Now that travel is starting to come back to more normal levels, now could be the time to think about how to start maximizing rewards, points and miles on credit cards. Cards like the Chase Sapphire, or American Express Gold or Platinum cards can rack up big points and rewards if used properly.
For many people, the temptation to overspend and get into debt with credit cards can be crippling. High interest and fees can make that a very difficult hole to climb out.
Using them properly is the key. For those who are good at managing their money, have good credit, and are debt-free on credit cards, there is a world of possibility if you take of advantage of it.
Dave Wested traveled quite a bit for his job and one day started to think about how he could start to utilize the travel rewards he was building up. At that point, Wested started to pay much more attention to how he used credit and create even more opportunities to let his money work towards some travel goals.
“At some point I just realized, you know, if I'm going to be a road warrior, I should figure out how to get a return out of it,” Wested says.
“So I just started a simple spreadsheet, figuring out if I was staying in hotels or taking flights, what I was earning out of it and how could I use them for personal trips down the line.”
Wested says he still pays for travel, but uses his points to be able to afford luxuries like flying first class or staying in hotels that otherwise would be out of reach.
“Once I gained a little level of understanding of like what is the point, and where can I use them,” asks Wested. “I started reading and kind of opened my eyes of like, wow, I could like I could use these to stay at some amazing hotels. Go on a vacation or I could fly here. It just opened up destinations that I never would have been able to go previously.”
There are some who read this and think that you’ve been warned against using credit, or credit cards are dangerous. That is absolutely true if you don’t manage your money correctly. If you don’t pay off your monthly balance, the interest is a major issue and would far exceed any “rewards” you can get using a card.
CNBC laid out some key points when it comes to using cards like this. Besides managing your money and credit properly, they recommend using a credit card for all of your purchases and putting the debit card back in your wallet. Why is that important? There are actually a few reasons.
First, you get protections with credit cards you don’t get with your regular bank card. Those can included fraud protection and extended warranties on purchases. Many of the high end cards with annual fees also include bonuses like travel credits, airport lounge access, opportunities to purchase tickets prior to the general public and other perks.
Second, they usually have built-in bonuses for points depending on where you spend your money. The American Express Gold Card gives you 4 times the points on dining or grocery purchases as an example. Some cards give you extra points on gas, hotels, airlines and more.
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Wested said it is key to know how you spend your money, and then use that to your advantage. Especially when it comes to those “bonus points” you see on a lot of card ads where you’ll get “60,000 points” just for signing up. That’s true, but there is a catch.
“The easiest way to earn a lot of miles is through a credit card sign up bonus,” Wested says. “A very common credit card offer could require spending $3,000, $4,000, $5,000 in say three months which can be difficult for a lot of people. But if you know you have a big expense coming up, like your annual car insurance bill, it can make it a lot easier to sign up for a big credit card offer and score a bunch of miles really easily.”
Wested says from there, you can use the cards to actually make money. Some cards offer cash back rebates, some travel points. It’s up to you for what makes the most sense.
“Just from an advice standpoint, I remember that you know you can make the banks and airlines work for you because you're the customer and you're in control. So shop around. I wouldn't only open Delta credit card just because you fly them the most. There are other alliances that American and United are part of that. You can use their miles to book business class tickets on Qatar Airways which Skytrax just named the best airline in the world. Go to the Middle East using American Airline miles.”
If you are willing to work within your budget, pay your bills on time, you will never see a penny of interest. It has to start at that point. If you’re in debt, can’t pay your full credit bill in full each time, this is absolutely not for you according to Wested.
“Good credit is a tool to be used,” Wested told WCCO’s Cory Hepola. “If you have good credit, don't be afraid to open a card. And then secondly to your point court, don't be afraid to close the card when the annual fee comes due. I do keep some cards that offer really good benefits and they're worth paying an annual fee.”
Wested has used points and rewards to go on a snowboarding trip to Japan first class including a hotel for a week all for free. He is going on a honeymoon in January to Dubai and the Maldives using points as well.
There are many resources online for those interested in getting new cards or using credit to rack up rewards. Check out Wallethub, The Points Guy, Nerdwallet and CNBC to learn more and get tips.
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