Many credit cards offer a variety of ways to rack up bonus points with daily spending. It’s all about knowing the right card to get that fits into your budget and lifestyle. Travel credit cards in particular tend to carry high annual fees, but they offer cardholders the opportunity to earn points to redeem for rewards.
Western Direct Marketing for United was the first to cultivate the idea of a frequent-flier program in 1972. In 1979, Texas International Airlines created the concept that used mileage-tracking to present as rewards to customers.
Today, points can be accumulated through reward or loyalty programs, which were originally designed for business travelers, or through a credit card’s cash-back option. It’s important for potential cardholders to know which cards may be worth it when it comes to considering perks and benefits.
Reward points offer incentives when consumers make purchases through select categories such as dining, travel, gas, and more. Miles are usually rewarded when making travel-related purchases through a travel credit card or via a loyalty program. Frequent travelers may prefer booking through select travel sites to earn points or enroll in loyalty programs.
Hotel Engine, a hotel booking service with a travel rewards program, compiled a list of ways people can make the most of rewards points when traveling and the types of cards that may be more beneficial to budgets.
1. Use more than one credit card to maximize rewards
For those who travel regularly, it may be helpful to own more than one travel rewards card. People with good credit have more options with less fees. Travel credit cards overall tend to be competitive, and many will offer welcome bonuses worth $1,000 or more for new eligible card owners. One of the advantages of having a hotel credit card is the free night offer when the annual fee is paid. To get the best rewards from a card, there are strategies such as booking day trips rather than a couple shorter days or booking a connecting flight to gain more points and stretch your rewards.
2. Know the expiration date
A majority of the programs for larger airlines do not have an expiration date when it comes to utilizing miles and points. However, some of the budget airlines require booking once a year or once every two years to reflect some sort of travel activity. Other airlines require booking every six months or else travel miles will expire if the member doesn’t redeem rewards. This also goes for hotels that require eligible activity at least once every consecutive 12 to 18 months or the account will be forfeited. If hotel reward points are about to expire, you can transfer credit card reward points to the hotel to reset the expiration clock.
3. Don’t carry previous balances
Most travel credit cards have high interest rates, so it’s best not to carry a balance, even for a regular credit card. The amount paid in interest will outweigh the amount of miles and points earned. For those unable to pay the credit card balance, they can find themselves paying extremely high rates such as 24% on the interest alone. If a rewards member racked up 80,000 miles after spending $5,000, the value of the rewards would not be applied if the member is carrying a balance on the card.
4. Be wary of buying miles
It can get costly buying a large amount of miles—such as 30,000 or more—as sometimes the miles cost more than the actual flight. The amount of miles needed for a free flight depends on the departure and arrival destinations and the choice of airline. If you ever consider buying airline miles, figure out the amount of miles you would need to cover the flight and if it’s worth it financially. The standard rate for purchasing airline miles is 3.5 cents per mile. There’s some programs with fixed values, the option of buying miles at a full price and buying miles in addition to airfare prices. The only time it would make sense to purchase miles in fixed-value programs is when only a few additional points are needed to redeem and there’s no other way to obtain those points.
5. Familiarize yourself with reward caps
Reward credit cards often offer cash back, points, or miles to encourage cardholder spending, but there’s usually a monthly limit or cap on reward earnings. This limits how much cardholders can earn within that time period. Earning caps are more popular among cash-back credit cards and point-earning cards. Cardholders with miles-earning cards rarely have caps. Cardholders can reach their earnings cap and still earn rewards. Once cardholders have reached the cap, they are eligible to receive cash back.
6. Know your credit score when applying for or canceling a card
Travel reward credit cards can provide a range of benefits such as earning discounted or even free flights and hotel stays. A great or near excellent credit score is what helps to get the best travel reward cards. It’s important to know the status of your travel credit card before closing your account. Credit experts suggest keeping the utilization rate low—below 30%—which is a general rule of thumb when it comes to keeping your credit in good shape. If your account is in good standing and you’re considering canceling or closing your card, the credit company may consider reducing or waiving the annual fee rather than see its good-standing customer leave.
7. Research the best cards for rewards
The best travel cards for rewards are the ones that help cardholders earn flight discounts and cheap hotel rates, and sometimes even free. Some other benefits of the best cards include insurance for delayed flights, trip protection, a 10% anniversary bonus and airport lounge access. The travel credit cards that allow cardholders to transfer points to airline and hotel loyalty programs are also popular among members. Some cards even allow cardholders to apply points toward statement credits, gift cards, merchandise, and more. For cardholders, the best benefits will depend on their individual situations.
8. Maximize rewards by dining out
Several airlines have dining reward programs that travelers can register for with a credit card or sign up for online. There are mileage dining programs that allow members to earn 100 additional bonus miles for completing a review within 30 days after eating out at each of their participating restaurants. The restaurant is hoping this gives diners an incentive to choose its establishment over a competitor once they know the restaurant participates in a rewards program. Some other airlines offer travelers the opportunity to explore restaurants and bars while earning points.
9. Skip cash while shopping
Imagine getting money back just for spending. There are credit cards that offer cardholder bonus rewards in certain categories such as dining, travel, or groceries. Some cards offer 6% cash-back incentives in purchases at U.S. supermarkets. Merchants who accept payment via credit card have to pay a percentage of the billed amount. The credit card company shares some of the fees with the consumer. The goal is to encourage people to use their credit cards instead of cash or debit cards. The more consumers use their credit cards, the more merchant fees will be obtained by the credit card company.
There are various ways to earn travel points and extra miles. One of the easiest ways to earn bonus miles is to sign up for a newsletter. Some of the major commercial carriers offer bonus miles when travelers sign up for their newsletters, which also inform subscribers of new routes, promotions, and flight offers, and the latest reward programs.