Turning Credit Card Spending into Free Travel: A How-To Guide for People in Their 20s
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Welcome to a world where smart financial decisions and passion for exploration go hand in hand. As people in our 20s, we have the world at our feet and the power to shape our own future. We all love to travel and explore new places, cultures, and cuisines, but often the cost can seem prohibitive. But what if I told you that there's a way to transform your everyday expenses into unforgettable adventures, without increasing your expenditure? Sounds dreamy, right?
If your bucket list is overflowing with destinations and experiences you yearn to discover, and yet, your bank account tends to disagree with your wanderlust, then buckle up. This blog post, "Turning Credit Card Spending into Free Travel: A How-To Guide for People in Their 20s," is going to be your financial passport to the world!
We'll navigate through the realm of credit card rewards, demystifying the fine print, and offering you the inside scoop on how to maximize your benefits. We'll also cover the basics of reward travel optimizing - a savvy approach that turns everyday purchases into miles, hotel stays, and travel experiences.
Get ready to convert your coffee runs, grocery hauls, and online shopping sprees into a ticket to your next great adventure!
Table Of Contents
How did I get into award travel?
So, you're probably wondering how I got started with this whole award travel thing. Well, I work in tech and, let's face it, there aren't many women in the field. My mostly male colleagues would frequently travel to Europe, business class, no less, and I was intrigued. After mustering up some courage, I asked them how they managed such luxurious travel so often. That's when I got my first glimpse into the world of credit card rewards and points. I was hooked, and I’ve been diving deeper ever since. The result? I haven't paid for a flight with actual money in three years; it's all been rewards and points. Now, I'm eager to share my knowledge with other people. The world of award travel isn’t an exclusive club; we can all reap the benefits if we know how to play the game right.
Understanding Credit Card Rewards
At its core, credit card rewards are incentives provided by credit card companies to motivate you to use their card. For every dollar you spend, you accumulate rewards in the form of points, cash back, or miles. To paint a clearer picture, imagine you have a card that gives you one point for every dollar spent. Spend $500 in a month, and you've earned 500 points. But remember the golden rule: don’t spend more than you can comfortably pay back just for the sake of rewards!
Points, Cash Back, and Miles: What's the Difference?
While points, cash back, and miles might seem interchangeable, they serve different purposes. Points are typically earned on a credit card company's reward program and can be traded for a variety of options. Let's say you've racked up 20,000 points over a few months; you might be able to exchange those points for a round-trip flight, shopping vouchers, or even use them to pay off your credit card bill.
Cash back is exactly what it sounds like - you get a percentage of your spending back in cash. If your card offers 2% cash back, for instance, and you spend $200 on groceries, you'll get $4 back as a statement credit or even a check.
Miles are specific to travel credit cards and work similarly to points. For example, if you have a card that offers two miles for every dollar spent on flight tickets, purchasing a $500 ticket would earn you 1,000 miles. These can be exchanged for airline tickets, upgrades, and more.
The Fine Print: Terms and Conditions
However, as appealing as these rewards are, they often come with certain terms and conditions that can influence their actual value. For instance, a credit card might offer you 3x points when you spend on dining out but only one point per dollar on other purchases. If you're not a foodie, this card might not give you the best rewards.
Some cards also have annual caps on how much you can earn. If your card caps your cash back at $300 per year, any spending beyond the point that would earn you $300 won't give you additional cash back.
And then there's reward expiration - if you don't use your points or miles within a specified period, you might lose them.
Knowledge is Power
Understanding the ins and outs of your card's reward program will put you in a better position to maximize your benefits. While reading and understanding the terms and conditions might sound tedious, the potential benefits are worth it. Imagine lounging on a beach in Bali, sipping cocktails that you didn't have to dip into your savings for - all thanks to your strategic credit card spending!
Choosing the Right Credit Card
So, you've got a grip on how credit card rewards work, but how do you pick the right card? The answer lies in understanding your spending habits and comparing different cards based on their rewards. And since we're all about getting free travel out of this, let's focus on travel rewards.
To pick a card that suits your lifestyle and maximizes your rewards, start by analyzing your spending habits. Which categories do you spend most in? Dining and groceries? Gas and transportation? Travel? Once you know where your money usually goes, you can choose a card that offers the highest rewards for those categories.
Let's take a look at some top travel credit cards to get you started:
Annual fee: $0 (see Wells Fargo terms here)
Earning rates (see Wells Fargo terms here):
1x points on rent payments
1x points on other purchases
2x on travel purchases
3x on dining purchases
Benefits:
No Foreign Currency Conversion Fee
Insurance: Various insurance and protection benefits based on the card's terms and conditions.
How to redeem: Points can be transferred to several travel partner programs or used for travel booked through the Bilt Rewards travel platform.
Use the card 5 times each statement period to earn points
Chase Sapphire Preferred® Card (⭐️ My pick for you)
Annual fee: $95
Earning rates:
5x points on travel purchased through Chase Ultimate Rewards®
3x points on dining
3x points on select streaming services
3x points on online grocery purchases (excluding Target, Walmart, and wholesale clubs)
2x points on all other travel
1x point per $1 spent on all other purchases
Benefits:
No foreign transaction fees
1:1 point transfer to leading airline and hotel loyalty programs
Insurance: Trip cancellation/interruption insurance, Auto rental collision damage waiver, Baggage delay insurance, Trip delay reimbursement, and more.
How to redeem: Points can be redeemed for travel, gift cards, cash back, and more through the Chase Ultimate Rewards® portal, or transferred to various airline and hotel partners.
Annual fee: $95
Earning rates:
3x points at restaurants, supermarkets, gas stations, air travel, and hotels
1x points on all other purchases
Benefits:
No foreign transaction fees
Transfer points to a variety of travel partners
Insurance: Various insurance and protection benefits based on the card's terms and conditions.
How to redeem: Points can be redeemed for flights, gift cards, unique experiences, and more.
Annual fee: $550
Earning rates:
3x points on travel (immediately after earning your $300 travel credit)
3x points on dining at restaurants
1x point per $1 spent on all other purchases
Benefits:
$300 Annual Travel Credit
Access to 1,300+ airport lounges worldwide
Complimentary Lyft Pink and DoorDash DashPass subscriptions
Insurance: Trip cancellation/interruption insurance, Auto rental collision damage waiver, Lost luggage insurance, Trip delay reimbursement, and more.
How to redeem: Points can be redeemed for travel through the Chase Ultimate Rewards® portal or transferred to various airline and hotel partners.
The Platinum Card® from American Express
Annual fee: $695
Earning rates:
5x points for flights booked directly with airlines or with American Express Travel (up to $500,000 on these purchases per calendar year)
5x points on prepaid hotels booked with American Express Travel
1x points on other purchases
Benefits:
Access to more than 1,300 airport lounges across 140 countries
Up to $200 in Uber savings annually
Up to $200 airline fee credit annually
Up to $100 fee credit for Global Entry or TSA Pre✓®
Insurance: Various insurance and protection benefits including car rental loss and damage insurance, baggage insurance plan, travel accident insurance, and more.
How to redeem: Points can be redeemed for travel, shopping, gift cards, donations, and more.
Of course, as you venture down this path, don't forget the importance of your credit score. Credit card companies will check your credit score to determine if you're a trustworthy borrower, and a good score could open the door to cards with better rewards. Checking your score is straightforward and can be done through various free online services.
Choosing the right credit card is not just about the perks and rewards. It's about aligning the card's benefits to your lifestyle and financial habits. When done correctly, your everyday spending can become a passport to incredible travel experiences.
Strategies to Maximize Your Credit Card Rewards
After choosing the perfect credit card to suit your lifestyle, the real fun begins - making the most out of your credit card rewards. Here are a few strategies that can help you turbocharge your points, miles, or cash back, getting you that much closer to your dream getaway.
Strategic Spending
To really get the most from your card's rewards, you'll need to lean into strategic spending. This isn't about spending more, but about optimizing how and where you use your card. Every card has its own reward categories that offer higher reward rates. As I’ve explained in my previous blog post, it's about understanding these categories and aligning your spending habits with them. Use your card for groceries if it offers high rewards for grocery shopping, or for dining out if that's where the rewards are. Just remember, no reward is worth spending money you don’t have or buying things you don’t need.
Intro Bonuses and Promotional Offers
Intro bonuses are a fantastic way to accumulate a lot of rewards quickly. Credit card companies often offer these bonuses as an incentive for new users, granting you a large number of points, miles, or cash back if you spend a certain amount within the first few months. Always remember to check what these bonuses are when choosing a card and consider if you will be able to meet the spend threshold without straining your finances.
Promotional offers are another way to boost your rewards. These could range from bonus points on certain categories during specific periods, to special discounts with partner brands. Stay updated with these offers by subscribing to emails from your credit card company or regularly checking their website.
Organizing and Tracking Your Rewards
When you start accumulating rewards, it can get a little tricky to keep track. Especially if you’re using more than one credit card, you want to ensure your rewards don’t expire unused. There are various apps and tools available that can help you track your rewards across different cards. Alternatively, a simple spreadsheet can also do the trick. The goal is to know exactly how many points, miles, or how much cash back you have, when they expire, and how you plan to use them.
Remember, credit card rewards are a tool to help you achieve your financial goals, whether that's traveling the world, saving money, or getting the most from your everyday spending. The key is to make sure your credit card works for you, not the other way around!
Successful Examples of Using Credit Card Rewards for Travel
I always find it motivating to hear about real-life success stories when it comes to using credit card rewards, and I bet you do too! So, let me share with you a few case study of my own life to fund some truly memorable travel experiences. I found most of my flight deals through Roame Travel.
My 10-day Adventure to Argentina
I embarked on a ten-day vacation across Argentina, where I enjoyed the vibrant culture of Buenos Aires and the world-class wines of Mendoza. All thanks to strategic use of credit card rewards.
First up was the flight. I flew business class with American Airlines, which typically costs $3,500 one way. Instead, I transferred 50k points from my Bilt Mastercard to American Airlines for each leg of my journey. An economy ticket on the same route would've cost me 25k points each way.
Once in Buenos Aires, I booked a week-long stay at a hotel using points through my Chase Ultimate Rewards platform. Here's the kicker: I could redeem each point for 1.5 times the value. So, my hotel, priced at $200 per night ($1,400 total), cost me about 93k points.
Next, I booked a flight to Mendoza using the Chase Ultimate Rewards platform, as the travel partners didn’t offer good value for this internal flight. The flight cost me 13k points, which equates to a $200 value.
My accommodations in Mendoza were at the Park Hyatt, a 5-star property. For my four-night stay, I spent 12k points per night (usually $500 per night), totalling 48k points.
In total, I spent 250k points on this trip, covering all my flights and hotel costs. If I'd paid cash for this adventure, it would have cost a staggering $10,600. But by carefully maximizing my points, I was able to get an impressive value of about 4.24 cents per point!
These are the kind of results you can achieve with a little planning and a lot of smart spending. So, are you ready to take the plunge and start earning your way towards your dream trip? Your journey to free travel with credit cards starts now!
Travel Smart: Best Practices
Let's face it: you've put a lot of thought and effort into earning your rewards. Now comes the exciting (and sometimes tricky) part of getting the maximum value from those hard-earned points, miles or cash back when you're ready to book your dream trip. Here are some best practices to ensure you're traveling smart with your credit card rewards.
Best Times to Redeem Your Points for Travel
Contrary to what you might think, there's a sweet spot for redeeming your points for travel, just as there is for buying tickets. Off-peak seasons can offer the best value for your points. Additionally, airlines often release award space 330 days in advance and within two weeks of departure. Try to book early or be ready for last-minute travel to get the most bang for your buck (or should I say, point!).
Maximizing Value When Booking Flights and Hotels
Different credit cards offer different point value depending on how you choose to redeem them. For instance, booking travel through the Chase Ultimate Rewards platform can increase your point value by 25% to 50% depending on the card you have. Some cards also allow point transfers to airline or hotel partners, which can sometimes provide a higher value than booking through the credit card's travel portal. Always take the time to compare and calculate the best redemption options for your particular rewards program.
Combining Rewards with Other Discounts and Deals
Another savvy way to maximize your rewards is by combining them with other discounts or deals. For instance, if your credit card offers a fourth-night-free hotel benefit, you could pay for the first three nights with cash or points and get the fourth night free. Similarly, if there’s a sale or discount on flights or hotels, you might be able to use fewer points for the same booking. Look for such synergies and you'll find that your rewards stretch even further.
Tips for Responsible Credit Card Use
Ground ourselves in the reality that, while credit cards can be powerful tools, they also come with responsibilities. Your credit card rewards should be a bonus, not a goal in and of themselves. Here are a few tips to ensure you're using your credit cards responsibly.
Always Pay Off Your Balance Each Month
This might be the golden rule of credit card use. It’s vital to pay off your balance in full each month to avoid interest charges. Remember, credit card interest rates are typically high, and any interest paid can quickly negate the value of your rewards. Using your credit card isn’t the same as having free money – it’s still your money, and it’s money that you need to repay promptly.
Avoid Overspending Just to Earn Rewards
It's easy to get swept up in the thrill of earning rewards and start spending more than you ordinarily would. But remember, the point of rewards is to get a bonus on your regular spending, not to incentivize unnecessary purchases. Stick to your budget and never spend more than you can afford to pay back immediately. If you find yourself making unnecessary purchases or spending more than you can pay off each month, it might be a good time to reevaluate your credit card use.
Use Credit Cards as a Tool, Not a Crutch
Credit cards can be a fantastic financial tool if used correctly. They can help build your credit score, provide purchase protections, and yes, earn you free travel. However, relying on credit cards to live beyond your means can lead to unmanageable debt and financial stress. Always aim to use credit responsibly.
Conclusion
As we wrap up this guide, it's evident that credit card rewards offer a fantastic opportunity for savvy spenders to travel more and spend less. Let's quickly recap the main points:
Understanding Credit Card Rewards: The key to maximizing your rewards begins with understanding how different cards work and their specific terms and conditions. Be it points, cash back, or miles, each has its unique benefits and uses.
Choosing the Right Credit Card: The best card for you depends on your spending habits and travel preferences. Choose wisely, comparing the various rewards programs, earning rates, benefits, and other details before making a decision.
Strategies to Maximize Your Rewards: Be strategic with your spending, pay attention to reward categories, and keep track of your rewards to ensure you're making the most out of every dollar spent.
Successful Examples of Using Rewards for Travel: Real-world examples, such as my Argentine adventure, show just how powerful credit card rewards can be in making travel dreams a reality.
Travel Smart: Best Practices: Be smart about when and how you redeem your points, look for the best value, and try to combine rewards with other deals and discounts.
Tips for Responsible Credit Card Use: Never lose sight of the importance of responsible credit card usage. Always pay off your balance each month, and never overspend just for rewards.
Now it's your turn to start this exciting journey. Don't be intimidated if it feels a bit overwhelming at first - remember, every great journey begins with a single step. Start by picking a card that suits your lifestyle, use it responsibly, and watch as your rewards start to build up.
I encourage you to share your experiences, successes, and lessons learned along the way. Your journey to free travel begins today, and I can't wait to hear about the amazing adventures you embark on, courtesy of your savvy credit card use. Got questions or need more insights? Feel free to drop a comment below. Let's make the world our playground, one point at a time! Safe travels, my friends!
Resources
List of useful websites, apps, or books for further learning
Roame Travel: This is my go-to resource when I'm researching award travel. It's a fantastic tool that allows you to search and compare award flight availability across different airlines, making it easier to find the best deals.
Cardonomics: A comprehensive site that provides detailed information about various credit cards and their reward programs. It's an excellent resource for comparing different credit cards and deciding which one is right for you.