Learning To Travel On Points

Let’s start with The Basics:

  • Certain credit cards give you the option to earn “points”

    • Points are earned by getting and using specific travel rewards credit cards

    There are 2 types of travel rewards credit cards: “Bank cards” and “Co-branded cards”

    • Bank credit cards are great because the points you earn can be used with any of the bank's travel partners (hotels and airlines) The Chase Sapphire Preferred and Capital One Venture are examples of “bank cards”

    • Co-branded credit cards are tied to a specific brand, like the United Explorer card or the Hilton Honors card. With these cards you only earn points with that particular hotel or airline

    When you book travel, you can pay with points instead of cash

    • If you have enough points, your travel can be nearly free!

  • Earning sign-up bonuses on travel rewards credit cards will help you accumulate points fast

    • No more using the same credit card for years on end

    • When you get a new travel rewards credit card, it usually comes with a sign-up bonus offer, something like: “Earn 60,000 points after spending $4,000 within the first 3 months”

      • This is your golden ticket. This is the bread and butter to earning points quickly.

      • The amount of points, the minimum spend requirement and the deadline will vary based on the card and offer (see examples in the images below)

    Put simply, to earn points quickly:

    1. Get a credit card that has a good offer and makes sense for your lifestyle

    2. Earn the sign-up bonus points by meeting the minimum spend by the deadline

    3. Get another card (and another bonus) once you are ready

    4. Rinse and repeat

  • Many people are concerned that opening credit cards will have a negative impact on their credit. That's a valid concern! But overall, having more available credit and using cards responsibly can significantly improve your credit score.

    *To be successful, you need to use credit cards in the same way you would use a debit card.

    *Only use credit cards for your normal expenses and pay your statement balance in full every month.

    How Credit Cards Come Into Play with Your Credit Score:

    • Payment history (35%): If you pay your credit card bills on time each month, this should help your score increase. This is the biggest factor in your score, so set up autopay and never be late on a payment!

    • Credit utilization/Amount owed (30%): Never max out your cards! Having a lot of available credit can boost your score, as long as you use less than 30% of your credit limit. A low utilization rate will really help your score since it makes up 30% of your total score!

    • Credit history (15%): Keep your oldest credit card open…even if you don’t use it often (or at all). If the card carries a high annual fee, call the bank and ask to downgrade the card to a no-fee version. This maintains your account history and keeps a good relationship with the bank.

    • Credit mix (10%): Having several different lines of credit should have a positive impact

    • New credit (10%): When you get a hard inquiry while applying for new credit, your score may drop a few points. But if you space out your applications and maintain old accounts, this shouldn't affect you in a major way (it's only 10% of your score)

Take The First Steps

  1. Have a Plan

    • Knowing where you want to go makes it easier to plan which credit cards you will need to get

    • Credit cards earn points with different hotels and airlines—depending on which bank issued the card or if it’s a co-branded card

    • So it’s important to understand what each card offers and how you would use those points

    • Research which airlines and hotels are best for your destination

    • Practice award searches to estimate how many points you will need for flights and hotel

    • The How-To Guide provides lots of visuals to help you start planning your trip

    • Bank cards like the Chase Sapphire Preferred and the Capital One Venture earn points that can be used with many different hotels and airlines.

      *That makes them good starter cards since you have lots of options on how to use the points you earn with them

    • Begin earning points now. Once you get a stockpile of points, you can check to see where those points can take you!

2. Choose a Credit Card & Apply

    • Choosing a good credit card offer Is an important piece of the puzzle

    • The offer you get in the mail for 100,000 Hilton points is not the same value as a 60,000 point Hyatt offer (hint: the Hyatt card will likely get you more hotel nights!)

      • Do some research: Search to find out how many points you will need for your desired flight and hotel stay

      • Then you will have a better idea of whether or not a credit card offer is worthwhile

    • If all of this seems overwhelming, check out The Game Plan for a personalized card strategy for your specific trip!

    • Always consider the minimum spend requirement and timeline the card allots you to meet that spending threshold

    • There are so many cards out there. You can find one that aligns with your budget and goals

    • If you have a destination in mind, make sure the points you are going to earn are compatible with airlines and hotels at that location

    • Fill out the credit card application as you normally would

    • Waiting about 90 days between credit card applications is a typical guideline

    • For more guidance on credit card applications, including strategies for business cards, check out The Guidebook

3. Meet the Minimum Spend

  • Each credit card offer will require you to spend a certain amount of money within a set amount of time

    • You must meet the minimum spending requirement by the deadline

    • Be strategic and plan when you get your next card around big expenses: taxes, renovations, tuition, insurance, furniture, etc.

    • Never spend more money than you usually would just to meet a minimum spend requirement

    • Pay your statement balance in full every month to hold yourself accountable for your spending (and to improve your credit score!)

    • If the minimum spend worries you, don't apply for that card

    • Missing the deadline disqualifies you from earning the sign-up bonus

    • Going into debt to meet a minimum spend that is too high for your lifestyle goes against this whole method (saving money by using points for travel)

    • Find a credit card with a lower minimum spend requirement or one that gives you more time to meet the requirement

    • For more strategies around meeting the minimum spend, check out this blog post

4. Do It All Again

    • Try to plan ahead. Have your next card lined up to use once you meet your minimum spend on the current card. Then, switch!

    • The goal is to always be working towards earning a sign-up bonus. This is how to build a stockpile of points quickly.

    • If you are overwhelmed with which cards you should be getting, consider The Game Plan, where you’ll receive a blueprint of what to get so you have the points you need for your trip

    • Use a partner (“Player 2”) to more than double your points earnings

    • You will get the credit card and earn a bonus, then your partner will get the same credit card and earn the bonus. During this process, you refer each other to every card in order to also receive referral bonus points!

    • This is a good way to space out how often you are getting new credit cards, since you are taking turns getting new cards with your partner

    • Stay organized and keep track of your payments and sign-up bonus deadlines

    • It can get overwhelming once you start getting more than a few new cards

    Use the Travel Freely app to do this easily

    • Travel Freely keeps track of all of your card deadlines for you and you can set up notifications so you never miss a sign-up bonus deadline

5. Book Your Travel

    • With “bank cards” the best value for your points is when you transfer your points to partner hotels and airlines

    • If you are unsure who the bank partners with, you can use the bank’s name and do a basic internet search (for example: “Chase Transfer Partners”)

    • Only transfer the points when:

    1. You found your desired flights and/or hotel room

    2. You have enough points

    Once you transfer points to a hotel/airline, you can’t get them back!

    • For Example: After transferring your Chase points to Hyatt, you can’t send them back to Chase if your plans change

    • Book your travel as soon as your points transfer is complete!

      *Availability and pricing changes frequently—what’s available and affordable today may not be there tomorrow. So be ready to take action!

    • If you have a co-branded card, your points will appear in your hotel or airline loyalty account soon after you earn your sign-up bonus (no transferring needed!). So, go ahead and book your travel!

    • If you want assistance with choosing cards and booking your trip, check out the Services

    • You can use your points to book flights, hotels, car rentals and more in the bank’s travel portal

    • This can be a good option as it provides more choices. Consider getting The Guidebook for a breakdown of bank travel portals and real booking examples

    • Always double check that you are getting a good value (compare the cost in the portal to what a partner booking would cost for the same itinerary)

    • You could use your points to “erase” travel charges

    • This gives you total flexibility on what and how you book

    • But your points are likely worth double, triple or even more when you use them with transfer partners instead of using the “eraser” or statement credits

Examples of Credit Card Welcome Offers

  • World of Hyatt Credit Card

    Offer: 60,000 points, after spending $5,000 within 3 months of opening the card

    These points would only be usable with Hyatt hotels. They are "Hyatt points"

  • Capital One Venture Credit Card

    Offer: 75,000 miles after spending $4,000 within the first 3 months. (Miles = Points)

    These points can be used with partner hotels & airlines, and in the Capital One travel portal

  • American Express Gold Card

    Offer: 100,000 points after spending $6,000 within the first 6 months of opening the card

    AmEx points can be used with partner hotels & airlines, and in the AmEx travel portal

Common Concerns

Is the travel actually free?

  • When you pay with points, you reduce your costs drastically—but it usually won’t be completely free.

    How much you spend out of pocket depends on many factors including:

    • How many points you have (typically you can pay with points & cash if you do not have enough points)

    • How you are booking (transferring points, portal booking, etc.)

    • Which hotel and airline you choose

  • Many hotels charge a modest nightly “resort fee.” Typically you can’t use points to pay this fee.

    • Hyatt and Hilton do not charge those fees when paying with points, so those hotel stays can actually be completely free if you have enough points

    When you book airfare using points, you will always need to pay taxes and fees out of pocket.

    Taxes and fees vary significantly depending on:

    • If it is a domestic or international flight

    • Which airline you are booking with (i.e. some airlines pass on surcharges for fuel to passengers…others do not)

  • A workaround to paying taxes and fees is if you book in the bank’s travel portal, instead if transferring your points to a partner airline/hotel.

    • Usually you do not get the same value for your points as you would if you book directly with the hotel and airline.

    • But in the bank’s travel portal, taxes and fees are typically included and payable with points

    So if your goal is for your trip to be as close to free as possible, travel portals could be a good option for you

    • Paying with points gives you the capability to save thousands of dollars on travel

    • You control how many points you earn and how you use them

    • Check out The Comparison to see the difference between paying with points vs. not using points (paying cash)

Do I keep these cards forever?

    • Many people are scared of paying an annual fee on a credit card

    • Usually cards with high annual fees come with much higher sign-up bonuses, so you should always consider them

    It is typically worth it to get a card with an annual fee because the points you are awarded can be worth thousands of dollars in travel.

    • Would you pay $99 to receive $2,000?

    • When transferring points, the value can equate to thousands of dollars

    • See The Comparison for real-life examples of the cost differential when using points vs. paying without points

  • Sometimes it is worth it to keep a card for the benefits that come with the card.

    These are examples of the many benefits that travel rewards may come with:

    • Free checked bags

    • Early boarding

    • Rental car insurance

    • Status at a hotel chain

    • Annual travel credits

    • Cell phone insurance

    • Trip insurance

  • If you do not want to keep the card, consider downgrading the card

    You can call the bank and ask to change your card to a no-annual fee credit card

    Benefits of downgrading:

    • Keep your line of credit open, which helps your credit score

    • Keeps your account open, which lengthens the age of your account

    • Keeps a good relationship with the bank, so you will be more likely to be approved for other cards later on

  • You can cancel your credit card but you should always wait at least one year to avoid it hurting your credit and your relationship with the bank

    You could ask the bank for a retention offer when you call to cancel

    • Sometimes they will offer you more points if you spend some money on the card, to help offset the fee

Is traveling on points for you?

  • The key is to only use your credit cards for your regular expenses

    • If you start spending extra in order to meet your minimum spend requirements, then you’re missing the point

    If you don’t pay off your credit card balances in full every month, you need to pay interest and it will impact your credit

    • Paying your bill in full every month should increase your credit score and keep you accountable for your spending

    • The goal is to leverage everyday spending to earn points, so that your travel costs are mostly covered

    • You will need good credit to start, since the process is based on getting approved for travel rewards credit cards

    • Credit not stellar? Don’t be discouraged. Here are some great suggestions to boost your credit score fast

  • Once you are ready, there is no limit to how many points you can earn. You will never run out of cards to get.

    • If you need a hand in figuring all of this out, check out The Services

    Your biggest travel concern will be, “Where should I go next?”

    Your life is about to change.

Overwhelmed?

I’ve done the research for you. Let me help you piece together your Points Puzzle.

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