Since 2013, Kailah and I have saved over $2,500 on travel through credit card rewards.
On one trip to Italy, we cashed in $900 on $1,400 worth of air travel, lowering our flights from Boston to Rome to $250 per ticket. This fall, I'll be flying and staying 3 nights in Vegas for $275 because we redeemed $475 in rewards points - this includes a direct Jet Blue round trip flight and 3 nights in a suite in Caesar's Palace.
We thought we might share how we make it work. Here are the 5 main rules we follow:
1. A rewards credit card that meets our needs
We did our research on this one in order to find a card that compliments our travel. Some cards offer general travel rewards, while others partner with airlines and hotels to provide brand specific point redemption. This means that you get more points when you book flights or hotels with these specific companies (Marriot, Delta, etc). As an example, if you are always staying with Marriot properties, it might make sense to get their card, so that you rack up points and get free rooms. On the other hand, if you enjoy flying Southwest because they offer great rates and flexibility, it might be best to hop on board with them instead. For Kailah and I, we currently use the Barclay Card because it offers us flexibility to travel both domestically and internationally - as well as a solid rate of return on points per dollars spent (not to mention a healthy $400 sign on bonus with no international transaction fee).
2. Always use that card
It's simple, we don't spend money without it going through the credit card - gas, groceries, bills etc.. This maximizes the amount of points earned. Cash may be king, but it earns nothing. There are very few exceptions - but one example would be if you pay your electric bill with your card to get 2% back in rewards, but the utility company charges you 3% in a credit card fee. You are actually losing $$$ in this scenario, so hook up your checking account instead. With that being said, we use common sense and send as much as possible through the card.
3. Make sure we hit our sign on bonus
Most cards will come with a sign on bonus if you spend a certain amount of money within the first month, or three months. This sounds like a gimmick, but it isn't, so we use it to our advantage (as long as we aren't spending beyond our income and can still fulfill number 4 in this list). Our Barclay card gained us 40,000 bonus points as long as we spent $3,000 within the first three months (Barclay point redemption is $1 per 100 points). Thanks to number 2 in this list, we had no trouble hitting our $3k mark.
4. Always pay our balance in full
This is the most important point in our list. We pay our balance every month. We set a budget and don't exceed it. We keep track of our spend. This probably goes without saying, but it makes zero sense to redeem points when you are losing money to interest on a credit card.
5. Automate to relieve stress
We set up auto payments to pay the full statement balance every month on a specific date. The only disclaimer here is that we have to keep an eye on our cash balance in our bank account to make sure that timing with other bills isn't an issue. If we are spending within our income, this isn't a problem. To avoid this stress all together, we just keep a cushion in our checking in case bills overlap.
There ya have it. By following these rules, we have accumulated tens of thousands of points and enjoyed discounted travel. If you aren't doing it already, go grab yourself a card and start earning some free money!