June 1, 2020
Due to travel restrictions, plans are only available with travel dates on or after
Due to travel restrictions, plans are only available with effective start dates on or after
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“Normally, the trip would have cost about $1,200. But I used my points.”
“I wanted to surprise him with a trip for his birthday, so I used my points.”
“I thought, why not upgrade to business class? Just used my points.”
Frequent travelers make it sound so easy. But what if you’re new to the world of travel rewards? How do these travel reward programs work? And how can you earn enough for a trip?
That’s why we’re here—to offer a primer for getting started wth travel rewards. It starts with scoring small victories and building the habits necessary to start stacking up points. Eventually you can soak in the view from first class, knowing you paid next to nothing to sit there.
When you get a dedicated travel rewards credit card, you’ll earn points on every purchase that you can redeem. Sometimes, you can use those points to purchase travel on the card’s portal, which typically earns you a bonus. Or, you can redeem your points to cover travel purchases you’ve made on the card, such as flights, hotels, and cruises. It’s important to know that one travel reward point does not equal one dollar. Usually, each point is equivalent to 1-2 cents. Rewards-program enthusiasts will tell you never to redeem points for less than 1.5 cents each.
You don’t need a travel rewards card to earn points. Most travel sites, airlines, rental car companies and hotels offer reward programs simply for consumer loyalty that can be measured in dollars spent, miles traveled or stays completed.
The biggest value travel reward cards offer is the signup bonus. Often, a card will offer 60,000 points or more for signing up and spending a certain amount. That signup bonus may be enough to cover a flight all on its own.
Pursuing travel rewards isn’t for everyone. You really have to be in a comfortable spot financially to succeed with travel rewards management.
Do you already pay your credit cards on time and in full? If you don’t, then don’t waste your time—and your money—chasing travel rewards points. Let’s say you sign up for a travel rewards credit card that gives you 50,000 points if you spend $5,000 in the first few months. Those points can be redeemed for $600 in travel expenses.
It’s a great deal. Except the card has a 24% APR, and every month, you’re charged about $100 in interest on that $5,000. So if you don’t pay it off right away, the value of your signup bonus will shrink. Wait too long, and you’ll pay more in interest than your rewards points are worth.
Wondering if that travel rewards credit card is worth it? They work best for people who:
There is no travel reward program that’s perfect for every single person, so you’ll have to make that decision yourself. We can tell you what’s important to look for.
Sign-up bonus offers: Do some quick research to find out how much that big bonus is worth in the real world. Also, how much do you have to spend to earn that bonus?
Annual fees: As a general rule, the cards that pay out the most travel rewards also have the highest annual fees, reaching $600 per year or more. A few travel credit cards charge no annual fee, but rewards earned are modest.
Points earned per dollar spent: This varies a lot depending on the card. You might earn 1 point per dollar on general purchases. You could earn 3 or more points per dollar spent on specific categories, like restaurants or air travel. And you could earn even more for qualifying travel purchases with a hotel- or airline-branded card. For example, the IHG One Rewards card gives you up to 26 points per dollar when you use it to pay for your IHG hotel stays.
The ability to transfer points: Certain travel reward cards allow you to transfer points to hotel and airline partners. This flexibility makes your points more valuable.
Fine print: Are there blackout dates or restrictions for redeeming travel? Do your rewards points expire after a certain amount of time? Make sure you understand any limitations.
Perks: Your travel credit card may include some valuable extras, such as airport lounge access, free checked bags, free TSA Pre-Check, no foreign transaction fees, and travel protection benefits. Just be aware that credit cards offer minimal protection compared to travel insurance. Read more: Credit Card Travel Insurance vs. Allianz Travel Insurance
Your personal travel plans: Let’s say your travel dream is to fly from Los Angeles to Tokyo, first class. Research the airlines that fly that route and their associated reward programs so you can focus on the most efficient way to earn the points you need.
The first piece of advice from travel rewards pros: Get organized. You can use a simple spreadsheet to track your logons, points earned, expiration dates and other key info. Or, try an online reward point manager. AwardWallet makes it easy to track more than 600 loyalty programs, keeping your credit cards, loyalty point balances, airline/hotel elite status info, and travel bookings all in one app.
Next: Pursue those signup bonuses. Applying for cards, claiming the bonus points, and then closing the cards is callled “churning.” This can enable you to collect huge amounts of travel rewards points, but it can also backfire by hurting your credit score or causing you to run up credit card debt.
Strategic spending can help you earn more travel rewards points, too. This can involve:
Be patient. It can take years to amass enough points for your dream trip. And one more tip: Get a good travel insurance plan! Travel protection is crucial in case of medical emergencies, travel delays, baggage mishaps and other challenges. Plus, the trip change protector benefit can reimburse fees for redepositing loyalty points, if you use those points to purchase travel and then cancel or change your trip for a covered reason. Get a quote for your upcoming trip!
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Terms, conditions, and exclusions apply. Please see your plan for full details. Benefits/Coverage may vary by state, and sublimits may apply.
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