I've mentioned before that we use credit card rewards points to cover some of our travel costs. Since this is a topic I've gotten a lot of questions about, I thought it was worth a post to help anyone who's considering getting into the travel rewards game. Before we jump in, two disclaimers:
- We are lazy travel hackers. If you want to learn how to get free business-class seats to Bali by churning 6 cards a year, I'm not your gal. More power to those folks, but that level of obsession and planning is not for me.
- If you deal with open credit the way I deal with open packages of chips, stop reading now. Credit card travel rewards work only if you never pay interest or late fees. Seriously. If you don't pay off the full card balance every month, you'll never make more money from the card than they make from you. Likewise, if you buy stuff that you wouldn't have ordinarily bought just to earn rewards, that's a loss.
How much can you earn in rewards?
Generally, sign-up bonuses on good cards are worth over $600, and you'll also earn 1-5% back in rewards on any purchases. The sign-up bonuses are by far the best way to earn rewards. In the last 5-ish years that I've been tracking (including Covid years where we weren't actively trying to earn rewards), we've redeemed nearly $7,000 in travel rewards without much effort. Not too shabby for lazy travel hackers! Excluding 2020-2021, we've averaged around $2k in free travel per year.
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| Salzburg, Austria, 2018 |
What cards do we use?
We currently have three cards that earn rewards. Like I said, we're lazy travel hackers, and I don't want to keep track of too many cards. One of the three is the Wyndham Rewards card that we opened last fall to earn hotel nights for a summer road trip. Now that we've earned that bonus - and the points are all sitting in my hotel rewards account - we will soon cancel that card and open another. It doesn't earn enough to be worthwhile now that we've already earned the bonus.
The other two are great options for travel rewards, and we like and would recommend both if you're just getting started. Each of these cards has several "levels" depending on how much you spend.
- Wyndham Rewards (link) - We have the "earner+", which currently gives 45,000 bonus points worth up to 6 free nights after spending $1K within 3 months. The Wyndham chain includes a bunch of hotel brands across the country (including LaQuinta, Days Inn, Ramada, Wingate) so was good for road trip purposes when we don't need anything fancy. Put your groceries on this card for a month or two and you'll get some free hotel nights, then close it out.
- Capital One Venture One (link) - This one is often listed as a top pick for travel rewards. Earns 2 pts/$1 on every purchase or 5 pts on travel through their portal. Current sign-up bonus is 75,000 points (or $750 in travel rewards) after spending $4K within 3 months.
- Chase Sapphire Preferred (link) - Another top pick on many travel sites. It's super easy to redeem rewards with them. Bonus is 60,000 points ($750 in travel rewards via their portal) after spending $4K within 3 months. Earns 5 pts/$1 on travel, 3 pts on restaurants, 1 pt/$1 on most other cases. Chase points are also known for being great to transfer to airline partners, though we haven't personally done that. When you read about travel hackers getting international first- or business-class flights with points, they're often starting with Chase points and transferring them. This card is also the only one we have that has primary rental car insurance (covering damage/theft without you needing to involve your auto insurance).
*PS - All the above links are our personal referral links, so if anyone actually gets the card via this link, we'll get bonus points on the first few of those. (Thanks if so!)
In the past, we've had cards for several different hotels and airlines, including Hilton, Hyatt, and Delta. Which to get depends on which you'd actually use. If you travel for work, these can be especially nice to have because they typically give you status in the hotel/airline rewards program for extra travel benefits. If not, airline miles suck in my experience. The airlines are constantly making it more difficult to use your miles on flights you actually want to take, and it takes forever to earn flights. Hotel miles are typically faster to earn (lower spending requirements to earn the bonus), and you can check ahead of time whether that brand has a hotel you'd want to visit and how many points it will cost. Capital One and Chase cards are much more flexible because they basically just apply your rewards balance to any flight you want to purchase, including to cover just a portion of a flight (or hotel or car rental). You can even use them to reimburse Airbnb stays after the fact.
Also note, the APR on most of these rewards cards is high! I don't factor this in since we never pay interest on the cards. Again, this whole system only works if you pay off the card in full every month.
Tips for earning rewards
- Put EVERYTHING on credit cards.
Leave that debit card at home, and avoid cash or checks wherever you can. Rack up those rewards. [Again: See disclaimer #2 above!] As a bonus, charging everything is safer (credit card companies are better are dealing with stolen or skimmed cards) and great for tracking your spending. I use and love Mint (it's free!) to aggregate our accounts, categorize, and track our spending. Can't plan your financial future or retire early unless you know exactly how much you're spending! - Pay attention to card rules.
Some cards have higher bonuses for gas, grocery, or travel. Airline or hotel cards have extra bonuses for using the card on their services. Some cards have special bonus periods at different times of year. For ex: Our current hotel card pays 4 pts/$1 at grocery stores and 6 pts/$1 on gas. Another card pays 5 pts/$1 at Amazon and Target during November and December every year. Understanding those rules and using the right card at the right place can help you double or triple your rewards. - Do some math.
At Target, their RedCard (debit linked to your checking account) gives you 5% off every purchase, better than our other cards. In other cases, you might have the opportunity to pay by credit card but only for an extra fee. For ex, you can earn rewards by paying taxes by credit card, but might pay close to 2% in fees to do so. Worth it? Not generally. Before you get a new card, figure out how much the points are actually worth, since they're not consistent across all cards. Here's a nice summary from Nerd Wallet. - Annual fees aren't always evil.
I hate an annual fee on a credit card, but have found many cases where the fee is worth it because the sign-up bonus more than covers it. I'll pay $95/year to earn $1,000 in travel rewards, but I'll only keep that card if the rewards will continue to cover that fee in subsequent years. - Watch cards to see when the bonuses are especially high.
The sign-up bonuses on cards change, and you might get 33%-50% more rewards based on when you get the card. When I signed up for our last hotel card, the bonus had just increased from 45,000 to 60,000 points, so was worth up to 8 free hotel nights instead of 6.
But you're ruining your credit score! (Nope)
Surprisingly, opening and closing a bunch of credit cards has had little to no effect on our credit scores (which are high). In fact, they typically go up after we open a new card because the percentage of available credit being used is the second most important factor in a credit score. (Open a new card, total available credit goes up, percentage of credit you're using goes down.)
But!: because the length of your credit history is also important, you want to maintain any long-standing accounts. Our oldest card no longer has the best rewards for us, but since it also has no fees, we keep it open and use it for a few subscriptions (so there's consistent activity and they don't cancel us), and autopay the bill. We will probably keep this card forever.
After we get the bonus rewards on our "temp" cards, we close those. This is especially important for cards that have zero fees for the first year but automatically charge a fee on your first anniversary. I have a spreadsheet to track this (of course! I love a spreadsheet), and also put reminders on my calendar. Closing these accounts typically has very little effect on our credit scores.
Summary
If you're able to pay off a balance in full every month and manage your spending, it's pretty easy to add (and later cancel) a new card once or twice a year to start earning travel rewards. The Chase or Capital One cards above are great options to start with because of their flexibility. We've owned each for multiple years. Chase is especially good right now because the bonus is higher than normal.
And note, any rewards are being paid for by the interest and fees other card holders pay, and indirectly by people using cash or debit. Is that great? No. Here's a great Vox article on the subject. Still, I don't believe that if we all stop earning rewards, the credit card companies would then lower rates for everyone, they'd just keep more profit. #capitalism For now, I plan to keep lazily earning rewards so we can experience more of the world.