In this post you will learn 5 tips on how to travel well using credit cards that provide a travel credit to reduce the cost of your next trip. I recently saved over $1,000 in real expense (hotel & flights) on our trip to Las Vegas using my Barclays Arrival Plus credit card. Read on to learn more.
A Little About Us
My wife and I recently took our first couples trip in 8 years to Las Vegas! Having three young daughters means that while we took family vacations, we weren’t able to get away on a trip for ourselves. My mom volunteered to look after the girls now that our youngest is almost three, and we got to have a great trip! Thank you mom!
Now, on to the main topic!
5 Tips on How to Travel Well Using Credit Cards to Lower Expenses
As you can see from the above, if you add up all of our statement credits, the amounts it equals $1,006.
These are all real savings that helped make the cost of our trip that much more affordable. Food is expensive in Las Vegas (at least on the strip) and I don’t know about you, but when I’m on vacation I want to experience the best an area has, within reason.
Here’s how you can also make credit cards work in your favor.
Precursor – Main Cost Buckets You Can Cover with a Travel Credit Card
Here are the main categories, although not exclusive, that a travel credit card which provides you with statement credits for valid travel categories will pay for.
– Airfare
– Hotel
– Cruise
– Travel Agency booking and tours
If only food was a valid expense category! Either way though, through smart planning you can help reduce the cost of your trip significantly. Especially if you are doubling down and using more than one credit card! For example, using one credit card for flights and another for hotel.
Step 1: Understand Your Needs
What type of locations are you interested in?
Close or far away. Urban or natural. Domestic or International.
What type of cost makes up the largest expense in the trip?
Tying into the above, further = more expensive typically, but not always!
Let me illustrate why these factors matter.
Think Distance & Cost First
If you’re looking at doing a trip to say Hawaii or New York, but you live close to these locations, then hotel expenses will likely cost more than airfare. However, if you’re traveling from a regional airport that doesn’t get cheap flight deals, then your flight could be your largest expense. Same case for international flights as well.
The expense which costs the most, as well as convenience/availability of booking, will help guide you for which credit card makes the most sense.
Quick Example
Two weeks in Thailand
– Airfare per person = $1,200
– Hotel = $80/night x 10 nights = $800
Two weeks in Japan
– Airfare per person = $1,200
– Hotel = $150/night x 10 nights = $1,500
Bottom line:
Try to cover your largest expenses with credit card miles/points.
Step 2: Finding the Right Card
Based on the above, if you find that your largest expense is likely to be your flight, then you know to focus (at least initially) on travel credit cards that are associated with airlines, and vice-versa if it is hotels.
When selecting a travel credit card, it is important to keep in mind:
– value of a mile/point
– network size (own brand first, then group/alliance)
– seat/room availability for when you would likely travel
– strength of the airline in your area & desired destination
– strength of the hotel in your desired destination
– size of the sign up bonus
There are numerous airlines out there, but if you live closer to a regional airport like I do, then in reality you only have a few strong options.
Perks & Annual Fees
One of the major perks that airlines like Alaska Air or Delta Airlines offer is a companion fare, which allows you to book a domestic flight in the U.S. for a nominal amount ($121 for Alaska, and taxes and fees only for Delta). This is an attractive offer, however, for both airlines it doesn’t come free. You have to pay $75 as an annual fee for Alaska and $250 for Delta. Now your flight is costing more like $196 to $250++.
It can certainly be worth it though if you’re looking at making an expensive flight. It pays to read the fine print though and make sure you fully understand the offer you’re getting into. I signed up for the Delta Platinum card hoping to use the companion fare for a flight to Florida, but found out that it can only be used from year 2 (meaning you have to pay the annual fee 2x or $500 before you can use it)!
Step 3: Strategize the Minimum Spend Requirement
If you’re like me and are excited about traveling more and saving money while you do it (so you can travel even more), having to come up with $3,000 here and $5,000 there to qualify for the sign up bonuses can add up. This is where it pays to plan well in advance and be a bit strategic about the timing of when you sign up, if spending these levels is an issue for you in the regular 90 day window.
Some quick ideas if you need help:
– Pay for your annual home/auto/life insurance with your new card
– Pay for annual expenses like a ski pass etc
– Pay taxes
– If you contribute to a charity, this could also be a good option as well
– Stock up on household items that you use, but don’t expire
One word of warning with the annual sign up bonuses though, it is worth calling to confirm that you have reached the required threshold. I missed it by $4.75 for one card because they charged the annual fee and I missed it on the 4th page of my statement…needless to say I was quite upset.
Step 4: Plan Ahead for Your Trip…or be Ultra Flexible
Due to the limited seating/rooms at preferential prices, it is recommended that you plan ahead. Way ahead. If you don’t already have all of the cards that you need to cover a large portion of your trip, you will have to factor the application time, as well as time to get and be able to use the card perks into your travel plans.
Either that or be open to going anywhere you can get a good deal!
Step 5: Reap the Rewards
If you’ve planned well and are utilizing accrued miles/point and/or sign up bonuses to help alleviate the cost of your trip – good for you!
I’ve seen offers where you could fly to Europe for free with smart combinations of credit cards. Let me give you one example.
Seattle to Paris Trip Hypothetic Trip
Flight $1,000 > Free with 72,000 miles (off season rates)
Taxes/Fees for Miles $200 > Free (pay using card like Barclays Arrival Plus)
Hotel $1,500 > Could be free or significantly reduced using a hotel card
Food $1,000 > no luck here really (as far as I know…unless it’s all inclusive)
Normal trip cost = $2,500
Trip cost using travel cards = $1,000 + $270* = $1,270
* $90 per Credit Card x 3 (flight, hotel, travel credit) = $270
Est. Savings = $1,230
Yes, you’re paying annual fees, but the savings definitely make it worth it (as long as you use them)!
My 3 Rules for Using Credit Cards
This probably goes without saying, but I wanted to share my three rules for using credit cards. You don’t have to use these, but I highly recommend them. Consider it the basics.
- Pay off credit card balances in-full & on-time every month. Always.
- Only spend what you can afford
- That might mean paying for flights in one statement, hotel in another statement and the actual trip in a third statement to reduce the monthly expense
- Do the math before you sign-up
- The relative value needs to be greater than the annual fee/cost
- Miles/Points need to be worth at least $0.01 for me
- Read the fine print
- As mentioned above, learnt this one the hard way!
- When in doubt, call and confirm
Travel is a wonderful way to explore new sights, sounds and tastes and my hope is that if you’re not already traveling as much as you’d like, that this post helps get you that much closer!
