I managed to get through college without opening a credit card account, which if you consider the stupid temptations that most college kids face – free frisbee! free t-shirt! free movie tickets! – for signing on the dotted line, was pretty impressive. Instead, I dealt solely with a debit card linked to my checking account. When my parents sent me money, they made a deposit there. I had to keep track of all my expenses in the ledger that came with my checks (ah, the good old days before online banking and seeing all your transactions!), including those made with the debit card. Before I went to grad school, in talking with my parents, we decided I probably needed a credit card to begin establishing credit, and the first card I applied for…I was rejected. Because I had no credit. Because it turns out that if you have no history of payments on anything, they can reject you. Instead, I called up my bank, and we got me an initial student card with a low credit limit (I think it was something silly like, $300), and after a few months where I proved I could pay it back on time, it was transferred to a regular account with a higher limit.
That first time having a credit limit in the thousands – that was intimidating. And it should be. Someone out there thinks I would be able to pay back thousands of dollars at a time, and if you’re going to be able to charge that kind of money, you have to be prepared to pay it off. And the first lesson I ever learned about credit cards is this: pay them off every month. The reason for this is that if you don’t pay off a credit card when it’s due, unless you are in some kind of 0% interest period, chances are you’ll be penalized upwards of 15% (and sometimes in the area of 25%) for your leftover balance. You’re paying 15-25% for the privilege of paying back later. Think about that the next time you buy something expensive on sale and then don’t pay off your credit card later. If you can’t pay off the entire balance due, pay as much as you possibly can, and then pay the remainder when you’re able. This means the total amount that will have interest charged against it will be lower, and you’ll still be in the habit of making that big payment.
My first point-earning card was with United. I got 1 mile per dollar spent that could be applied towards United flights, and 2x miles spent on United flights. The interest rate was low, there was no annual fee, and the bonus for signing up was low also. But I was in. I’m not sure I ever earned enough miles in that time period to redeem for much, but it was a start, and I was growing my bank of miles from which I would draw in the future. And when a couple years later I started planning a few bigger trips, I made moves to upgrade my credit card game.
The first step was getting a card that charged a fee. In my case, this was the United Explorer card. Cards with annual fees when it comes to points and miles tend to be ones that also give you better benefits, and it’s usually waived that first year. The Explorer card gave me not only 1 mile per dollar spent, and 2 on United travel, but 2 miles per dollar at restaurants, and 2 miles per dollar on hotels. This was a step up. PLUS, if I spent a certain amount of money in the first 3 months, I would earn a big chunk of bonus miles. The current offer for this card gives you 40,000 miles after spending $2000 in the first 3 months. That’s enough for a “Saver Award” round trip flight . I think when I applied, the bonus was a little higher, but it was enough to take me over the top for a trip I had been planning, and still leave me with a nice chunk of miles for the future.
When I had the dates set for my next trip, I heard from a cousin about a card I should really get since it would give me even better benefits, especially since my next big trips would be foreign. That was the Chase Sapphire Preferred. This was another card with a $95 yearly fee waived the first year, but gave really great bonus points for all travel spending, and was not limited to purchases with United, and includes things like taxis/Uber and parking fees. It too had a multiplier at restaurants, but would also count on things like vending machines. And while I would be earning points and not miles, these points could be transferred to a variety of programs, including my preferred United program at a 1:1 rate. And if I spent $3000 in the first 3 months, I would earn 50,000 points. This was again enough to put me over the top for the trip I had planned, and with putting all my regular spending on this card and paying it off every month, I would have enough for another trip soon after.
And those cards were where I stood for a long time, until this past summer when I began to plan for a trip that the Boy and I are planning to take with all our girls to visit my sister and her family next year. The flights would be super expensive, but being able to do at least one or two tickets on points would make the pain of spending that much more bearable. And so I downgraded my Sapphire Preferred card to one with no annual fee, but still with decent earning (the Chase Freedom Unlimited, which gives 1.5% cash back on all purchases, no matter what), and applied for a big girl credit card with a hefty annual fee: the Chase Sapphire Reserve. This monstrosity of a credit card gives 3x points on travel, 3x points on dining (which is better than most anything out there), and an annual travel credit of $300 (on ANY travel spending – most of mine so far has gone to pay for Ubers!), in addition to a host of other benefits. But this card would give me another 50,000 points after spending $4000 in 3 months (easy enough when you’re putting purchases for a family of 5 on there!), and along with the slew of points I’d earned in years past which had piled up, along with my stack of miles in my United account, I will be able to buy 2 international round trip tickets, and have a bunch left over.
But if it were all about just putting your regular spending on there, I’m not sure I would be able to do it. So I’m going to share with you my tips and tricks for using your credit cards.
- Pay off the balance on your card every month – or enough so that the interest charged is nominal. I said it in the beginning, but I’my saying it here again because it’s so important. The value of any points you earn disappears the moment you start owing big slugs of interest to the credit card companies. Use your credit card to pay for things you could pay for with cash or debit card, but are instead using it for convenience and bonus earning benefits.
- Choose an airline or airline alliance, and focus your earning there. But how do you choose an airline if you’re just starting out and don’t have (many) points earned with any particular company? Look at your closest airport(s). Who has the most flights out, and are they going places you want to go? I’m lucky to live close enough to IAD, which is a major international hub for United, so it’s made sense for me to choose them. However, the boy does a lot of domestic travel for work, and since we live closer to DCA, that’s where he flies out of, and since American Airlines have non-stop flights to more cities, and frequent flights to American hubs which can get him to even more niche locations, American has been his airline of choice for a while. Search for your local airport’s website and see where different airlines fly directly, and figure out how that’s of interest to you.Now – why is committing to one airline important? If you don’t commit, then you’re potentially leaving opportunities for status on the table. Generally, if you fly a certain number of times each year, and spend a certain amount of money on those flights, you’ll earn status, which will get you things like priority boarding, better mileage earning, and the chance for upgrades to a better seat. Choosing the cheapest flights every time is a legitimate strategy too if you have lots of options, and if you care less about how you get someplace than the fact that you get there at all.
- Don’t limit yourself to one credit card. This may seem to fly in the face of item 1 up there, but the fact is, no one is going to make you spend any money on a credit card once you’re milked the benefits from any initial points or miles you earn off of it. And if it has no annual fee, there’s a very good reason to keep it in your wallet sitting unused: credit history. The longer you have an account open, the better it’s seen by credit agencies. It also leave a chunk of credit unused, so your “credit utilization ratio” is better. For information on how credit scores are calculated, take a look at this quick intro.But having a couple different cards is good for another reason – it gives you options. When the spending bonuses are different across cards, you’ll want to put different payments in different places to earn the maximum amount. For me, any time I go to a restaurant, or spend money on anything related to travel, I pull out the Sapphire Reserve, because I’m getting 3x the points for how much I spend (e.g. $20 on a Lyft? That becomes 60 points that can be put towards future flights). But for literally everything else now, I’m using my Freedom Unlimited, because I’ll get 1.5 points back on every purchase. Other cards may have rotating categories which earn bigger bonuses for a season (sometimes it’s Gas Stations, Amazon, Warehouse stores – they change each year). Or if you have a new card, you may put ALL your spending on that particular one until you hit the amount needed to earn your reward. Using the right card at the right time can make a huge difference. Spending $100 on dinner? If I used my Freedom Unlimited instead of the Sapphire Reserve, I’m missing out on 150 bonus points, all because I used the wrong card.
- Take advantage of shopping portals. All the airlines and credit cards have these online shopping portals where you can earn bonus points for spending money online. I’m not saying go on a shopping spree. No – do your regular shopping how you would in any case. BUT, before you commit to spending those dollars, go into your portals and see if the shop that you are already in will give you some kind of bonus. Sometimes it’s just another 1 point per dollar spent. A good bonus is something where you get 3 points per dollar spent, and a really good one is when you’re doing 5, 10 or 15x your spending and getting that much back in points. Planning on sending flowers, chocolate, or something else that’s gifty? TAKE ADVANTAGE, because florists are always doing generous points offers. It may take you another few minutes, but you can usually leave your items in the cart, and when you click through the link on the portal, it will all still be waiting for you there.Related to this, United has their own app that is similar, but can be combined with the shopping portal to stack your earnings. It’s called MileagePlus X, and you use it to buy gift cards (which can also be used in person). Spending money on the gift cards earns you bonus points (looking now, it seems to have 3x be average), and it still counts as spending with the shopping portals, so you’re earning points there too. In 2018 alone, I’ve earned more than 7000 United Miles spending money on things I was already planning on buying.
- [Advanced] Keep an eye on special promotions. This takes a little more effort, but not much. Mostly because it involves not unsubscribing from airline emails, and reading a few blog posts every once in a while (from people more knowledgeable than I am). I get emails from United, and every once in a while, they’ll let me know that if I spend X dollars through their portals, I can earn a bonus X points. Or that there is a special on (usually) flowers through their portal, and instead of the regular 15 miles per dollar, I could earn something like 40 points per dollar. This is serious business. It’s the kind of thing where if you were considering doing a thing now or in the future, it might change your timeline a little, or temporarily change which card you use, or which portal you use.
- [Advanced] Keep up with points and miles news. You’ll notice that I haven’t talked a lot about spending your miles, because I’m not the best at doing that. But there are LOTS of people on the internet who are good at that, and have put information out there so you can learn from them. My favorite points and miles site is The Points Guy. The site has airline and hotel news, information about all the different programs, reviews of flights, and lots more. They also do a monthly evaluation of how much points are worth, which gives you a good idea of whether the value you’re getting for them is worth the flight that you’ll spend them on.
I’m sure there are other tips you can follow, and The Points Guy even a post that is an even further introduction to starting out with points and miles, but that site is not the only one. There are lots of people out on the internet who have used their regular spending to make travel possible. If you have a dream vacation, you can make it happen. It may take a while, and some strategic saving and moves with credit cards, but it’s possible, and can be done in a way that is responsible towards your credit and your budget.
So – any questions? Any tips from others who use credit cards for points and miles? Anyone else have a big trip coming up that they’re planning on paying for with points?