With all the talk of a pending recession, saving some money on your next vacation is likely even more top of mind than usual. Luckily, there’s a solution out there to help you save money while still enjoying your next vacation!
The answer is traveling with rewards points. All this entails is using existing systems to your advantage to get discounted and free airfare, hotels, car rentals, and other travel expenses.
So, you can get your next vacation on the house! Below, we’ll highlight the six steps to traveling on rewards points that any beginner can use to get started – yes, even during a recession.
What is Traveling with Rewards Points?
As briefly mentioned,
Traveling with rewards points is the process of using existing systems to travel on a discount or for free.
That’s a little broad, though. More specifically, it involves taking advantage of programs such as:
- Airline miles programs
- Hotel rewards programs
- Credit card rewards
- Credit card sign-up bonuses
- And more
For example, say you sign up for an airline miles program and use the rewards from that program to get free flights. That’s the essence of using travel rewards points. By signing up for and utilizing these programs, you can score some sweet deals, and we’ll highlight all of that and more in the six steps to traveling on points below.
6 Steps to Travel on Points
For beginners, there are six steps that you need to know to start traveling using rewards points. You can get started on steps 1-4 today pretty easily, and then steps 5-6 are ongoing steps that you will use over and over again as you get more familiar with the process.
Once you get these six steps down, you can start to look to maximize your points and miles, but for now, we’re focusing on the 80/20 principle and the basics to get started. You can worry about eeking out every possible dollar from travel rewards later down the road.
Step 1: Sign Up For Airline Rewards Programs
First things first, you need to sign up for an airline rewards program. It’s best to pick one airline that you can frequently fly from your home airport. Signing up is the easy part, but accumulating miles takes time.
When you spread yourself across a few airlines, you spread those miles across various airline programs as well (typically, you cannot combine miles from different airlines).
Sticking with one airline when possible is the best way to accumulate miles fast.
The largest airlines in North America are below, in case it helps narrow down your selection:
- American Airlines
- Delta Airlines
- Southwest Airlines
- United Airlines
- Air Canada
- Alaska Airlines
- JetBlue Airways
- Spirit Airlines
Of course, you can also wait until you go to book your next flight before signing up. That way, you make sure you sign up for the airline you will use.
Step 2: Sign Up For Hotel Rewards Programs
Similar to airline miles, hotel points are best when accumulated with one hotel brand. Try to sign up for one and stick with it where you can. Luckily, most hotel loyalty programs are at the corporate level and cover a wide variety of hotel chains. For example, Marriott hotels encompass a few familiar hotel chains:
- JW Marriott
- The Ritz Carlton
- And more
A big hotel chain like Marriott has close to every major city covered in the US. There are a few other large hotel companies that you can consider signing up for that will have similar coverage to Marriott:
Just like airlines, you can always wait to sign up for a program when you book your next hotel. Sometimes, they offer deals for new members of their loyalty programs that you can take advantage of too.
Step 3: Research Credit Cards
The most important (and most beneficial) step to traveling with rewards points is researching credit cards. Every credit card will have its advantages, but there is no doubt that some are better than others. Especially when you consider all of the perks that credit cards could offer, including:
- Sign up bonuses (usually bigger with premium credit cards)
- Cashback or point rewards
- Fraud protection
- Purchase protection
- No foreign transaction fees
- TSA pre-check
- Free checked bags when flying
One massive difference between credit cards lies within their cashback and points programs. While many will offer a standard 1% or 1.5% cashback (or point) reward, just as many other cards provide specific rewards for certain categories of spending, like groceries or travel.
This matters a lot for consumers like you! If you spend a lot on groceries, you want a credit card with generous grocery rewards. Similarly, if you spend heavily on travel, you’ll want a card that rewards travel spending.
You should do your research to understand which credit card offers the best point rewards program, and other perks, for you. If you need some help with the investigation, you can use this calculator to find the best credit card for you based on your past spending habits.
I’ve shared the cards I’ve personally signed up for on this page and I think these are a great lineup to start with!
Step 4: Get Your First Credit Card
Once you’ve researched and selected your first credit card, it’s time to apply. Before doing so, check your credit score to ensure your score is high enough to get approved for the card you selected. If it is, you should have no problem getting approved. Once you have the first card, you should:
- Spend enough money in the introductory period to get the sign-up bonus
- Then, wait a few (3-6) months
Usually, the sign-up bonus details will sound something like “spend $3,000 in the first three months to get 50,000 bonus points.” While $3,000 is a ton of money, it’s something you want to do, because 50,000 points is a ton of points!
Even if you don’t spend this much money naturally, there are ways to move up typical expenses so that you qualify for the bonus within the specified time. Some common strategies include:
- Pre-paying for an annual gym membership (rather than monthly)
- Buying a lot of shelf-stable groceries
- Pre-paying for insurance (car, home, life, or other insurance)
The last thing you want to do is go on a shopping spree to get the bonus! It’s better to cover it with ordinary expenses, if possible.
I put all of our bills and every expense I possibly can on the cards to get the bonuses. Doing this allows us to get the rewards without doing any spending we weren’t going to otherwise.
Step 5: Use Your Points and Reward Programs!
Once you’ve gotten your credit card bonus and accumulated some points over the first 3-6 months,
you can consider using your points and rewards!
It depends on how big of a trip you want to plan. A sign-up bonus can likely cover a couple of domestic round trip tickets, but if you want to cover an entire vacation, you might need to wait 6+ months to earn enough credit card points.
For example, I took a 5-day trip to Arizona (from Chicago) and got my flights and hotel covered with 74,534 Chase Ultimate Rewards Points. That’s a little more than the typical 50,000-60,000 point sign-up bonus that Chase offers with it’s Sapphire cards.
The other factor at play here is that you likely have not accumulated any hotel points or miles at this point. Steps 1 and 2 above got you started, but you need to take a trip for that to happen. So, it’s up to you if you want to:
- Book a shorter trip immediately, or
- Wait a few extra months to accumulate more points and book a more extensive trip
Step 6: Get a New Credit Card Every 6 Months
To continue traveling with rewards points, you should look to get a new credit card about every six months. This is not an exact number of months you need to follow, but it’s a reasonable guideline. There are a few details within Step 6 that are important for beginners to get right:
Get New Sign-Up Bonuses:
Earning everyday credit card points is excellent, but they come at a much slower pace than sign-up bonuses. Sticking with our example above, you could earn 50,000 points when you spend $3,000 with a sign-up bonus.
That’s over 16 points per dollar spent!
With ongoing rewards, you’ll likely earn points at a 2% cashback rate (at best). This is just an average, but it would only equate to 2 points per dollar spent.
Getting a sign-up bonus can provide an 8x better reward than your typical, ongoing credit card rewards.
Don’t Hurt Your Credit Score:
The vital balance to strike with opening credit cards is not to damage your credit score. Opening a new credit card will result in a hard credit check on your credit score, which will send your score in a negative direction. That said, with responsible use of credit cards (and other loans), your score should bounce back to normal within a few months.
Hard credit checks only result in a short-term negative impact. Waiting ~6 months between opening cards gives your score time to rebound and not take too much damage. Plus, it allows you to make sure you can get the sign-up bonus with every card that you open. Said otherwise, opening five credit cards in one day is not advised!
Summary: Intro to Traveling With Rewards Points
Travel with rewards points can be an easy and effective way to travel for free when you know the steps to take:
- Sign Up For Airline Rewards Programs
- Sign Up For Hotel Rewards Programs
- Research Credit Cards
- Get Your First Credit Card
- Use Your Points and Reward Programs!
- Get a New Credit Card Every 6 Months
So go ahead and get started with steps 1-4 today! You’ll be traveling for free before you know it.
This article originally appeared on The Money Mix and has been republished with permission.
Kevin runs the personal finance website Just Start Investing, where he focuses on making investing easy. Just Start Investing has been featured on US News & World Report and Chime Bank, among other major publications for his easy-to-follow writing. Check out Just Start Investing to learn the simple strategies to start investing today, as well as ways to optimize your credit cards, banking and budget.