This past summer, my family and I moved from Florida to Washington State. That’s no small trek. And, because it was summer, we decided to take our time and see as many sights along the way as we could, everything from the Florida Caverns in the panhandle to Nashville, Tennesee to Indianapolis and Chicago, then on to the Wisconsin Dells, Mount Rushmore, and Yellowstone.
All in all, we spent 3 1/2 weeks on the road and covered more than 4,000 miles.
It was SO much fun! And aside from one night spent at a friend’s house along the way, we stayed in really nice hotels the whole time–the Westin, the Hilton, the Sheraton, the Marriott, the DoubleTree. In other words, there was no roughing it! We traveled the country in as much style as our jam-packed 2002 Tahoe would allow.
So how did we afford it?
With the exception of our 3 nights at Yellowstone (where we shared a KOA cabin with my sister’s family), we used reward points, and got more than $4,000 in hotel stays completely FREE.
At some point, many of us have signed up for a credit card due to the claim of some sort of promised reward, be it 10,000 airline miles or travel points, Disney dollars or cash back rewards, or, in the case of department stores, an extra discount as we made a big purchase. Maybe we were even swayed by the promise of a free blanket or a stuffed animal.
Then what happens? We end up with a massive annual fee we didn’t know about or we find out the interest rate is through the roof. We can’t pay off our balance and we end up with late fees or worse, all adding to our debt.
Here’s the secret: credit card rewards aren’t there to benefit the consumer. They’re there to entice you. They’re there to get you to spend more and stretch your budget. …I dare say they’re even there to trick you with fine print, limited offers, blackout dates on travel, and complicated point systems created to ensure you just give up.
So is it worth it?
Just like “extreme couponers,” there are “extreme mileagers” or “travel hackers”—people who’ve figured out the secret to accruing major airline miles and rewards, then cashing them in for unheard of bonuses. There’s even a guy who found a “pudding loophole.” He spent $800 on pudding (donated to charity for a tax break) to receive a lifetime supply of airline miles. Basically, to get crazy, free money deals, you need to invest time, research and dedication. It’s similar to day trading: it requires attention and a love of figuring out puzzles.
For most of us, these extreme deals aren’t realistic, but taking advantage of simple rewards just might be, especially if you own your own business or have large expenses that can be paid on a credit card. After all, it’s essentially free money—and who doesn’t want a little of that?
But be fair warned–there is a big downside to credit cards! It is easy to overspend and to get yourself in trouble, so if money and spending is a struggle, don’t risk it. That said, if your finances are organized, you have savings, you’re good at budgeting and self control, and you are in a good financial place, then there are some great opportunities you can take advantage of to earn rewards.
Here are some smart strategies and tips to keep in mind.
1. Don’t Carry a Balance
The biggest key to taking advantage of credit card rewards is to never carry a balance. You MUST pay off the credit card each month or the interest you accrue will completely negate any reward you might receive. This is essential!!
Keep in mind, credit card companies are banking on the idea that you’ve been lured in by the promise of a reward. They expect you to bite off more than you can chew (and pay back). That’s the whole point of these “rewards” offers. By paying off the balance each month, you’re ensuring interest doesn’t add up to more than the reward you’re trying to earn.
2. Watch the Annual Fee
Many airline rewards cards have an annual fee. Some cash-back and other bonus cards don’t. Pay close attention to the annual fee—especially because many credit card companies wave the fee for the first year (so it’ll only come back to haunt you later on). For some people, a $50 fee is well worth the rewards they can reap. In other cases, an annual fee would certainly cancel out any advantage. Understand what you are getting–and do the math to find out whether the fee will pay off or not.
There are also some debit cards that offer bonuses and rewards without the fear of accruing an annual fee or interest. Do the research beforehand to ensure you’re not surprised later on.
3. Look for Signing Bonuses
Many mileage cards offer very enticing sign-up bonuses. As long as you have a healthy credit score, most credit experts say you can safely sign up for 4-6 cards per year and cancel them later without experiencing permanent adverse effects to your score. However, be very careful! Check if you must have the card open for a certain amount of time before reaping the rewards. Some cards require you leave the card open for three to six months to gain any rewards, which can be a challenge to manage.
Credit card companies offer mega-miles for signing bonuses these days, so shop around and see what you can find. NerdWallet offers this helpful list of the credit cards with the best bonuses and rewards available.
4. Manage Your Miles Carefully
Sites like AwardWallet and MileageManager can help you keep track of miles. Many reward miles expire after a year or two. There are also blackout dates and restrictions on when and how you can cash-in those bonus miles. If you’re planning a trip during Christmas or over the summer, you might be disappointed to find those dates are unavailable under your rewards restrictions.
A mile management app or website can really help you keep an eye on expiration dates and see what’s available when you’re ready to travel. It can also help you know when to upgrade, as well as provide ideas for other ways to use your miles, especially if you travel frequently for business.
5. Find Rewards You’ll Actually Use
If you rarely travel, then a credit card with mileage rewards or hotel points might be the wrong benefit for you. There are credit cards that offer discounts on concert tickets, or cash back on groceries, gas, retail and even leisure activities.
Find a card with bonuses and rewards that really speak to you. If you’ve accrued miles you don’t want to use, you can trade them in at sites like points.com, but be aware that between the spending for points and trading points for gift cards, you might take a loss. (However, it’s better than letting the points just expire.) There are also savings rewards cards that can help you put more money toward your retirement account or college savings. It might not be as glamorous and fun as travel miles, but it can be a sound investment.
6. Spend in the Right Place
Taking advantage of rewards might mean carrying several cards at once. You may have to have a card for gas, one for groceries, and one for dining out because you only earn certain rewards for each card. Keep careful track of which cards do what. Using a gas rewards card can earn you major rewards when you fill up, a grocery rewards card may only work at certain stores, and retail cards may only give you bonus points, discounts and rewards from certain retailers.
When you open a card, you might need to spend a certain amount right away to maximize your points. Consider purchasing gift cards to Amazon or another frequently used retailer. That way, you’re buying something you’re going to spend money on anyway. The trick is you just need to pay off the credit card balance right away.
Find out if, in lieu of cash, you can pay babysitters, dogwalkers and others with Venmo or Amazon Payments. Anywhere you use cash, you can be earning points instead (and socking that cash away to pay your bill at the end of the month).
7. Be Generous
You can also take advantage of credit card points by putting down your card when you go out to dinner with a friend. If your friend has cash, offer to put the entire bill on your card. Go even further “footing the bill” by signing up with organizations like Kiva.org to support microloans for business owners to meet your minimum spend requirement. (The borrower pays you back over time, so you must have the money to pay off the credit card on hand.)
There are also options for donating your reward points to charities. If your miles or points are about to expire and you can’t find a way to use them, consider donating. Donations are tax-deductible and are very useful for those in need. An estimated $16 billion in credit card points and rewards go unclaimed each year. Put those points to good use!
8. Look for Helpers
Before you visit a retailer or go out to eat, check your credit rewards site for a portal or link. Apps like iDine can help you earn extra rewards whenever you go out to eat.
If you go through the shopping portal on the bank’s site (or the site of the hotel or airline), be sure you’re still accessing the same price and discounts. You may be paying more for the item or it might not be worth cashing in those “Sky Miles” for something you could get cheaper elsewhere.
9. Look for Additional Benefits
Some credit cards offer other benefits outside of traditional points and rewards. Check to see if your credit card company offers travel protection and insurance, which many do. Credit card companies may also offer “price match guarantees,” so if that major purchase goes on sale next week for 25% off, they’ll match it or make up the difference.
Little bonuses and protections can be just as valuable as traditional rewards—and in some ways, even more so. All credit card companies offer fraud protection, but some have special protections against fees and price gauging, plus alerts to help you detect fraud before it happens.
10. Meet the Minimum Right Away
Meet your minimum spend as quickly as possible to take advantage of the bonus points and offers associated with the card. Many have a monthly activity requirement or may ask that you spend a certain amount each month to hold onto your rewards.
Again, never bite off more than you can chew. If you’ve done your research beforehand, you should be aware of any surprises or caveats that might end up costing you later on. Only choose cards you can easily manage.
11. Focus on One Card to Start
Yes, with a good credit score you can safely open and close several credit cards in a year to take advantage of signing bonus points. However, if you’re new to rewards, try to focus on just one card to start. It can be tempting to open a gas card, a grocery card, and an airline card to try to get all the rewards at once.
Instead, give yourself time to see if you can stick to paying off the balance each and every month. See if you can meet the minimum requirements and manage the card well for a few months before you add another card to your repertoire.
12. Watch Dates & Terms
It seems obvious, but always watch the dates and terms of each card. People can be so eager to get the benefit, they can forget to check through the fine print. Understanding all terms will keep you protected down the road. Read each correspondence you receive from the company as well, because terms and conditions often change frequently.
When you’re deciding on airline points or miles, check the dates and see how flexible the airline is, as well as the accessibility. If your city is a hub for an airline, you might use their flights much more frequently than an airline that doesn’t even fly to your state, but offers better rewards. Be wise and don’t be blinded by amazing deals.
13. Cash Back is Often Best
For most people, cash back rewards are the best. Even though they might not seem as lucrative as airline points, cash outdoes this and most other benefits in many cases (especially when you take all the restrictions and shifting availability into account). I personally like the travel rewards, but I travel a lot more than most people. Be realistic about what will be most practical for your lifestyle.
Wealthy credit card users report they almost always opt for cash back rewards over travel and other benefits. Why? Because it’s practical and easy. Cash is straightforward and you can see the tangible reward. Obviously, decide which reward is best for your particular situation, but if you’re torn, opt for the cash option.
14. Don’t Be Afraid to Pick Up the Phone
Whenever you’re trying to save money, whether it’s on utilities or navigating credit card plans, always pick up the phone and call. Many companies are very eager to keep your business, so they’re willing to wave fees, extend offers and work with you on rewards.
So often we can look at the bill or see an annual fee and just throw up our hands in frustration. Instead, call the company and ask what they can do for you. With so many competitors out there, they know what’s at stake if they don’t come through (your business). Most will be more than happy to cut you a deal.
When properly managed, credit cards offer rewards you can really maximize and take advantage of, especially if you’re using a credit card already and you’re comfortable with the process. Always be sure you’re staying organized and keeping track of your budget. Keep control of your spending and use wisdom and guidance when you make purchasing decisions. If you spend your money wisely, it can work for you and bring you even more financial freedom!
Oh, and by the way, if you are wondering which travel reward cards are the best, I would say that my favorite hotel card is by far the SPG Rewards card by American Express, while the Chase Sapphire is a great all-around card that will give you points for a variety of airlines and hotels.