Why You Shouldn't Rely on Credit Card Points to Travel

When I first started looking into ways to travel more, I was drawn into all the articles and posts sharing the art of credit card points. They promised easy ways to travel for free by paying for things you already had to buy on a reward-heavy, travel-friendly credit card. To put it broadly, these credit card companies would offer a major sign-on promo that would give you a boatload of points for spending a certain amount of money right away. Those points could then be redeemed for airfare or hotels, making travel “free”. So I gave it a go.

And guess what? It worked.

I signed up for the Chase Sapphire Preferred (not sponsored/affiliated), spent the necessary $3,000 in three months, and ended up with a nice bundle of points that I redeemed for a few flights to explore Europe. It was great. I got free flights by putting costs I was already anticipating on this shiny new card. I was hooked – these bloggers had it figured out.

But then, I started planning for my second trip. And that’s when I realized my mass of points were gone and it would take a long time to earn them again. I would only earn two points for every dollar I spent. That meant I would need to charge about $25,000 on my card in order to get the same amount of points I got when I initially signed up. I definitely did not have the credit line, necessity, or even desire to load that onto my credit card. I was disappointed...was this really the end of the road for this credit card hack?

The problem with relying on credit card schemes to finance your travels is that it only works the first time around, unless you plan on constantly opening new cards to get more of the one-time sign-on bonuses. To some of you, this might seem appealing. But as someone who operates in the financial world (CPA here with plenty of experience in the banking industry, including on the collections side) I would NEVER recommend this to someone whose spending habits I didn't know.

Credit cards are dangerous. It’s easy to quickly spiral into a credit card debt situation. Constantly opening up new cards can damage your credit score, too, making it difficult in the future when you want to buy a car or house or even sign an apartment lease. Some credit card companies might even catch on and deny your application. While it’s great to cash in on perks when you can, to me it’s not worth the effort and impact of opening a new swanky travel card every time I want to travel.

To all my newbie travelers out there, take out a travel-y credit card. Take advantage of a sign-on bonus to help out with your first big trip – but only if you can pay off that required spend to get the points. If you don’t have $3,000 to pay off the $3,000 you’ll put on the card, congrats – you just put yourself in a potentially dangerous debt situation. The interest you’ll pay will just eat into money you could have used towards your travels. If you are able to stay on top of the balance, then go for it. Use this new credit card for your travels. In addition to the initial point boost, you might also be able to reap in benefits like:

· Travel insurance – we’ve relied on this benefit in the past and gotten hundreds back on unexpected costs due to trip interruptions

· No foreign currency fees – buy abroad in yen, euro, pounds, pesos,etc. without getting hit with a bank charge

· Fraud/dispute peace of mind – if you ever have your credit card stolen, or have transactions occur that are unauthorized, the credit card company won’t hold you accountable for the transactions in question while they investigate. They will also do the legwork with sorting the issue out. Once time in France, our hotel charged us a breakfast fee (we never ate breakfast there) and refused to refund it. The credit card company reversed the charge and worked with the hotel to resolve the issue

· Concierge services – some credit card companies will give you a number you can call to get recommendations or reservations

· Car rental insurance and roadside assistance – you might get additional insurance over any rentals you make, as well as a 24/7 roadside assistance in case you breakdown in the middle of a foreign country

For those who have already cashed in on a travel card sign-on bonus, don’t be tempted to open new cards for each trip you take. It can hit your credit score (especially if you’re closing the old cards) and you might open yourself up to the temptation of using up those credit lines and falling into debt. Keep using that initial credit card to take advantage of the other benefits you get. You will still earn points – albeit slowly – that you can put towards your travels.

Looking to maximize your point earning abilities without opening new cards?

· Pick a card that you can benefit from the most. My previous job required lots of travel and we always stayed with the same hotel chain. Taking out that chain’s specific card allowed me to rack up 3x as many points than if I went with a different card

· Look into partners. Most airlines and hotels partner with other brands and allow you to transfer points between them. When I needed a few extra hotel points, I was able to transfer my credit card points on a 1:1 basis. The more partners a credit card has, the better flexibility you’ll have to earn and redeem

· Work expenses that get reimbursed by the company? Always offer to pick up the tab. It’s basically free points!

· Some credit card companies will let you book travel directly on their site at a discount. For example, Chase will let me redeem one point at a value of 1.25 points when I book on their site. That’s a little extra boost that I wouldn’t get elsewhere

· Keep an eye out for flash bonuses your credit card offers – but only if you can pay the charges off! Chase will partner with companies and offer bonuses as high as 8 points for every $1 spent. If I spot a company that I know I need to buy from anyway (like beauty essentials from my favorite skincare line), I’ll buy through this partnership link.

· Double up the rewards. When you redeem your points for travel, you can usually add in your loyalty number for whatever brand you’re buying from. For example, if I redeem my points for airline tickets, I can add in my airline loyalty ID and also get mile reward points from them. Points = more points!

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Don’t be discouraged and think the only way you can travel (without it being your job) is to get wrapped up in a complicated credit card scheme. It’s always a good idea to have a travel-friendly card in your wallet, but don’t let it become a gateway into credit card debt. Spend responsibly so you can save money for more traveling later.

PS – I am not affiliated or sponsored by any credit card companies or brands mentioned above. Just personal stories!

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