Do you have a travel rewards credit card? If so, are you making the most of it?
If you manage your credit well and pay your balances in full every month, your credit card could pay you to travel. My family gets free flights, free checked bags, free priority boarding, premium airport lounge access and other benefits from travel rewards credit cards.
This strategy can add hundreds of dollars to your travel budget every year, but it only works if you have healthy credit and good spending habits. Do not use this strategy if you struggle to keep up with your bills because it could make your situation worse.
If your credit score needs work or if you are paying interest on credit cards, start changing that today. Cut up your credit cards. Stick to a budget. Pay off your debts so that you can qualify for the best travel rewards cards and travel more often for less money.
If you have good credit, put it to work! Here are tips for using your good credit to get free travel rewards.
Get a card that fits your travel style
Many airlines, hotel chains, and travel brands have travel rewards cards. Chase Sapphire is a great card that doesn’t require you to commit to one brand.
It’s easy to search for cards online, and if your credit is good, you can usually apply online and be instantly approved.
Do you have a preferred airline with lots of flights from your home airport? Or a favorite hotel chain? That’s a good place to start.
For a long time, my primary credit card was the American Express Delta SkyMiles Gold Card because Delta is the biggest airline at our home airport. It fit the way we traveled. I have also used credit cards for Southwest Airlines, Hilton Hotels, and Disney.
More recently, we switched to Southwest Airlines cards. Thanks to a program called Families Fly Free, we've learned how to maximize our points and fly free on Southwest Airlines EVERY TIME.
Watch for annual fees
Most premium travel rewards credit cards come with an annual fee ranging from $95 to $495 per year. There are usually versions of these cards with no annual fees, but they come with fewer benefits.
I have no concerns about an annual fee if I’m getting a big rewards bonus when I sign up and I know that the rewards will be much greater than the fee. When I’m less certain, I start with the version that has a lower annual fee.
If your card has an annual fee, make a note of your sign-up anniversary in your calendar. Collect your big bonus and then downgrade to a fee-free version or cancel before the end of the first year if it doesn’t become one of your preferred cards.
Related: My Review of Families Fly Free
Pay your balance in full
This is how you travel for free with credit card rewards! It’s SO IMPORTANT to pay your credit card balances in full every month.
When you carry a balance, you typically pay a high rate of interest. When you pay interest, the credit card company isn’t paying you… You’re paying them! Most people pay more in interest than they receive in rewards, which is why the credit card companies and their partners can afford to offer big sign-up bonuses and travel rewards.
When you pay your balance in full every month, you beat the system. You’ll save big money when you stop paying interest, plus get all the rewards that come with the card. Your credit score will keep going up because you pay your bills on time and in full.
If you are currently paying interest on credit card balances, adjust your spending habits and pay down the debt faster so you can qualify for the best rewards cards and let the credit card companies pay you to travel.
Put everyday expenses on the card
Most travel rewards credit cards require you to spend a certain amount in the first 4-12 weeks to get the big sign-on bonus. Make sure you have a plan to spend that amount and pay it off before you sign up for the card.
Use the rewards credit card to pay for groceries, fuel, clothing, and other everyday expenses. Don’t increase your spending – just shift it from your checking account, cash, or another credit card. Keep track of your budget and pay your balance in full every month.
Then watch the rewards start adding up.
Pay attention to special offers on your credit card’s website. There are often opportunities to get extra rewards points when you use the card at particular businesses, or for categories like groceries or gas stations.
We never came close to earning even the cheapest one-way flight in the Delta SkyMiles program until we got the SkyMiles credit card and started using it for everyday expenses. Now we earn free flights every year. Plus, we get free checked bags and priority boarding every time we fly Delta.
Planning a big purchase?
We save for home improvement and could pay these expenses in cash. But when our heater needed to be replaced, I shopped for credit cards with big sign-up bonuses.
I applied for the American Express Hilton Honors Surpass Card and used it to pay for the heater. Then I used our savings to pay off the credit card in full.
The expensive heater covered the minimum spending requirement and 60,000 points were soon added to my free Hilton Honors account, plus I was upgraded to Gold status. That’s about $300 toward Hilton hotel stays, which made the $95 annual fee worth it. We continued to use the card that year and earned more free nights, then canceled it just before the first anniversary.
Another time, we planned to go to the Oogie Boogie Bash at Disneyland. Tickets cost $100 per person, for a total cost of $400 for my family of four.
I saved $150 on our tickets by signing up for the Chase Disney Premier Visa Card. The card offered a $200 statement credit after we paid a $50 annual fee and spent $500 in the first 3 months.
I used the card to pay $400 for our Oogie Boogie bash tickets and easily covered the last $100 with everyday expenses. After paying the annual fee, the sign-on bonus basically knocked $150 off the cost of our tickets.
Then we used the card on our Disneyland trip and saved 10% on most in-park shopping and dining. When we returned home, I paid off the card and canceled it to avoid a future annual fee.
Check out ALL your benefits
It's easy to focus on the reward points and forget about all the other benefits that come with your card. Here are a few common benefits that come with travel rewards credit cards.
- no international transaction fees
- “insider” benefits like free bags, early boarding, free breakfast, free upgrades…
- secondary rental car insurance
- lost baggage insurance
- trip delay reimbursement
- access to premium airport lounges
- hotline/concierge service
- extended warranty on purchases
It's smart to know what you already have before you purchase additional insurance and services.
Don’t cancel your old credit card
Your old credit card boosts your credit score. If it has no annual fee, keep it. Just use it less often as you shift your spending to the new rewards card. Length of credit and the percentage of your credit that you use are two important factors that affect your credit score.
Your credit score considers how long you’ve had all your credit accounts and adds them together. Generally, a bigger number equals a better credit score. If you’ve had your old credit card for a long time, it adds to your length of credit and keeps your score high.
A new credit card will increase the amount of credit you have. If you do not increase your spending, your credit score should improve because you will use a smaller percentage of your total credit than you did before.
Juggling credit cards doesn’t make sense for everyone, but if you have good credit and already pay your balances in full every month, consider switching to one good travel rewards card. It can add hundreds of dollars to your travel budget every year and improve your credit score at the same time.