Travel Rewards: Your Secret Weapon to Cheap Travel
You're friend just booked a 10-day vacation for less than $2000....how did she do it?!
This is the one thing I see majority of travelers missing out on. There are endless opportunities to earn rewards and to travel for discounts or even FREE! Travel rewards are your secret weapon to traveling for cheap.
Travel rewards can be scary and overwhelming, but that's why I'm here. We're going to cover...
Travel Rewards Explained
How to Earn Rewards
How to Use Your Rewards to Travel
I've written this beginner's guide to help you get started with earning points and rewards for your dream vacation. This topic could go on forever, so keep in mind this is just a basic overview of how to work the system.
The quickest and easiest way to earn travel rewards is to use a travel credit card. Don't get scared just yet. Let me explain...
Everyone has bills to pay, gas to fill up their tank and groceries. Very few people pay for any of that with cash. Typically we swipe our debit card. Only with a debit card, you get nothing in return. When you use a credit card, you earn points or miles to be used toward a vacation. You're spending that money regardless, so wouldn't you like to know you get something in return?
Now, there is one rule to follow when using a travel credit card....
Pay your bill in full, on time, every month.
Never spend more than you can afford. The travel card is not intended to be a crutch or a reason to buy extravagant gifts. It is intended to reward you for everyday spending. If you wouldn't have bought it without the credit card, then don't buy it with the credit card.
Summary: Use the travel credit card for normal living expenses to maximize your points.
TRAVEL REWARDS EXPLAINED
The best way to think about points and miles is as a type of currency. You are essentially getting cash back on purchases you make. This can be with airlines, hotels, travel credit cards, etc. All of those "currencies" are worth a certain dollar amount to be exchanged for travel. The catch is that they are not all created equal. There are different exchange rates based on who your rewards are with.
Still tracking? Let me give an example.
American Airlines: 1.4 cents
Chase: 2 cents
Marriott: 0.8 cents
Doesn't seem like very much, but it will add up quickly! These differ throughout the year, so make sure to check before you book any travel. The Points Guy has a really good resource for checking exchange rates. For reference, 50,000 miles with American Airlines is worth roughly $700 (50,000 x $0.014 =$700).
So, the point of gaining rewards is to travel for cheap. You never want to use your points on something that would cost less to pay for out of pocket. So, if you need an American Airlines flight that costs $400 or 50,000 miles, you would be better to just pay out of pocket versus spending points. If that flight costs $900 or 50,000 points, then you can save yourself a lot of money by using points.
Summary: Points and miles are travel currency equivalent to a dollar amount. Use them wisely!
HOW TO EARN REWARDS
We've already discussed everyday spending as a way to earn rewards. So, here are a few other ways...
Sign-Up Bonuses: Most travel credit cards have a "Welcome" bonus. This is a large lump sum of rewards after spending a certain amount. For example, Chase offers 60,000 bonus points when you spend $4000 in the first 3 months. Sounds like a lot, but being strategic on when you apply is critical. Here's how I got the very same deal with Chase...
We were already searching for new furniture. We had set the money aside, went shopping, and found the furniture we wanted. We applied for the Chase Sapphire Rewards Card, and used it to purchased our furniture. Then we simply took the money we had already set aside to pay off the bill at the end of the month. We qualified for the bonus for purchasing something we had already budgeted for.
Another easy way is to simply pay for those everyday living expenses. You would be surprised how quickly they can add up!
Shopping Portals: Instead of going directly to the retailer's site, start on the airlines (hotels, rewards cards, etc) shopping portal. This will then direct you to the retailers site. You will be purchasing the exact same item, BUT because you went through the shopping portal you'll earn rewards. These portals can easily be googled.
Travel: Of course, travel is another way to earn points. Most travel credit cards give you 3x the points on travel expenses, so you have the chance to earn a little extra. Hotels and airlines also give points for every stay and flight.
Summary: Spend smart. Spend responsible.
HOW TO USE YOUR REWARDS TO TRAVEL
When you're ready to actually use your points, your options are going to vary based on your credit card, airline, hotel, etc. Some credit card companies have their own booking agent, so it makes it super easy to book your travel with points. Airlines and hotels almost always give you the option to use points when booking as well.
Always use your points for the most expensive portion of your trip. Like I mentioned above, the point of rewards is to pay less. Also, your points can transfer to partner companies (American/Hyatt or United/Marriott for example) if you need to use them for certain portions of your trip.
If you want help maximizing your rewards points, feel free to contact me and I can help walk you through the process.