In the world of points and miles, it is important to stick to the basics. It is easy to get carried away with all the deals and promotions out there and often I find myself circling back here to these basic principles. If you are interested in this hobby then I think that this is a good place to start, and even if you consider yourself advanced, it never hurts to read this starter guide and check yourself before you wreck yourself!
- Think about your travel goals. This may seem basic, but if you want to travel for free then you have to know where you are going. Acquiring points and miles is fun, but the ultimate goal should always be to apply them to your travel and to have the travel experiences that you have always dreamed of. People ask me all the time what the best credit card sign up bonuses are and the first thing that I tell them is that it depends on where you want to go! Your travel goals should dictate your points and miles strategy, rather than the other way around. For example, if you want to take a trip to New York City departing from Tampa, then it would be beneficial to acquire miles on airlines that have a direct route between the two cities, rather than earning Hawaiian Airlines miles from the Hawaiian Airline credit card. Just one example, but you get the idea.
- Understand your credit – As I mentioned in a previous post, a good credit score is like your permission slip and will allow you to hop on the bus to the points and miles field trip where you can have the time of your life, but remember to pay close attention to that permission slip!It is important to always know and understand your credit prior to applying for credit cards, and equally as important to monitor how the applications affect your credit after the credit applications. You can obtain one free credit report a year from each of the three credit bureaus at annualcreditreport.com and make sure to check out the site creditkarma.com for free credit score “estimates” (which are not exact scores, but will give a good idea of where your score stands).
- Loyalty programs – Sign up for them! If there are airlines, rental cars, or hotel chains that you stay at often or may utilize in the future then go ahead and sign up for a free account. Loyalty programs award you points or miles each time you associate your loyalty account with a flight, hotel stay or car rental so make sure that you are getting credit for the travel that you are already doing.
- Apply for a rewards earning credit card – If all is good in step number 2, then it is time for the lucrative part – credit cards! Chances are that if you are just starting out, you may not have a good rewards earning credit card, but is important to put your spending to use by using a card that offers you valuable points and miles! One of my go to cards for racking up points and miles over the past couple years has been the Chase Sapphire Preferred, and in my opinion it is the card to start with (especially since the current offer is at an all-time high of 50,000 points!). There are many other cards from a variety of other banks (check out flyertalk for a good list of what the current best offers are at any given point in time), so have your travel goals in mind and let them lead the way.
- Earning Points:
- Minimum Spending – Reward credit cards will offer you amazing and extravagant sign-up bonuses, but like most things in life, they come with requirements that you must meet. The main requirement for many of these credit card sign-up bonuses is the meeting of a “minimum spend requirement” within a certain number of months. For example, “earn 50,000 bonus points after spending a total of $3,000 in the first 3 months of card ownership” would mean that you have to make $3,000 in purchase on your card in the three months following your application date, otherwise you miss out on 100% of any bonus that was offered. So make sure you meet those spending requirements and don’t leave those points on the table!
- Everyday Spending – Try to get in the mindset that every dollar you spend is an opportunity to earn points. This means that your new rewards credit card should replace those cash, debit card and check expenditures that you made in the past (unless of course a merchant only accepts cash, debit or check). Whether the charge is $100 or $0.01, every transaction counts and those points add up!
- Pay your balances in FULL, EVERY month – This is very important. The points and miles that you earn will not be worth it if you carry a balance on your rewards credit card from month to month. Credit cards are notorious for charging lofty interest rates on credit card balances that are not paid in full each month, and these interest fees typically cost more than the worth of the miles you earned. Don’t change your spending habits in the name of points and miles! You can change the way you pay for things but don’t spend more than you would if you were using the wad of cash that used to fill your wallet.
- Earn ‘em & Burn ‘em!– Congratulations on earning all of those points and miles… Now put them to use! Have you ever heard people say that your car depreciates as soon as you drive it off the lot? The same concept applies to points and miles, as they can lose value based on the actions of hotel chains and airline programs. Whether they announce it or not, hotel chains and airline programs can and will increase the cost of point redemption, which means in the future you may need to use more points and miles per hotel night or flight, thereby causing your points and miles to lose value. So don’t get attached to all those points and miles you have in your accounts and take my advice – Earn ‘em & Burn ‘em!
- Enjoy achieving your Travel Goals – Don’t forget that the whole purpose of earning points and miles is to achieve #1 on this list. It’s easy to get caught up in the details and minutia of earning rewards but it is important to take the time to enjoy all the hard work that you put in earning those point and miles!
Please feel free to post comments below or email me at AcCountingyourpoints@yahoo.com