In this beginner’s guide I’m going to teach you all the basics you need to know so you can travel almost for free.
Table of Contents
What are travel credit card points?
Travel points are rewards you get from your credit card for spending on it. Also, when you apply for a new credit card most of the time these come with welcome points. Those points that you will get after making the minimum spend are valued at a certain amount of money depending on how you redeem the points. You can use the points to redeem hotels, flights, rental cars and other travel expenses.
The idea is that you apply for a card, complete the minimum spend, acquire the points, redeem the points for flights or hotels, go on a vacation almost for free, and repeat this.
How to earn credit card points for travel?
Ways to earn points:
- Welcome points: Many travel credit cards offer welcome points when you meet the minimum spending within the first few months.
- Referrals: Some cards allow you to earn points by referring friends and family who are approved for the card.
- Everyday spending: Earn points on all your purchases with categories such as gas, restaurants, supermarkets, among others.
Types of Credit Cards
- Airline Cards- These are miles that you accumulate with a specific airline. For example, if you apply for the United card, those welcome points are only for flights with United Airlines. Every time you use that card, you accumulate miles with United Airlines. These points CANNOT be transferred to any other airline and must be redeemed through the United portal. These airline credit cards often come with benefits such as a free bag, priority boarding, a free pass for a companion, etc.
- Hotel Cards- These are points that you accumulate by using the card from that hotel line. For example, if you apply for the Hilton credit card, those welcome points can only be used to redeem nights at Hilton branded hotels. Many of these cards come with status benefits, late check-out, a “free” night every year, etc. These points CANNOT be transferred to another hotel line or airline.
- Transferable Points – These are points that can be used to transfer to a hotel or airline that is associated with that bank. This is my favorite type of point, and they are more valuable than any other.
- Fixed Value Points – These are points redeemed through the bank’s portal or accumulated with the Capital One Venture Rewards card. With the Capital One card, every time you make a purchase that codes as travel, you can redeem your points to remove this expense from your account. The most common ways to redeem this way are for Disney World ticket counters, rental cars, etc.
Minimum Spending
This is the amount of money that the credit card company asks you to spend to get the welcome offer. For example, when you apply for the Chase Sapphire Preferred you have to spend $4,000 in 3 months to get a welcome bonus.
How do you get the welcome points? First, keep your debit card and pay everything you normally pay for like gas, tolls, internet, cell phone, food, etc. with that new credit card.
Do you think that amount is too much for 3 months? Make a plan and apply only when you know you are going to have a big expense. For example, tuition and school books, Christmas shopping, annual taxes, home renovations, etc.
Annual Membership Fee
Some of these cards come with annual fees. They range from $49-$695 a year. It sounds like a lot, but these credit cards come with some great benefits like a free night in a hotel, cellphone protection, car rental insurance, etc.
The annual membership will be billed on your first statement and will not count toward the minimum spend.
The first year I have the card, I consider the annual fee as a small investment for that well-deserved vacation that will be almost free. After the first year I decide if I want to: keep the card, cancel or downgrade.
- Keep the card and pay the annual membership
For example, I keep the IHG card (Intercontinental, Holiday Inn, etc. hotel line) because it comes with a “free” night every year. The membership is less than what a night at one of these hotels would cost so for me it is worth paying for the membership every year.
- Opting to Downgrade
For example, if you no longer want to pay for the annual fee of the Chase Sapphire Preferred you can call the number on the back of the card and ask to upgrade to the Chase Freedom Flex or Chase Freedom Unlimited which do not have an annual membership.
- Opting to Cancel
Before doing this, I suggest you ask the representative on the call if there are any retention offers or if they could eliminate the annual membership for that year.
Keep in mind that you must keep the card for a year. The credit card company will not like it if you cancel the card immediately after you have earned the rewards points.
How long will it take me to get a free vacation?
This depends on your spending and how many points you need for the type of trip you want to take. To give you an idea, it took us about 6 months to get the points needed to travel first class to Japan and 8 nights in a hotel.
Two Player Mode
This is a term we use when both you and your partner are simultaneously accumulating points in this game. This way you accumulate a lot more points.
For example, I open a card that has a welcome bonus of 100,000 points. After completing the minimum spend, I send my card referral link to my husband, and he opens that same card. After completing the minimum spend on his card, we have another 100,000 in addition to 20,000 referral points in my account for using my link when applying for his card. So now in total we have 220,000 between the two of us.
Chase 5/24 Rule
Chase bank has a rule that says if you have 5 or more new credit cards from any bank in the last 24 months, you will not be approved for a new credit card from Chase. There are many credit cards from Chase. For example, Hyatt, Marriott, IHG, Southwest, United, etc.
If you are an authorized user on any credit card, this also counts as part of those five cards. Because of this rule, I recommend that you start by applying for Chase cards and then expanding to other banks. Credit cards under the business category do not count as part of 5/24. But if you are over 5/24, you will not be approved for a Chase business card.
Because of this rule, when the cashier at Marshalls offers me the store card, I always say no 😀
Which card should I start with?
This depends on your travel goals, where you want to go, and what hotel you want to stay at. My favorite travel card is the Chase Sapphire Preferred. This card is very easy to earn points, and they are flexible. Because they are flexible points you can transfer them to book flights, hotels, cruises, and rental cars.
If you have a business, my favorite cards are the Chase Ink cards that also earn flexible points (except the Ink Business Premier).
Business cards usually come with the best welcome offers. You might be surprised to know that you don’t need anything special to apply for one of these cards. These cards can be applied for with either your business ID number or your social security number. There are so many things that qualify as a business: selling Avon products, child or pet care, selling on Facebook Marketplace, etc.
Is this for me?
This hobby is only for those who can pay off the balance on each card in full at the end of each month. If you are paying interest, then you are not getting a free vacation. You must have a credit of at least +700 for banks to approve these cards.
Get organized
When you start you will apply for a new card every 3 to 4 months depending on your budget and the trip you have in mind. There are many ways to stay organized.
It is important to know the day you applied for the card, the day you received the bonus, annual fee, the number of points you will acquire and when those points expire (if they expire).
You can keep this on your computer in Excel or in a notebook. There are free applications that help you keep everything organized. I personally use the Travel freely app.
You should also know your airline and hotel account numbers with their respective passwords.
Where do I want to go?
It is very important to know how you want to use your points. Having a specific trip in mind guides you to which cards to apply for. For example, if your goal is to travel to South Korea, then applying for the Southwest airline card is not beneficial because they only travel to the United States and some cities in Latin America and the Caribbean.
For travel inspiration check our Destinations page.
How does this affect my credit score?
Many people get scared thinking that their credit will decrease if they start applying for many cards. Sometimes after applying for a card, your credit score decreases temporarily. The important thing is that you pay the balance at the end of each month. After about a month, your credit returns to normal. I have been able to apply for about 8 cards in a year and I have a credit score of more than 800+ 😉
Final Thoughts
Traveling with points and miles is not “one size fits all.” There is no way to do this wrong. Whether it’s going to Bora Bora, going to Disney parks, or doing some domestic sightseeing, any way to redeem your points so that your monetary investment is minimal is an excellent use of your points.
I recommend thinking about a trip when you apply for a card, have a plan to get the minimum spend before you apply, and always pay the balance in full at the end of the month.
Go travel!
Editorial note: The opinions expressed here are solely those of the author and not of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved, or endorsed in any way by any of the entities included.