Credit cards come with lots of great perks. If you choose the right credit card and use it the right way, you can earn rewards that you can use for free travel. Even if you can’t travel for completely free, you can use your travel rewards to travel at a significant discount.
You generally need to have excellent credit to qualify for the best travel rewards credit cards.
If you don’t have excellent credit right now, work on improving your credit by taking care of past due balances and building up a positive payment history.
There are generally two types of travel rewards credit cards: general purpose credit cards that pay higher rewards on all travel purchases and brand-specific credit cards that pay higher rewards on purchases with a specific airline or hotel. If you’re loyal to a certain airline or hotel, you may want to choose a branded credit card. On the other hand, if you make lots of travel purchases across brands, the generic card will be better for you.
You don’t have to stick to just one credit card. Having more than one travel rewards credit card in your wallet gives you the opportunity to earn more rewards. You may, for example, have one credit card that pays higher rewards on gas purchases and another credit card that pays higher rewards on travel purchases.
You also don’t have to stick to a travel rewards credit card. A cash back credit card can also be used to help you pay for travel. But, there are some things to watch out for. First, make sure there are no caps on the amount of cash you can earn on the card. Second, choose a card that pays more cash back in the areas that you spend the most.
Pick a credit card that doesn’t have a cap on the rewards you earn, and that doesn’t have a short expiration period. Look for other perks like no foreign transaction fees, complimentary companion tickets, waived checked baggage fees, and the ability to earn bonus rewards by booking with travel partners.
You’ll probably have to pay an annual fee on the best travel rewards credit cards. Many cards waive the annual fee in the first year but starting in year two; you’ll have to pay the fee. If you can earn enough rewards for a free flight or hotel, you’ll barely notice that you’ve paid the annual fee. Make sure you pay it off right away, so you don’t pay any interest on the annual fee.
To get free travel with your credit card rewards, you have to earn enough rewards to make a redemption. The more you use your credit card, the more rewards you can earn. Knowing your rewards program inside out will help you learn the best way to use your credit card to maximize your rewards. For example, if your card pays more rewards on gas purchases, then you always want to use your credit card for gas.
It is one of the most important rules to follow when you’re using any rewards credit card, especially a travel rewards credit card.
Paying your balance in full each month will help you maintain excellent credit which will allow you to qualify for better credit card offers. Having a good credit score is important, but that’s not the only reason to pay your balance in full each month.
You have to pay finance charges whenever you carry a balance on your credit card beyond the grace period. Finance charges negate the rewards you receive on your credit card. To truly use your credit card for free, you have to pay off all your charges every month so that you avoid interest. No matter how minimal you think your finance charges may be, never give yourself permission to pay them.
Speaking of avoiding extra charges on your credit card, balance transfers, and cash advances almost always means paying a fee.
Even if your credit card has a 0% promotional rate on balance transfers, the balance transfer fee could be hundreds of dollars depending on the amount of the balance you transfer.
Fees aren’t the only reason you should avoid balance transfers and cash advances. These transactions don’t earn you any rewards. And, they take up room on your credit card, leaving you with less available credit for purchases that will let you earn travel rewards.
Lots of travel rewards credit cards offer very lucrative signup bonuses. Some of the bonuses are so big that you earn a free flight right away. To earn a signup bonus, you typically have to spend a certain amount on your card within the first 90 days of opening your account. The clock starts ticking the date you open your account, not the date you receive the credit card. So, in reality, you could have about 80 to 85 days to earn the spending bonus depending on how long it takes you to receive your new credit card in the mail.
Some credit cards even let you earn an additional bonus if you add an authorized user to your account. The authorized user doesn’t have to make any purchases to earn the bonus. But, having an authorized user can not only help you earn the spending bonus, but it can also help you earn rewards. Just make sure you can afford to pay off the purchases the authorized user makes on the credit card.
Choose a credit card with a signup bonus that’s easy to earn. The minimum spending threshold should be low enough that you can afford to pay off your balance in full each month. For example, a $3,000 spending threshold means you’ll need to charge and pay off about $1,000 each month. If that’s out of your budget, look for a travel rewards credit card with a lower spending bonus.
Try to meet the spending threshold as quickly as possible. With many credit cards, it will take about 4 to 6 weeks after you’ve earned the bonus for it to be credited to your account. Be patient that means it could be about five months from your account opening before you receive your spending bonus.
Unless you can handle spending across multiple credit cards, don’t try to earn the spending bonus on more than one credit card at a time. Also, keep in mind that many credit card issuers only allow you to earn one spending bonus every two years. Or, in some credit card issuers, you may only be able to earn one spending bonus in the lifetime of that credit card issuer. Read the fine print to find out whether you can earn another spending bonus from a credit card issuer and the time period you may have to wait between earning bonuses.
Your credit card will pay rewards on your purchases. Most hotels and airlines have loyalty programs that will also pay rewards for your stays and flights. Signing up for these programs and free. Make sure you use your loyalty rewards number during booking and use your credit card to earn even more rewards.
Let’s say, for example, you’re booking a flight on Delta Airlines and staying in a Marriott hotel. Use your SkyMiles number and your Marriott rewards numbers when you’re booking to earn rewards with those programs. Plus, earn rewards on your credit card for the purchases.
Stick to the same hotel and airline brands as much as you can. The point of loyalty programs is to reward you for frequent usage. The more you use the same brands, the more points you can earn. You’ll also move up in status levels which give you additional perks plus bonus points on your flights and hotel stays.
Once you’ve accumulated points in different programs, you may be able to combine them into a single program and redeem for a trip. Before you make the transfer, read the rules to learn how you can transfer points and whether you’ll lose any points in the transfer. Ideally, you want to transfer points with a 1:1 ratio so that you keep all the points you’ve worked so hard to earn.
Depending on the credit card, you can either use your rewards to book travel via the card’s online booking tool, or you can redeem your rewards for a statement credit. If you choose the statement credit route, you’ll have to charge the travel to your credit card then use your rewards to credit the account for the amount of the travel. If you don’t want to end up paying off the balance, redeem your rewards right away. Otherwise, you might have to pay at least the minimum payment to keep your account in good standing while you wait for the statement credit to post to your account.
The fine print of your rewards credit card will include the things that can make you lose your credit card rewards. Most commonly, late payments will cost you all the points you’ve accumulated. It is the last thing you want after you’ve worked so hard to build up rewards. Set a reminder a few days before your due date so you won’t forget to make your credit card payment. Or, set up an automatic payment just in case you forget your payment.
Credit card issuers can and do change terms of rewards program terms frequently. Don’t assume you’re grandfathered into a program. Pay attention to inserts that come with your credit card statement that explain any changes that have been made to your credit card rewards program. You’ll need to alter your spending habits to continue maximizing the rewards you’re earning.