Key takeaways

  • Many credit card companies reward your spending with points towards travel
  • Choose your travel goals and work backwards to find the right card for you
  • Never run up debt just to earn more rewards points
  • Do the math to make sure any annual fees or spending minimums are worth it
  • Stay organized to reap all of the rewards your travel credit card(s) offer

Credit card companies want you to become a loyal card user and keep their card at the top of your wallet. To encourage you to reach for their particular card when you need to make a purchase, many companies give you rewards in the form of points you can redeem for air travel, hotel stays, and more. Here's everything you need to know to maximize those points wisely and start traveling for a steal.

Don’t Create Debt To Earn Points

Credit card rewards programs are great, but they shouldn't overshadow the importance of being smart about credit. Before you sign up for any credit card, make sure you understand how to use your credit wisely. Running up balances and making minimum payments or late payments can cause your credit score to plummet. It doesn't make sense to run up debt just to earn "free trips" because you'll end up owing more money in interest than you earn in rewards points. As you start thinking about rewards programs, keep in mind that opening a new credit card and taking advantage of points won’t damage your credit score, but not being smart about using credit will.

Consider Your Travel Preferences, Then Work Backwards

There are lots of rewards programs out there, including cashback programs, airline-specific and hotel-specific rewards programs, and flexible programs. Although your options might feel overwhelming at first, it helps to start from the end and work backwards.

For example, when you fly, is there an airline you always book or do you look for the cheapest flight? Are you a die-hard fan of a specific hotel chain or do you typically stay at Airbnbs? If you’re loyal to one travel brand, you’ll likely get the best reward points bang for your buck by choosing that brand’s credit card. If you’re more likely to mix it up or go with the best deal, you may want to consider a card with flexible rewards, where you accrue points that can be used across a variety of airline and hotel brands.

Do The Math On Credit Card Fees

Being mindful of your card's annual fees is important, too, but you shouldn't get too hung up on them. If your card's annual fee is $95, for example, and you earn $2,000 in travel, it was $95 dollars well spent. Just make sure to evaluate your annual fees each year and make sure you’re still getting enough of a reward to make the cost worthwhile.

Stay Organized To Reap Your Rewards

When it comes to credit card rewards programs, organization is key. Keeping track of expiration dates, "spend by" dates, and annual fees is especially important. Saving up points might be a good idea, especially if you're planning a major trip, but it's important to remember that credit card points often expire after a set period of time. You can use a notebook, a spreadsheet, or a specialized app such as AwardWallet to stay organized.

As always, be sure to read the fine print. It’s important to be aware of when your points expire, how often you have to use a card, what happens to your points if your payment is late, and if there are end dates or spend minimums for any sign-up bonuses you may have been offered. You don’t want to lose thousands of points because you missed a deadline. And don’t forget that many cards have residual benefits, such as free points or a free night’s stay on your sign-up anniversary!

Credit card travel rewards are a great way to start exploring the world, but in order to have all that fun, you have to make sure you're handling your credit responsibly. If you're interested in learning more about how to make the most of your rewards program, check out our Lunch & Learn.

For advice on how to incorporate travel rewards cards into your financial plan, reach out to a CFPⓇ Professional at Facet Wealth.