How to start collecting travel rewards {QnA series}

here is a question I received from a good friend of mine 🙂

QUESTION: I’m considering getting a credit card to use for travel rewards.  I know you are the queen at that! which one do you use?  or do you use several?  I think at least for now, I just want one that we could use for airline tickets. we’re looking at Alaska cruise for next summer.  if I worked on it from now til then, maybe I could pay for our tickets.

First of all, planning for a specific vacation is a great way to start and even continually play this game. I have not done that yet, I am a little random and all over the place, but I am working on building me a “vacation portfolio”, with specific vacations and plans to earn the points/miles and get there free!

So, next. I do use several right now, and will from now on, but I did not start that way. If you don’t have a specific destination in mind, or even know which airline will be your bestie, what hotels you want to or will stay at, etc AND want one card to start and   keep things simple, then there are three cards/companies I recommend.

(1)CAPITAL ONE. The venture and spark for business are good starter cards, have an earn rate of 1.5 – 2 points per dollar spent and your miles can be applied to ANY travel purchase on your card. So, you choose when, where, how you want to travel, fly, stay, and then tell capital one you want those charges “erased” from your bill, and apply the miles and those charges are gone! The only restriction is you have to have equal to or more than miles than your purchases. SO, if you have 400,000 miles (translates into $4000), and you charge flights to Hawaii for your family of 4 for $4052.00, then you can’t “apply” your miles to that charge. Your charge would have to be less than $4000. The bonuses are, they are very generous on what is considered travel, so hotels, gas, rentals, adventure park tickets, theater tickets, meals (an probably more)…all count. Basically if you can do it on vacation you can wipe your charges. SOOO, if you airline tickets don’t fall under your miles value, then your hotels, food, etc could easily do so.  This would be a good way to pay to pay for a cruise as well.
Most high earning cards have a fee, generally from $59-99, but some are more. CAPITAL ONE has free and paid cards, the higher earning cards(2 points per dollar) charge $59-$69 a year, or they have the lower earning cards (1.25-1.5 points per dollar) that have no annual fee. You have to spend $5900 to cover that fee, so you need to do a little math to make sure it is worth paying or better to just earn a little less per dollar. Also, there is little to no sign up bonus, so that makes it a downer. But if you want simplicity, this is a good way to go.

I used two capital one venture cards for 2-3 years with lower credit limits than I wanted, and worked those cards hot all month long paying bills. I put EVERY item possible on them, from buying a coke at sonic, to paying a big farm bill. When I say I worked them hot, I mean, my monthly bills may have been 3-4 times more than my credit limits on the cards, so I divided them up into sections, paid everything I could on the cards, waited for the charges to post, paid them online and started again until all my bills were paid. I basically paid bills all month long, but the rewards were awesome and worth it. Now, I have higher credit limits and more cards, so I don’t work quite so hard, but I also have more to keep up with. However, I am earning more points and miles than ever before.

(2) CHASE offers a a few ultimate rewards cards. I am new to them, so I am not real versed in all the differences, but they are now replacing my capital one cards as my daily spenders. They earn “ultimate rewards” which is not as flexible as capital one where you can just freely choose when and how you want to spend your travel, but the UR has so many transfer partners that if you are willing to put just a little more effort into how you plan your trips, you earn at a much higher rate. – esp if you have or qualify for a small biz, then your earn rate is 5x on many things, and 2x on everything. (click here to visit one of my fav bloggers on how anyone may qualify for a business card

Ultimate rewards transfer 1 to one with :

  • British Airways
  • United Airlines
  • Hyatt
  • Southwest
  • Virgin Atlantic
  • Mariott
  • Ritz Carlton
  • Korean Air
  • Priority Club
  • Amtrak

so that gives you several airline and hotel options, and southwest has some good hotel partners too, so if you transferred them to your southwest RR, then you would have airline and hotel options.

PLUS, if you book your travel through their Ultimate Rewards travel portal thingie, then you get an additional 10% off your costs!

 

~ CHASE FREEDOM is an easy free card, and has good earning potential and just a good card to have in your portfolio. It has:

  • No Annual Fee
  • 0% Intro APR for 15 months
  • 5% Cash Back on up to $1,500 in combined purchases in bonus categories each quarter
  • Unlimited 1% cash back on all other purchases.
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn a $25 Bonus when you add your first authorized user and make a purchase.

So, you can get about $175 cash back, and the best thing about this card is to watch your category bonuses and sign up for them (they send lots of reminders and help). Many times this is food, gas and clothing, so for three months you can earn 5 points per dollar on the selected categories. (I make little labels on my cards on what to use them for)

~ CHASE SAPPHIRE PREFERRED has a great sign up bonus (click here to visit a great post on how to best maximize this-up to $2000), good card to have for lots of reasons, but there are better earners for your daily spending, so if you can handle getting this one for the bonus and benefits, and using another better earner for your dailies, then you are on your way to a great free vacation . Also, you will NOT get this offer if you are not a first time user to the sapphire preferred.

  •  40,000 bonus points after $3,000 is spent within the first 3 months
  • $95 annual fee waived in the first year
  • Earn 2 points per $1 spent at restaurants – from fast food to fine dining.
  • 1 Point per $1 spent on all other purchases (not the best for everyday spending)
  • 2X Points on Travel -1 Additional Point on Travel (total of 3 points) per $1 spent when you book airfare or hotel accommodations through Chase Ultimate Rewards.
  • 20% off travel when you redeem through chase ultimate rewards for airfare, hotels, car rentals and cruises.
  • TRIP CANCELLATION/ INTERRUPTION INSURANCE
  • Lost Luggage and Trip delay Reimbursement

(3) BARCLAY ARRIVAL WORLD ELITE MASTERCARD has a great sign up bonus as well, and is comparable to capital one cards as a daily spender in that you can turn in any travel you book for a statement credit. So you are not restricted by an reward program rules. However, this card has a little perk that makes it more valuable than the 2 miles per dollar capital one cards, because you get 10% of your miles back every time you redeem for travel purchases.

  • 40,000 bonus points after $3,000 is spent within the first 3 months
  • $89 annual fee waived in the first year
  • Earn 2 points per $1 on all purchases (makes for a good daily spender)
  • 10% miles back when you redeem your miles for travel purchases

This card also has a no fee alternative, the benefits are not quite as good, but if you don’t want to pay a fee, or want to get your spouse a card for the bonus, then this would be a good route. It is similar to the chase preferred card.

  • 20,000 bonus points after $1,000 is spent within the first 3 months
  • NO annual fee
  • Earn 2 points per $1 on travel and dining purchases
  • Earn 2 point per $1 on all other purchases
  • 10% miles back when you redeem your miles for travel purchases

 

With a specific destination/vacation plan in mind, you can maximize your earning and focus on your trip. So, if you want to go a little deeper than just working with one card, and get quite a bit more return for it,  this is probably what I would do:

(1)Find your flights – this does not mean you need to book them, but if you do some searching and see that a particular airline keeps popping up and IF you were to book at that time that is who you would book with, then you could  look for that airline’s credit card and sign up for some bonus offers. (downfalls to booking with airline specific miles: [exception-southwest] black out dates, varying reward pricing, difficulty booking 3+ on one flight) All of the downfalls can be worked-around, but you have to invest a little more time and effort in your planning, and having some flexibility in your dates will go a long way. So, if you can do these things, and you live around dallas our houston, then your best bet is probably going to be an american airlines or united airlines card. Most flights out of midland or lubbock connect in dallas or houston, and those are the two major airports in texas. (there is a lot of info on flying other airlines, transfer partners and such, I am NOT good at that, at all, yet, but many of the blogs I follow have lots of info on that if you are interested.

Southwest Airlines is the exception to the rule above. They are not always my fav airline to fly, (I hate all the stop and go’s), but they have the best rewards program IMO. They don’t have blackout dates, you are not limited in rewards use at all. You can book on cheaper fares and stretch your miles. Their entire plane seats are the same (their “class” seating is only limited to perks, like boarding first, etc). They don’t assign seating, and THE BEST ONE OF ALL, they have no penalty fees for changing your flights, and on reward bookings, you can cancel right up to your flight and get all your rewards right back with no penalties at all.

If you find that you can fly southwest for all or part of your trip, then I have a LINK TO SHARE for a southwest card. This offer is not available anymore unless you have a special link. Mine came from chase-refer a friend, and I will get bonus points if you sign up. . You get 50,000 southwest rapid rewards points, which is positively good for 2 roundtrip tickets, but I have stretched mine further than that with good fare deals. The card has an annual fee of $99, BUT think of it this way, you are getting AT LEAST 2 round trip tickets anywhere sw flies for $99. If you are not happy with the card after that, cancel before the annual fee comes the next year. Get one for you and your spouse and now you have at least 4 tickets for $199. It has a minimum spend of $2,000 in 3 months for the points, but if you get 2 cards, meet the minimum spend, you will then have 104,000 points, which means if you spend$6000 more in the same calender year, you will earn a companion pass (I have one, it is awesome!)Then, one person of your choice will fly free with you for the next calendar year wherever you go!

 

(2) I have never taken a cruise, and don’t know that I ever will, so I really don’t have much input here, but from information I have gathered from friends, you generally need to book the cruise a good bit in advance, so you may not have the miles/points to pay for the cruise. (capitalone, barclay and ultimate rewards would be your options here, cause they redeem as “cash”). You may also need to book it an pay it out, BUT if you do, you should use one of your good earning cards and at least you will be earning points on dollars you have to spend! However, for the sake of our “to do list” you need, at least, an estimate of what the cruise will cost you.

 

(3) When meeting up with a cruise, there will probably be a night or two of hotel stays, unless your lucky charms leprechaun is with you when you book. Getting your flights and transfer to align with your loading time may be rather difficult (again, never taken a cruise, so no real knowlege here). If you will be staying at a hotel the night before you board, and the day/night that you arrive back at your starting point, then getting those nights free is pretty easy, as there are lots of reward programs with hotels and most have enough sign on bonus points to get you 2-4 nights, with minimal spending. So check around for hotels that you would stay at and then google that hotel name for a branded credit card, You will want one with a sign up bonus. Hyatt, Hilton and Starwood are great places to start looking as they all offer great signup bonuses – but all hotels have a branded card, you just have to find the one that fits your destination needs.

That is about it for my advice here, and plenty enough to get you started on your way to a free or almost free vacation.

As always, remember,

  • you must have an excellent credit score to play this game.
  • keep that score in good shape by paying off your balances EVERY month. Paying interest counteracts your points earn.
  • Carrying balances will also hurt your credit score
  • join a place like CREDIT SESAME to check your credit score & report, as well as monitor your credit profile, its FREE
  • if you choose to start a portfolio of rewards cards, even a small one, places like AWARD WALLET are fantastic for helping keep up with your various rewards in one place as well as monitoring and alerting you to when they expire.
  • PRACTICE MAKES POINTS – so just keep trying, but stay where you are comfortable and understand what you are doing
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