And You Didn’t Even Know You Can Travel for Free: The Credit Card Points System

I’m not a cash person- rarely do I have any in my pocket. This is an age where credit is king. Even my cell phone even has a chip for mobile payments, making my cards a simple accessory. This is our future. Why not get rewarded for something you already do? Derek Wilson is writing a guest post series in order to share how you too can tour the world for free using credit card points. As a frequent traveler, a family man and a patron of student loan debt, which I know many of us can relate to, Derek explains the basics below:

Photo by Danny Froese via Unsplash

Photo by Danny Froese via Unsplash

TRAVELING ON POINTS

By Derek Wilson

I love traveling. Sign me up for exotic beaches, big cities, countryside escapes, and passport stamps—all of it. Something you may not know is corporations are throwing free money at YOU, the consumer, and all you need to do is learn how to play the Points Game to travel well, and do it cheaply. Most people get points and don’t do much with them because they do not understand the point system or they think the points are worthless. I remember redeeming what seemed like a million points for a $20 Starbucks gift card many years ago, and thought it was a waste of time to think about points. It was not until recently that I learned you can find great ways to redeem them for free flights and hotels on vacations to Costa Rica, New Orleans, New York City, and so many other amazing places to see. You can do it by yourself, or like I do, with my wife and sometimes our infant.

Derek and his wife Sharonna in Greece

Derek and his wife Sharonna in Greece

I use rewards points to fly all over the place and stay in great hotels for much, much less than most people think. Because I (and you) are not alone in loving travel, there is a large community of people who figured out how to obtain and use points. But, jumping into the Points Game can be overwhelming. Let me explain the basics of how anyone can use rewards points to easily pay for vacations that seemed much too expensive without points.

What Are Points?

Rewards points are an amount given to a customer for using a particular corporate brand—ostensibly to reward customers for using one brand instead of many. Think of points as cash that can only be used in the country of whatever corporation gave you the cash. Reward points can be redeemed for a discount or free product of the brand—or sometimes redeemed for cash or transferred to another brand affiliated with the points. I am focusing on major flight and hotel brands, because I am in the “points game” for travel, but points can be racked up on all sorts of brands, products, and services (think buy 9 and the 10th XYZ is free—these are all forms of discounts on products awarded after repeated uses and variations of points).

Major flight point programs include: Delta’s Skymiles, American Airlines’ AAdvantage miles, and Southwest’s Rapid Rewards points. Major Hotel point programs include: Starwood’s Preferred Guest points, Hyatt’s Gold Passportpoints, and Hilton’s HHonors points. There are many other programs that are just as good or even better, but these are just well-known examples.

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Derek and Sharonna in Cinque Terre, Italy

How Do I Use Points?

Most brands have their own website that explains award redemptions for the particular brand. It’s crucial to know what is a good deal, and what is not. Every point has a different value. Some websites value points from half a penny per point (Hilton’s points) to three pennies per point (Starwood) based on the rewards program. This is important, because redeeming 40,000 points for five nights at a Westin in New Orleans over Mardi Gras saved me $2,500 in what the rooms would have cost if I wasn’t using points. That’s a great redemption, but if I was using 40,000 Starwood points for a hotel that I could pay $700 cash for, it would be a bad idea. Similarly, flying business class for 150,000 Delta Skymiles to Australia is a great deal when similar tickets would cost $3,500. But using 75,000 Delta Skymiles for a domestic trip that would cost $400 is a bad redemption. The bottom line is when you know how to redeem points properly, you get a tremendous value.

Some programs even have bonuses on redemptions. For example, Starwood gives you a free 5th night if you use points for the first four nights. I’ve used that perk to get a free night in Maui in the summer and New Orleans during Mardi Gras. Points really can save you a lot of money, and you can use points for five-star hotels and first-class seats that you probably would never spend actual dollars on.

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New Orleans

 How Do I Get a Lot of Points?

Spending on credit cards, using the brand, and signing up for credit cards are the most frequent ways to obtain a lot of points. Some banks have points (like Chase) that can be transferred to cash through the bank’s award redemption website or transferred to hotel and airline reward programs (Chase has 9 partners, including Hyatt and United). This is important, because banks will give you tens of thousands of points as a sign up bonus/incentive, and you can sign up for many cards without it adversely impacting your credit score (a topic that is complicated enough to warrant a future post).

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Derek and Sharonna in Croatia

What This Means:

You can travel for close to free. It takes a little work to learn how, but investing that time means you can create memories that will last forever without making your head hurt from thinking about all the money you spent that you don’t have. You can also make your followers on Instagram super jealous. Over the next few weeks, there will be more posts about credit card bonuses, redemption tips, spending tips, premium status tips, and more. Let us know in the comments if you have questions before then.

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13 thoughts on “And You Didn’t Even Know You Can Travel for Free: The Credit Card Points System

  1. pdbjay says:

    Teach me your ways, oh travel master!!! But seriously, do you have a spreadsheet to keep track of your points? Do you only use one card when stockpiling points for a trip? I need to know and Houston and I need to get on board.

    Liked by 1 person

    • djwbaseball says:

      I use lots of cards for different reasons, and it’s important to have points in lots of brands so you can be flexible on redemptions–that way you get the best free stuff possible for your points.

      Like

    • Derek says:

      Instanbul can have some great deals on fares, sometimes $500 flights pop up. You can set an alert on Kayak. If you can’t get cheap fares, or want to do first class and don’t want to shell out that money, points are the way to go. Delta and United have good options, and American can get you there as well. Turkish Airlines is also a Star Alliance member, so United and US Airways points can get you on that airline. So to answer your question, you can use a domestic credit card to get points and redeem them to visit Turkey. I’ll post more on partners and redemption options in the next few weeks.

      Like

    • djwbaseball says:

      Good question, Sam. The short answer is applying for a credit card only temporarily hurts your credit score due to the hard inquiry on your credit history–but this is a small factor in your overall credit score. Being a good debtor (having a history of paying loans, credit cards, etc. on time) is much more important than how often you apply for credit. We will post more on credit score as well as perceived and actual concerns in credit card applications.

      Like

  2. Midwest Darling says:

    I’ve been working on accumulating travel points, the problem I’m finding is that I don’t spend enough in the fist 3 months to get some of the big bonuses. I’ve got the bank of american travel rewards card though and I’ve been racking up points pretty quickly. I just put all my purchases on the card and then pay them off as soon as they clear.

    Sarah
    Midwest Darling

    Liked by 1 person

    • djwbaseball says:

      Lots of people have that problem–some of the best sign-up bonuses require a lot of spending to earn. There is a trick to “manufacturing” spending by basically paying for cash cards with the card that needs to hit a spending requirement, and using those cash cards to pay for everything from rent to student loans. The cash cards are available at fewer and fewer places, because they are also used by criminals to launder money (ruining it for the rest of us). American Express has Bluebird that can also help to meet spending requirements. The best rule is to do what you’re doing, put everything you can on the card and pay it off before you have to pay any interest on it. That way, you’re earning free currency to use on travel.

      Like

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