The first time it paid for our entire trip to Hawaii.
The second time it paid for a flight home.
The third time it paid for a plane ticket to Paris.
If used wisely, a rewards credit card can shave off a good chunk of your travel expenses or, even better, completely pay for them. Here are five ways to maximize your points while minimizing your debt so you can (as they say in Europe) “work to live and not live to work!”
#1 – Find the right card for you.
For about five years now I have been using the Escape by Discover Card. This card has not disappointed me yet.
Besides giving me bonus miles for signing on (as most reward cards do) I also receive 2 points for every dollar spent using the card (most cards offer 1 point/mile to 1.5 points/mile per dollar spent). With Escape by Discover I can receive $100 travel credit on every 10,000 points earned.
Travel points for this card don’t expire and there are no blackout dates or restrictions as to how I can use them. That means I can use those points toward any airline ticket purchase or even if I book a trip through a discount site such as Travelzoo or Expedia.
There is a $60 annual fee for the card but as well as this card works for me, I don’t mind paying the fee. Plus that $60 also gets me 120 points. Additionally there is no foreign transaction fee. That means I’m not charged an extra 3 percent when I purchase something at, say, Harrods in London.
The only downside is that Discover is not used as commonly as other cards. My husband and I experienced this hiccup during a recent two-day getaway to Catalina Island. Many of the boutiques and restaurants on the island do not take Discover.
For this reason, I am thinking about applying for a Capital One Venture Rewards Visa or Mastercard. This card has all the benefits that the Escape by Discover card has but is more widely accepted around the world because it is a Visa or Mastercard (depending on what you apply for). The annual fee is only a dollar less than Discover – $59 with a $0 introduction the first year.
#2 – Charge it but only if you have the cash.
The goal is to gain the points but to lose the debt. Here’s how we do it. My husband and I use our Discover card for every purchase we can use it for – from groceries and gas to even paying bills (cell service, water, etc.)
This method obviously accumulates miles quickly, but in order for it to work you must already have the money if your bank account to pay the card off quickly so as not to incur interest charges and debt. This means we use the card within our monthly budget.
To stay even more diligent, I have broken down our budget to twice a month (a set amount of money to cover bills and expenses from the 1st through the 15th and then from the 16th through the end of the month).
I save every receipt as a way to keep track of spending. I then pay the card off every 1st and 15th of every month. The card is basically used as a debit card. If the money runs out from our monthly budget then we simply stop swiping, i.e., spending.
#3 – Inquire about a second card for your spouse.
Some credit cards offer a second card that you can assign to a family member. This card is linked to your account. This is a great way to grab more points but please be warned! This will only work if your spouse is adhering to the budget and knows exactly how the card will be used.
My husband is fully aware of the budget. We openly discuss “personal” purchases with the card. Before we eat at a restaurant we also set a limit as to how much we are going to spend.
Most restaurant menus are available online. Looking at an online menu before going can help manage the spending. I usually do all the grocery shopping but if my husband runs an errand, he goes with a list as well as a limit on how much to spend.
#4 – Know the promotions
Check your card’s website frequently or talk to a representative about current promotions to earn more points. For example, I was recently told that I could earn 10 points per dollar spent on my Discover via the Apple Pay app.
Many stores, restaurants, and gas stations are now accepting this method of payment – including two stores that I frequently go to (Albertsons and Trader Joe’s). So I will be definitely taking advantage of this program.
#5 – Do double duty with your hotel loyalty and frequent flyer memberships.
I’ve already blogged about two hotels offering loyalty memberships that can help you earn airline miles. Here’s how to double-play your cards.
Use your travel rewards credit card to book your hotel stay (this way you can earn points or use points to pay for the room). Then make sure that your booking applies to your hotel loyalty membership for points and/or airline miles through the hotel’s program.
For example, the Hilton Honors program rewards members with 10 points per dollar spent on a booking plus 1 airline mile per dollar spent on that same booking. Let me break this down.
I book a hotel room for one night at $400 using my Escape by Discover card. That’s 800 miles I just earned. Additionally, because I am a Hilton Honors member, I have also earned 4,000 points towards a hotel stay and 400 miles toward my preferred airline.
The same concept works with frequent flyer miles. Use your travel credit card to book the flight (this way you can earn points or use points to pay for the flight). Then make sure that the miles for that flight are applied to your frequent flyer card for that airline.