Why use credit cards that earn points and miles?
We have used credit cards that offer cash back for years. Sometimes family members would suggest an airline credit card to earn miles for trips. This didn’t make sense to us at the time because I thought getting $100 cash back is greater than $100 toward a flight on a particular airline. There is still a lot of truth in that. But I have now learned that all award travel cards are not created equal. Do you love to save money? Would you pay $95 to get either $750 back or up to $900 toward travel? The worst outcome with cash back is that you net $655. I have come to learn that you can often get even more value for those points or miles compared to the cash back that you can get.
I am able to plan and go on more adventures with the help of earning points and miles.
The Basics
I use a credit card like I would use a debit card. I use for every purchase and pay off the statement balance every month. I don’t incur late fees or interest. If you can use a credit card in that manner, award credit cards are for you. If you carry a balance on credit cards, award credit cards are not for you. All the interest you pay will discount the value of the points earned. So keep that in mind. Also award travel cards almost always have high interest rates.
The best way to rack up credit card points is to earn the Sign Up Bonuses (SUB). Award credit cards offer a sign up bonus with requirements when you sign up for a new card. The requirements are often spending $3000-4000 in the first 90 days after opening the card. Take a look at your normal budget and see how many expenses you can pay by credit card each month. You won’t be able to pay a mortgage, rent, or a car payment with a credit card. If you can meet the spend requirement with your normal expenses, then getting an award card will work for you. If you don’t usually spend that much, plan getting a new award credit card around a time that you expect more than normal expenses. These times include Christmas, sending a child to college, moving, medical expenses and vacation. Do not ever go after a spend requirement that is just too hefty for your budget. Once you earn a SUB, you repeat with another card offer.
What does it do to my credit score?
Your credit score will fluctuate a few points when opening credit cards, but over time, your credit score will likely increase. This is due to payment history and credit usage.
Annual Fees?
You may not want to pay an annual fee for credit cards. But is $95 worth $900 to you? Don’t be afraid of annual fees that will bring far greater value than $95. Do be careful about cards that have high annual fees ($395+). It is always worth paying an annual fee for the SUB when opening a card. After that it may be best to cancel or downgrade the high annual fee card after having the card for a year.
Best Offers
The best current elevated offers are listed on the Referrals Page.
Recent Data Points:
You might wonder, are there actually good deals to be found with points. Yes, absolutely. Here are a few that I found recently:
American Airlines one way ticket Salt Lake City to Liberia Costa Rica 8,000 miles. Cash price $428. So if we were comparing cash back—8000 points would be about $80. So getting an award ticket for 8,000 points is a steal compared to the $428 cash price.
Paris Hyatt Regency €285 ($307). Points 18,000 If we compared cash back 18,000 points would be $180.
My Adventures
In the last year, I used credit card points to buy airline tickets to Thailand, Hawaii, Japan, Costa Rica, and Salt Lake City. I also used points to book hotels in Thailand, Japan and Costa Rica.
