Travel Smarter, Not Harder: Are Travel Rewards Credit Cards Right for You?

Traveling can be both enriching and fulfilling, but it can also be costly.

I worked in the hospitality industry for years before I got burnt out.

I switched careers, but my love for travel and hotels didn’t go away.

What did go away?

My hotel team member discounts. We’re talking $29/night sometimes. Ouch. That’s how I found earning points and miles!

A significant part of this involves opening travel rewards credit cards, but isn’t only about credit card sign-up bonuses.

Although earning points and miles with credit cards can be lucrative numerous other strategies can make your travels more affordable. But what if you do want to be opening those travel rewards credit cards?

Is it worth it? Is this strategy right for you? Let’s find out!

How to earn Points and Miles?

Earning points and miles is all about leveraging loyalty programs and optimizing your everyday spending, allowing you to afford incredible travel opportunities.

Contrary to popular belief, it’s not only about opening a million credit cards to secure welcome bonuses.

It’s a strategic approach to travel that can benefit anyone, regardless of their travel preferences or comfort level with credit cards.

In fact, even if you’re not interested in opening multiple cards, there are still plenty of ways for you to join this game and reap the rewards.

If you’re not ready for credit cards check out this post about 7 strategies that don’t require credit cards.

Why are credit cards important?

Although it’s not the only way, credit cards play a significant role for several reasons.

They offer many benefits and rewards that can enhance your travel experiences and make your trips more affordable.

Welcome Bonuses: Travel rewards credit cards often provide attractive welcome bonuses, which are bonus points or miles awarded when you meet a specific spending requirement within a designated period.

These bonuses can be substantial, sometimes enough for a free round-trip flight or several nights at a luxurious hotel.

By strategically selecting credit cards with nice welcome bonuses, you can kickstart your journey with a significant boost.

Ongoing Rewards: Travel rewards credit cards typically offer rewards programs that allow you to earn points or miles for every dollar spent on eligible purchases.

Some of these credit cards also offer bonus earnings for categories such as travel, groceries, gas, and restaurants. By using credit cards strategically for everyday expenses, you can accumulate rewards faster and maximize their value.

Flexible Redemption Options: Travel rewards credit cards often provide flexibility when it comes to redeeming your points or miles.

You can typically use them for a variety of travel-related expenses, including flights, accommodations, rental cars, and more.

For some redemption ideas, check out these resorts that you can book with points.

Travel Benefits and Perks: Travel rewards credit cards also offer additional perks and benefits that enhance your travel experience.

These can include airport lounge access, priority boarding, free checked bags, travel insurance, hotel upgrades, and concierge services.

These perks can significantly elevate your travel comfort and save you money on expenses you’d be paying anyway.

Foreign Transaction Fees and Travel Insurance: When traveling internationally, you want to make sure that you’re not paying a foreign transaction fee on top of your purchases.

This can easily be avoided if you use a travel rewards credit card that offers no foreign transaction fees. Additionally, certain cards offer travel insurance coverage, providing peace of mind in case of trip cancellations, lost baggage, or other unforeseen events.

Not all credit cards are created equal

Not all credit cards are created equal, especially when it comes to earning travel rewards.

While certain credit cards, like the Costco credit card, aren’t designed to earn travel rewards, others, such as cash-back cards, may have limited options for converting rewards into travel benefits.

By combining a cash-back card with a travel rewards card in the same card family like the Chase Freedom cards and Chase Sapphire Preferred® Card or Chase Sapphire Reserve®, I can convert my cash-back rewards into valuable travel rewards.

So when you’re considering which credit cards to apply for, remember that not all credit cards will earn travel rewards. You can check out a list of some great travel rewards credit cards on my best credit card offers page.

Is it worth it?

That’s a common question for those considering diving into the world of loyalty points and miles.

The answer varies depending on your travel goals, preferences, and financial situation. Here are key factors to consider:

Cost Savings: Earning points and miles can lead to significant savings by using points and rewards to reduce or eliminate travel expenses.

It makes travel more accessible and allows you to experience destinations and activities that may have been unaffordable otherwise.

Enhanced Experiences: In the world of travel rewards credit cards and points you can enjoy upgrades to premium cabins and complimentary stays at luxurious hotels.

Exclusive perks like airport lounge access and priority boarding enhance your overall travel experience.

Flexibility and Freedom: Points and miles provide flexibility in planning your trips, allowing you to customize your itinerary and explore destinations within your budget.

It may not be for everyone. But if you’re financially responsible there’s no reason why you shouldn’t take advantage of these strategies.

You’ve worked hard for your money so it’s time that you make your money work for you!

What are the cons?

While there are numerous benefits, just like with everything there are pros and cons.

Some of the cons are actually common misconceptions and myths debunked.

Credit Score Impact: Opening multiple credit cards can have an impact on your credit score.

Each new credit card application results in a hard inquiry on your credit report, which may cause a temporary dip in your score.

Additionally, maintaining multiple credit cards requires responsible credit management and timely payments to avoid accruing high-interest debt. It’s crucial to be mindful of your credit utilization and overall financial health.

These points and miles apps can help take the burden off of managing your credit cards.

Annual Fees: Some travel rewards credit cards come with annual fees.

While these fees can be offset by the value of the rewards and benefits they offer, it’s essential to evaluate whether the annual fee is justified based on your spending habits and travel goals.

And if you’re not utilizing the card’s benefits or rewards effectively, paying an annual fee may not be worth it.

I’ve got a blog post about annual fees and whether they are worth it.

Limited Availability: While loyalty programs can offer incredible value, popular travel periods or peak seasons might have limited availability for award redemptions making it challenging to secure your preferred options. Flexibility in your travel plans is key.

Learning Curve: Yes, earning points and miles involves a lot of rules and strategies. It requires time and effort to understand the intricacies of different programs, maximize rewards, and stay updated on changes and promotions.

It can be overwhelming for beginners or those who prefer a more straightforward approach to travel.

Luckily for you, I have a laid-back approach that I like to call lazy budget travel. If you want to get started, click below for my free cheat sheet!

Risk of Overspending: To meet minimum spending requirements for welcome bonuses, it can be tempting to overspend on credit cards.

Being financially responsible is essential to reap the benefits without compromising your finances.

Changing Terms and Conditions and Devaluing Points: Loyalty programs and credit card rewards can change their terms and conditions or devalue points and miles, sometimes with little notice.

This can impact the value of your accumulated points or miles, alter redemption options, or introduce new restrictions.

Staying informed with blogs, newsletters, and Facebook groups can help you stay on top of this.

Despite these potential cons, many travelers (myself included) find that the benefits far outweigh the cons. But it’s essential to evaluate your own circumstances, preferences, and willingness to invest time and effort into maximizing your everyday spending.

There’s no right way so you should come up with your own strategy that aligns with your lifestyle and travel goals.

Is this Bad?

No, this strategy itself is not inherently bad, but it does come with potential risks and consequences if not approached responsibly.

One risk is falling into debt or overspending when trying to meet minimum spending requirements on multiple credit cards.

It’s important to have a solid financial plan, budget wisely, and pay off credit card balances in full each month to avoid accruing high-interest debt.

Earning points and miles with credit cards can impact your credit score through inquiries and account closures. However, if done responsibly (avoiding multiple applications at once, keeping your oldest account open, and not closing accounts too soon), it can actually improve your credit score by increasing your credit limit.

Assessing Your Finances

We’re not giving financial advice here, but it’s essential to assess your financial situation before you begin on this journey of opening credit cards.

Earning points and miles with credit cards can be a fantastic way to save money on travel, but it’s not the right fit for everyone.

High-interest debt: Do you have outstanding high-interest debt like credit card debt? The average interest rate for credit cards is around 16%.

This can significantly affect your financial fitness as you’re just throwing money away.

If this is you, you should not get into credit cards until you have paid off all your credit card or high-interest debt.

Credit Score: Your credit score plays a significant role when earning points and miles with credit cards. It affects your ability to qualify for those travel rewards credit cards with lucrative sign-up bonuses and awesome benefits.

A higher credit score generally opens up more opportunities, so take the time to check your credit score and work on improving it if necessary. If you don’t know your credit score download the Experian Boost app.

Shifting Payment Methods: Use your credit card like a debit card

A lot of people have a hard time shifting their mindset from using their debit card for everyday purchases to travel rewards credit cards – Thanks Dave Ramsey (side eye).

But it’s the most crucial step to maximizing and earning points and miles on your everyday spending.

Make your money work for you!

Ask yourself – why do you need to use your debit card for your everyday purchases? If the answer is because you’re afraid of overspending then that’s something that can be fixed.

You need to shift your mindset and think of your credit card as a debit card.

The fact is, that using a credit card for your everyday purchases is not only more rewarding but it’s safer.

By using travel rewards credit cards, you can take advantage of lucrative sign-up bonuses and earn valuable points on everyday spending to fund travel, enjoy travel-related benefits such as airport lounge access, travel insurance, etc., and build a long-standing credit history.

Here are some tips for using a credit card like a debit card:

Set up automatic payments: Schedule automatic payments for the statement balance of your credit card each month.

This way you’re always paying your credit card bill on time and in full, just like a debit card transaction.

You’ll also avoid interest charges and late fees, plus it’s also great for your credit score. Since you’re not spending money that you don’t have, then automatic payments work perfectly.

Monitor your spending: Keeping a close eye on your credit card transactions and regularly reviewing your statements can help you identify unauthorized charges and errors.

This is also something you should be doing with your debit card anyway. The difference is that credit cards usually come with purchase and fraud protections and extended warranties that debit cards do not.

Use a budgeting tool: Utilize personal finance apps or budgeting tools to track your credit card spending. These tools can help you stay organized, categorize your expenses, and provide insights into your spending patterns. By staying aware of your credit card usage, you can make adjustments if needed.

It’s time to be responsible and take control of your finances. If you don’t, you could be missing out on a whole world of travel benefits and experiences all while making everyday purchases.

Setting Your Travel Goals

It helps to have travel goals when you’re getting started, especially with credit cards.

Are you looking to fly to Europe in business class?

Or stay in 5-star hotels?

Or do you just want to afford a family vacation to Fresno?

It doesn’t matter what your travel goals are, as long as you have them. Having a vision of what you want to achieve through travel allows you to make informed decisions and maximize your efforts.

Consider how much time you can allocate to travel each year and the duration of your trips. This will help you plan your strategies accordingly and be aware of any flexibility required.

Reflect on your travel style and preferences. Determine if you lean towards adventure or luxury, solo or group travel. Do you enjoy comfort and convenience over the cheapest price?

Set realistic expectations for how much you’re willing to spend and how much you want to save on flights or accommodations. Are there any special occasions or milestones you want to celebrate through travel?

Consider the personal growth and experiences you want from traveling. Do you like to experience tourist attractions, cultural immersion, volunteering, or educational opportunities?

Once your travel goals are established, keep them in mind as you explore travel rewards credit cards, loyalty programs, and travel deals.

Evaluate how they align with your goals so you can make informed decisions. Reassess your goals as your journey progresses and adapt your strategies as needed.

Setting clear travel goals not only gives you direction but also fuels your motivation and sense of purpose. So, take the time to dream big, outline your objectives, and get ready for an incredible adventure!

Making an Informed Decision

It’s crucial to remember that no one knows what’s right for you except yourself.

It’s easy to get caught up in the noise of social media, where Instagram and Facebook portray glamorous travel experiences fueled by credit card rewards.

But the truth is, your journey is unique, and only you can determine if applying for new travel rewards credit cards aligns with your financial goals and lifestyle.

That being said, responsible credit card usage is paramount in this game.

Applying for multiple cards within a short period can have a negative impact on your credit score, so it’s essential to space out your applications wisely.

Once you have your travel rewards credit card, spending within your means and making conscious spending decisions are crucial.

Creating a dedicated budget for your travel expenses can help you stay on track and avoid overspending.

Paying your credit card statement on time and in full each month is vital to maintaining a healthy credit history and avoiding interest charges. This ensures that you’re maximizing the benefits without falling into unnecessary debt.

If you’re ready to apply for a travel rewards credit, that’s great!

Check out my blog post on the do’s and don’ts of maximizing your new travel rewards credit card.

It offers tips on optimizing your credit card benefits, avoiding common pitfalls, and maximizing your travel rewards potential.

Remember, this is all about YOU and no one else.

Do what feels right for you and at your own pace. I will tell you that if done right, this strategy can bring you amazing travel experiences that you can afford and that’s priceless.

Want to Travel More for Less?

Become a Budget Traveler! Head over to my start here page and grab my free budget travel cheat sheet  – it’s packed with valuable tips to help you create your own winning budget travel strategy.