is usually around 15-20k points per night), whereas a Marriott property could easily require double the amount of points for a similar level hotel/room.
How do I Redeem My Points?
Branded Hotel and Airline Points
For branded hotel and airline points, it is relatively simple to book flights and stays.
- Ensure you are signed up for the loyalty program of your airline of hotel. This is where your points will live (think of it as your points bank!).
- Log into your loyalty account and search for flights or hotel nights using the award/miles search feature. Note, it usually defaults to cash, so look around and be sure you have toggled on ‘award/points/miles’.
- Select your option and book the flight or hotel nights available and your points are automatically deducted.
- If you do not have enough points for a stay or flight, you may have the option to combine money and points.
Flexible Currency
For a flexible currency, booking can range from simple to complex:
Simple
- Log into the credit card’s travel portal (Chase, Capitol One, etc.) and search for hotels and flights just like you would on a search engine like Kayak or Expedia.
- Check out the points needed and, if you have enough, book directly through the portal.
- For some cards, like Capital One, you can also use the ‘travel eraser’ feature, which lets you wipe out travel-related charges on your card after the fact.
- NOTE: you usually get a lower value per point using this method, but it is a simple way to get started using your points.
Complex: Transfer Partners
If you are ready to jump into the deep end, let me introduce you to transfer partners. Each flexible currency card has a list of transfer partners that you can, you guessed it, transfer points to. For example, Chase Ultimate Rewards points can be transferred to Hyatt to book hotels, or United Airlines for flights (among many others). These partnerships change regularly, so be sure to look online for the latest list of transfer partners for each flexible currency.
- Go to the hotel or airline website you would like to book with. Make sure you have a loyalty program set up there. These are free to set up and will serve as your bank to receive the points you transfer.
- Determine what transfer partners you have available for your flexible currency. Note, not all flexible rewards transfer to all hotels and airlines.
- Check the transfer ratio. This is often 1:1, but sometimes the transfers are worse (2:1 or more) or there may be special limited-time transfer bonuses, where you get more for bang for transferring your points to a specific program.
- Check out the transfer timing. Often, the transfer is instant, but some transfers could take several hours or even days. This is very important as award availability can go quickly (available one hour and gone the next).
- Be SURE you want to transfer your points and only transfer as much as you need for your booking. Double-check the availability and transfer timing. Do not pre transfer points ‘just in case’ because once you transfer out of a flexible program, you cannot transfer points back. They will be stuck at the hotel or airline you transferred them to.
- Once the points hit your loyalty account, you can book the flight or hotel you wanted.
Part 4: Final Tips and Tricks
You’ve learned about points and miles, selected your beginner card and have started earning (and redeeming!) points. Here are some final thoughts on extra ways to earn points and miles.
Shopping Portals
Many airlines have shopping portals. These work just like online shopping, only you log in through the airline shopping portal first. From there, you search for the store you’d like to shop at (example: Apple, Sephora), click on the link and shop online as you normally would. By doing this one extra step (logging into your airline shopping portal first) any purchase you make not only gets you your standard 1-3x points per dollar spent from your credit card, but ALSO earns you additional points for that respective airline. This can range from .5 points per dollar to 10 points per dollar or more! You are essentially double dipping on points earnings. Note, not all online stores are available through portals, but many popular ones are.
Pay Attention to Spending Categories
Different cards offer favorable points earning multipliers on different categories. For example, one card might offer 3 points per dollar on groceries and gas purchases, while another might only offer 1 point for those categories. It is helpful to scope out the points per dollar earned on categories that you use most and incorporate that as part of your card selection criteria. Once/if you have multiple cards, pay attention to the categories and use the card with the most points earnings for the purchase you are making.
Two-Player Mode
If you have a partner, you can take advantage of ‘two-player mode’. This essentially means that each of you (you and your partner) can sign up for the same card. By doing this, you each receive the sign-up bonus. Because of this, we do not recommend adding a partner to your card as an authorized user, as that usually precludes them from earning a sign-up bonus on the card themselves.
Get the Biggest Sign- Up Bonus
It helps to do a little research on what historical sign-up bonuses for each card have been. If one card usually offers a 60,000 points sign-up bonus, but is currently offering a 75,000 sign-up bonus, it could be a great time to consider signing up for that card! Inversely, if a card usually offers a 150,000 point sign-up bonus and is currently only offering 100,000 points, it may be better to wait on applying for that card until the bonus is higher. Some cards only let you get one sign-up bonus, per person, per card in their lifetime, so time applications wisely!
Summary
When used responsibly, travel credit cards can be a wonderful way to earn points and miles on purchases you are already making. These can then be redeemed for travel for you and your family. The world of points of miles can seem overwhelming, but just remember that you can make it as simple (or complicated) as you’d like. While getting a 7 cent per point redemption on first class tickets to Europe is lovely, it is just as exciting to use your points to help offset the cost of flying to see your family over the holidays.
Happy Travels!