Credit card optimizing
for free/reduced cost travel
TLDR; Use travel rewards (mostly from credit cards) for free flights, hotels, rental cars, etc., and get a better return than cash back.
We started accumulating points and miles in anticipation of my husband having to do residency interviews. We had heard horror stories about how much people paid out of pocket for travel and wanted a way to save money. In the end, all the residency interviews were online due to COVID, but I had found a wellspring of information and unlocked a way that we could actually afford travel.
We have only traveled for the past few years because of credit cards. We went to a cousin's wedding in Alaska and only paid for food and gas (flights, hotel, and rental car for 5 days were all paid for in points). We moved across the county. We did a Southwest road trip. I’ve flown to see extended family multiple times. This past weekend we checked out Greenville, SC, and paid for our hotel, all with credit card points! I could keep going with the trips we have booked for the rest of the year…
There are whole websites associated with using points and miles, and people get really into it. They fly business class and stay at all-inclusive resorts. I might be one of those people, but unlike many who are trying to maximize their value, I am simply trying to afford some experiences with my family. The way we earn and spend our points and miles is going to reflect that. I want to share some of the methods we’ve used to earn and redeem travel rewards.
For the uninitiated, many banks, airlines, hotels, you name it, run rewards programs. Rewards go by many names (points, miles, etc.), but at the end of the day, they are all their own currency. Your grocery store has a rewards program. Every gas station does too. But by far, travel rewards are the most valuable to both the companies and the customer. I say most valuable because they make money for the companies (by encouraging spending on their specific brand, by having a brand-specific credit card, by all the unused rewards, etc.), and they also offer the consumer the most value. One website I use for tracking my cards estimated that we’ve received ~$6000 worth of value in credit card sign-up bonuses in the past two years, and that’s just one method of earning points.
Some math to check if you are getting a ‘good deal’ -
I just booked a flight home from Thanksgiving that was priced at $210 one-way for 6,000 American Airlines miles and $5.60. That means I am getting a value of 3.5 cents/mile. Many websites will value miles, and AA points are valued at ~1.5 cents/mile. My value was more than double that. That is a good deal.
There are a couple of main categories of points that we use,
Bank/flexible points. Flexible points are those like American Express Membership Rewards. They can be used to book all types of travel on their website and can be transferred to a number of partners such as Delta and Marriot.
Hotel points. These points are for a specific hotel chain. They vary widely in how valuable they are. We have heavily utilized Hyatt hotels and IHG hotels this past year and found some great values.
Airline points. Similar to hotel points, these are points/miles for a specific airline such as American Airlines.
If you have credit card debt and/or can’t pay off your cards fully, TRAVEL REWARD CARDS ARE NOT WORTH IT. The interest rates on travel cards are some of the highest in the industry. Any value you get from signing up and spending will more than be negated by high interest and fees.
Earning points
We have earned points in a bunch of random ways. We’ve done surveys, paid off student loans with gift cards, and bought items for other people. Most of our points have been earned through some basic signing up and spending.
Sign-up bonuses. Most travel cards offer sign-up bonuses. That is, if you open a new credit card and meet some minimum requirements (usually a certain amount of spending over a given time period), they will give you a bonus. These are the easiest way to get a lot of points. But you can only sign up for so many cards, so you want to be strategic here. (Some banks limit you to applying for 5 cards every 24-month period.)
Category spend. Where do you spend most of your money? For us, it’s rent and groceries. Therefore we have cards that we can use for those expenses and get more points from those. There is currently only one card I know of you can use to pay rent. As for groceries, we are currently using a 5x for the first-year promotion on another free card.
Shopping portals. We don’t do a lot of online shopping, but when we are ordering something, we go through Rakuten (you can get American Express Membership Rewards instead of cashback) or the American Airlines shopping portal.
Linking accounts. For example, my Shell gas account is linked to my American Airlines account, so whenever I get gas, I also get airline miles.
Referrals. The biggest way we take advantage of this is me referring my husband and vice versa. But you can also refer family, friends, etc. If you want a recommendation/referral from me, I am happy to help!
Redeeming points
TRANSFER, TRANSFER, TRANSFER. This is where most people fall flat. Often, you get the most value from bank/flexible points by transferring them to the airline or hotel that you want to book with rather than booking it on their website.
Portals. The bank’s website has a travel portal. You can book through this and use their points. Sometimes this is a good deal but more often than not, TRANSFER.
Compare points. When I am looking to book a flight, I compare and look at the cash price and the point/mile price for the different carriers that fly the route I am looking at. For example, I look at Delta, Southwest, and American Airlines because I have points that can transfer to all of those carriers. I also look at the cash price on Google Flights in case other budget carriers could beat one of the main carriers.
Things to be aware of
Don't ever buy anything to get more points. Stick to the budget and be smart about which credit card you use for your budgeted spending.
The fees. Many travel cards have annual fees. Many times the annual fee is well worth the card benefits, but not always. Banks like to throw in a bunch of shiny benefits that you may not need/want to make it seem like the fee is worth it, be careful. Also, you can always ask for the fee to be waived or if there is a retention offer. (I was going to cancel one of my cards recently but simply messaged them, and they gave me enough points to make the fee worth it for another year. Next year, I will probably do the same thing.)
Putting it together into a strategy
Traveling with points and miles works best when you plan early. You want to book travel at least 6 months early, if not 9-12 months. Working backward, that means planning and getting the right credit cards even further out than that. We ask ourselves a few questions in planning:
Where/what type of trips are we trying to go on in the next year or so?
What airlines fly out of our airport/to our potential destinations?
What hotels are at our destinations?
Then we make a plan how to best earn points/miles to cover part/all of our travel.
Happy travels!