When it comes to award travel, whether it be for flights or hotels, the quickest way to attain a worthwhile redemption amount is via credit cards. While you may have a certain hotel or airline (maybe, even a specific flight in mind), for those just learning about how to leverage loyalty programs, your top priority should be to accumulate earnings in a transferable “currency” e.g. Ultimate Rewards via Chase cards, Membership Rewards via American Express and Thank You Points via Citibank.
There are a host of other cards with transferable points, but the aforementioned 3 have the best balance of transfer partners and earnings multiplier. To simplify for newbies, we’ll touch on specifics for each program on future articles. Before you go about applying for cards, you’ll want to keep the below in mind:
- Don’t let the pursuit of awards put you into debt. Most bloggers don’t touch on this, because they rely on credit card referral earnings or are not wanting to act like big brother. Well, I can’t tell you how to manage your finances, however, considering that points earning is normally 1-2% of spending (and yes, possibly up to 5% if you spend on certain categories), that pales in comparison to interest rates of 15%+. As mentioned in one of our background articles, we don’t advocate getting into the points game if you can not pay off your balance in full. In the same vein, I’d avoid creating expenses just to meet bonus sign-up spend requirements.
- Credit card issuers are restricting how many cards can be opened within specific time periods e.g. Chase’s 5/24 rule which generally results in a denial if you’ve opened 5 credit cards within the last 24 months. Thus far business credit cards do not factor into this formula. Unless you just want a couple of cards, you NEED to know this so you can prioritize which cards to apply for first. The consensus is often to start with a combo of Chase Freedom and Sapphire branded cards.
- Though focusing on transferable points gives you options, it is helpful to know what you want to do with it and when as well as what your upcoming spend might be. Airline miles and hotel points can get devalued with little if any warning, so knowing what and when gives you an idea of how many points you need and how quickly you can get there. Note that you can often book an award up to a year ahead which means you can focus on getting to your target level asap, transfer to the desired airline/hotel and book.
- The best award returns are on redemption towards business and first class airfare and luxury hotels. If you plan to redeem for economy flights or low-cost accommodations, you’re likely better off focusing on cashback cards as most don’t charge an annual fee. There are times when complex routings or holiday pricing makes sense to apply points towards economy travel, but that’s rare.
I’ll stop here on this getting started session. On our next installment, I’ll touch on points valuation and explain the reason for why we want to redeem for premium travel. Following that article, we’ll jump more into credit card application strategies based on the issuer restrictions.
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