This article is about how to use credit card points. In a prior post, I wrote about how to properly use travel cards and which one to get. Find that post here.
Credit card points and travel hacking are a trend in the modern financial world that truly boggles the mind. Some financial influencers or travel bloggers will make outlandish claims about free trips they took, Some of those trips were truly free via their points, others were free via deals or discounted heavily because of their status, and still more were only free in the sense that they were paid more by the content than they paid to be at the destination. Still, there is value to be gained by utilizing travel credit cards and other reward-based cards to your advantage. You can maximize the value you get from them, the question is how much time are you willing to spend on your strategy?
Let’s start this off by discussing points. Points are fake currency given out by the credit card companies. They are in line with Fortnite’s VBucks and Runescape gold. The only difference is that you can actually convert them into physical goods or services. They don’t gain interest and they have fixed value if used in various ways. The best way to think of each point is that it’s a penny. So 100,000 points is $1,000 dollars. Now, back to the strats.
Little Time
The simplest to gain value from a travel credit card is to utilize the introductory offer points on a 1:1 level. Many of the popular credit cards will give you some number of points if you spend and pay off a certain number of dollars worth of transactions in the first month or quarter of having the card. For example, you might sign up for a card that says if you spend $5,000 in the first three months you’ll get 50,000 points. If you take a trip, you should just be able to use points to cover the related transactions. The points will be valued as 1 point for 1 penny or less using this method. So you could cover $500 of a travel expense.
Some Time
The second tier of maximizing value comes in the “transfer partners” that each of these cards has. If you’re flying on your trip, transfer points to an airline that both works for your trip and participates in your card’s transfer points program. That airline will often give you more than 1 penny of value per point (often now: mile) that you use. This can maximize the value of your points further and can often work with hotels and other travel providers. You could potentially book a flight worth $650 for the same 50,000 points (now miles.)
Lots of Time
The third tier of maximizing comes via special offers that these transfer partners give out on a regular basis. An airline might do a brief promotion that offers huge discounts on trips booked via points to a particular destination or during a particular week. As long as you’re willing to wait on your next vacation or be flexible with the destination, you might be able to fly for free! Your points can go massively far here. The same can be true of hotel chains.
They may offer huge discounts during low seasons to fill up rooms. The key is staying vigilant and aware of the offers that these transfer partners are giving out. If you find a great offer you may be able to get a $1,000 flight or hotel room for the same 50,000 points!
So as you can see, there are strategies for getting the most out of these benefits that build upon themselves. The more value you need to get for your points, the more vigilant you need to be of seasonal options and offers. You also may need to take a very fun trip to a destination that wasn’t high on your list if you want the most value for you rewards. That said, sometimes the deal is good enough that cashing in all of your points seems worth it.
As a closing thought, remember that this is a small optimization and maximizing credit card points does not solve a cash flow issue or replace the need for an emergency fund. All of those things are more important in the short term. Investing is more important in the long term, as well. Credit card points are a good way to subsidize a trip as long as you are paying off the card and checking all of the other financial boxes.