Insider tips on maximizing card Benefits for free travel
By Dawn Papandrea | Released: August 17, 2017
Personal Finance WriterSpecializes in family finances
Sipping champagne in first-class when
flying certain beats crunched fighting and legs for peanuts in trainer. Even better
is if you don’t have to pay for such luxury VIP treatment as you head toward
your stay in a five-star hotel for free. This and more can be yours if you can
master the way of their credit rewards enthusiast.
If you have already dabbled in rewards
points, you are better off than the 31 percent of people who say they’ve never
redeemed any card rewards. But there’s so much more to explore!
In case you’ve got a healthy credit rating
and pay your bills in full every month, there is no reason why you shouldn’t take
advantage of the benefits that rewards credit cards have to offer. But,
taking your rewards game to “wow” levels requires a little bit of ingenuity
“It is important to manage your
expectations when you are just beginning,” states Jake Serfas, lead
financial strategist with O’Dell, Winkfield, Roseman & Shipp, a wealth
management company. “You can’t just expect to
obtain a lavish vacation by spending more on your credit cards. It requires a
tremendous amount of discipline to not just stay on track, but to maximize
a little inspiration goes a long way, which is why we turned to three credit
rewards power users for an inside look into their point art.
Meet the pros:
Perri, creator of the John the Wanderer Blog
reward experience: Traveling first-class on Cathay Pacific from Los Angeles to Hong Kong.
“I got to relax in the
private cabin aboard the 777-300 and drink a couple of bottles of very expensive
champagne, and enjoyed lobster and caviar up in the atmosphere. In addition, the
ground experience working with the first-class sofa at The Pier and The Wing in Hong
Kong was incredible, from the private room overlooking the tarmac to the table
Lee Huffman, traveling blogger
reward experience: A romantic vacation for two to Italy in December 2016.
flew business-class from California to Rome and remained in five-star resorts in
Rome and Milan. If we had paid retail for this vacation, it would have
been about $12,000. By using airline miles and hotel points, we paid
Jamie Larounis, founder of The Forward Cabin
Favorite reward experience: Traveling
to Australia twice in 2016.
“I was in Qantas first-class,
considered as one of the best premium airline products out there, for less than a
$100 in fees and taxes. I stayed at the Park Hyatt Sydney completely free, with
a gorgeous room overlooking the Sydney Opera House. A ticket like this to
Australia normally would operate in the $10,000-plus range, one-way, and a room at
the Park Hyatt can easily cost over $1,000 per night for this prime view.”
you have been inspired by the lavish experiences that could be financed on your
credit card company’s dime, here is how they do it:
1. They treat their credit cards such as debit cards and
larger the bonus, the higher the spending which may have to earn those points in a brief
time frame. And if you are carrying cards with high annual fees — the cards that offer the biggest rewards — you’ll
have to devote a certain amount annually in order to come out on top.
Huffman finds that perks,
such as primary rental auto insurance, airport lounge access, free checked bags,
priority boarding and top-tier loyalty program status usually make the fees
worthwhile. He also receives one free night every year on his Marriott, Hyatt
and IHG hotel credit cards, which he says are worth much more than what he pays in annual
Successful rewards hackers possess
the discipline to crunch the numbers and invest only enough on their plastic to
optimize points, but only on expenses they would have anyway. To put it differently, they
plan out their spending and pay off the balance every month to avoid paying
“I do my best to take care of all
purchases like it’s a debit card. I need to be sure that I do not add debt
because the interest outweighs the miles and points earned on the cards.”
“I do my best to take care of all
purchases like it’s a debit card. I want to be certain that I do not add debt
because the interest outweighs the miles and points earned on the cards,”
says Perri. To maintain himself accountable, he sets up automatic payment from his
checking account to cover the statement balance on his cards.
tip: Huffman goes a step further by paying off credit debt every time he uses
his card. “One of the tools I recommend using is Debitize. Whenever
you use your credit cards, it attracts the purchase amount from your checking
account and pays the credit card company,” he says.
2. They know their credit scores constantly. Qualifying for elite rewards
cards and growing your credit limitations require that you maintain stellar credit
scores, and with so much action on multiple accounts, being diligent is essential.
“My credit rating is extremely
important to me,” says Huffman, “so I am very mindful of how my
actions affect my score.” That’s one of the reasons he pays off his
cards before the statement closes, so that the temporary large balances are not
reported to the credit reporting agencies. Otherwise, his debt utilization (the quantity of
debt carried as compared to the total credit limit) might seem like it is high
with the total amount of spending he does on the card. Credit utilization is the
next most important factor affecting your score, right behind making on-time
payments. It’s also helpful to contact each card issuer to discover when they
report balances and payment activity to the credit bureaus as the reporting
times may differ from card to card.
Larounis points out that other
action, such as opening and closing accounts, which stage collectors do
routinely, can temporarily ding your score. “It’s minor things like that
that are worth keeping track of,” he says. So, carefully spacing out
software and account closings is crucial.
tip: Besides keeping your credit pristine for qualifying purposes, it is also a
good idea to keep an eye on your statements, states Serfas. “The possibility of
ID theft might be higher for those with a lot of open accounts,” he says.
3. They routinely open
new cards for bonus points.Our three hackers every state they
have a few trusty cards they maintain over the long term, but they’re always looking out for enticing sign-up bonuses that could be made by opening new
“It’s the ideal way to earn a
ton of miles and points,” says Perri. “Once I am no longer getting
value out of this card, I will downgrade to a non-fee version, if possible, but
will keep it open because this helps with building credit,” he says, in addition to keeping his scores intact.
In addition to bonuses, Huffman says
it is worth it to reevaluate your wallet every year. “Card benefits and
hotel and airline loyalty programs change all of the time, so what works today may
no longer be helpful for you next year,” he says. That’s why he recommends
shopping around to see if another program or credit card better matches your
Larounis thinks about two
criteria prior to opening a new account: “How many points I’ll receive just
for opening the card and meeting a spending threshold, and just how much of a return
I’ll get from the card with usual spending. To put it differently, what would be the
category bonuses and credit card perks that make it worthwhile to use the
card,” he says.
unless you plan to keep loyal to one airline or hotel chain, look for programs
that allow you to transfer things, says Perri.
Bonus tip: Look closely at
bonus stage requirements and have a spending plan in place to fulfill that before
you apply to avoid racking up unnecessary fees.
“When my wife said that
she wanted to go to Paris in 2011, that’s when I had to get serious, because
there was no way I needed to pay thousands of dollars for a single vacation.”
4. They are
detailed oriented and organized.When using
multiple cards with different promotional period deadlines and rotating
spending categories, it requires some savvy to find out which card will provide you
the maximum value for a particular purchase. “You don’t need to pay for an
airline ticket with a credit card that only earns 1 point per dollar. Put it on
the card that earns 5 points per dollar,” says Larounis.
instance, Larounis explains, let’s say you spend
$2,500 on airfare on the American Express Platinum card, which includes a $550-plus
annual fee. That $2,500 converts to 5x the points, which would mean you earn 12,500
points. With these points, you can get you a one-way ticket anywhere in the U.S..
So as long as that one-way ticket is more than the annual fee of the card,
you have already made back your commission with this 1 purchase.
track of program specifics takes a little bit of work, they say, but apps such as
AwardWallet or ThePointsGuy’s WalletMaximizer
can help you keep tabs on changing points worth and track your miles.
Bonus tip: Perri says that he uses an old-fashioned
dictionary. “When I’m trying to reach specific spend thresholds, I set
up an Excel spreadsheet so I can be sure that the account opening bonuses and
other bonuses are met in the ideal timeframe,” he says.
5. They set clear
goals.There’s nothing wrong with
building up things and then redeeming them for cash, statement credits or gift
cards if that’s more your style. However, if you’re looking to capitalize on elite,
reward-funded travel adventures, you’ll need a purposeful spending game plan.
“When my wife said that
she wanted to go to Paris in 2011, that’s when I had to get serious, because
there was no way I wanted to pay thousands of dollars for a single vacation,”
Whatever your personal goal, do
the research to learn what it takes to achieve it, such as how many points
you’ll need for free flights and hotel stays, says Larounis.
Bonus tip: Work those categories to reach
your goals, says Larounis. For instance, say your card
is giving bonus points for spend at office supply stores, but you don’t frequent
them all that much. However, since lots of them also carry gift cards to
popular merchants, you could stock up on cards to your favorite retailer or restaurant,
thus earning more things than you differently, he says.
6. They understand
the ins and outs of the traveling industry.Besides
learning how to earn things, figuring out the best times to redeem them is also
an art. “For first-class travel, you often need to wait until the last
minute to reserve using miles and points,” says Perri. His strategy is to book award travel in economy
and business class well in advance, and then a day or so before the flight,
call into redeem the extra miles to move up to first class.
Video: Exclusive credit card rewards adventures
He suggests being open to different airports, departure
and arrival days, and connecting airports as well.
Whatever you do, don’t hoard your points, says Huffman. “Don’t
accumulate miles and points like they are a traveling 401(k). Airlines and
hotels will lessen the value of your points every year or two, so your best
strategy is to focus earning rewards toward a specific vacation, redeem for
that vacation, then begin all over again. In the travel world, that approach is
called ‘earn and burn. ”’
Perri uses two cards in tandem to boost his airline miles. “Select a credit card in a certain airline program you use
with a large sign-up bonus, in addition to a card with the capacity to transfer
points between a number of programs. Earn the sign-up bonuses on each, and then
optimize your everyday spend on the card that delivers transferability,” he
you’ve got what it takes to be a world traveler due to credit card
miles and points? Serfas recommends starting off slowly and working your way
up. “If your invoices are $3,000 per month, begin with putting 25 percent of that
on your own cards to be sure you have the discipline to make the payments,”
he proposes. Once you feel comfortable, you can try tactics to boost your
strategy is genius: “I put
aside specific online savings account for annual expenses, such as auto and
house insurance, school tuition, property taxes and Christmas shopping. I
time the application for new credit cards a month before those bills are due so
that I could more easily meet the minimum spend. I then use those cards to pay the
bills in full for a reduction,” he says. Other clever moves include using
cards for large home improvement projects, or even for the down payment on a new
car. Needless to say, this only works if you pay off those credit statements in full.
“The secret is to have self-control, not spend more
than you would if you were using a debit card, writing a check or paying
cash,” says Huffman. “Traveling rewards are awesome, but not worth
going into debt.”
See related: Rewards bubble hasn’t popped … yet, 8 creative ways to build credit card rewards points quickly
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