Many wonder how we manage to travel frequently despite our modest incomes as a teacher and a nurse. The secret? Smart use of travel credit cards! Over the years, we’ve explored amazing places like the Bahamas, Australia, and Costa Rica, often paying little to nothing.
Initially, we hesitated to dive into the credit card world, but once we did, the benefits were clear. With the right strategies, everyday purchases can earn you points that turn into incredible travel opportunities. It’s essentially free travel, requiring just some organization and financial savvy.
If you’ve heard about the perks of travel credit cards but feel unsure, take it from us: you can absolutely do this. Start your journey today!
Travel Credit Card Basics for Beginners
If you’re new to travel credit cards, here are the essentials to get you started:
- Choose the Right Card: Look for cards that offer generous sign-up bonuses, rewards for everyday spending, and no foreign transaction fees. Research different options to find one that aligns with your travel goals.
- Understand Points and Rewards: Familiarize yourself with how points work. Many cards offer bonus points for specific categories like dining, groceries, or travel, allowing you to maximize your rewards.
- Manage Your Spending: Use your travel credit card for regular purchases, but be mindful of your budget. Aim to pay off your balance each month to avoid interest charges and maintain a good credit score.
- Take Advantage of Bonuses: Pay attention to promotional offers, such as double points on certain purchases or special bonuses for spending a certain amount within the first few months.
- Stay Organized: Keep track of your points, expiration dates, and any upcoming travel plans. This will help you make the most of your rewards.
- Research Redemption Options: Learn how to redeem your points for flights, hotels, or other travel-related expenses. Some cards have partnerships with airlines or hotel chains that can enhance your savings.
- Monitor Your Credit: Regularly check your credit score and report. Responsible use of a travel credit card can improve your credit over time, which may benefit future financial decisions.
By understanding these basics, you’ll be well on your way to making the most of your travel credit cards!
A few warnings:
- Check Your Credit Score: If you’re not already monitoring your credit score, now’s the time to start. Good credit is essential for qualifying for top travel cards. Keeping an eye on your score is important as you manage your accounts. Apps like Mint can help you track your finances and provide free credit scores, while websites like Credit Karma and Credit Sesame are also great resources.
- Pay Off Your Balance Each Month: Always aim to pay your credit card in full every billing cycle. Carrying a balance and accruing interest can quickly erase any travel points you earn. We charge nearly everything to our travel cards but ensure we have enough funds to pay off the balance in full.
- Meet the Minimum Spend Requirement: Each travel card has a specific minimum spending requirement to earn the sign-up bonus. For instance, the Chase Sapphire Preferred offers 50,000 points if you spend $4,000 in the first three months. While this may seem daunting, using the card for everyday expenses like groceries and utilities can help you reach that goal easily.
- Be Aware of Fees: Avoid charging purchases that come with credit card fees. For example, paying a mortgage with a credit card often incurs surcharges that outweigh the benefits. Always check for any fees at the point of sale.
- Stay Organized: Managing multiple travel cards can get tricky, so organization is key. Set reminders for when to meet spending requirements and when payments are due. If you’re not using a card often, keep an eye on when your points might expire to ensure you don’t lose them.
By following these tips, you can make the most of your travel credit cards and enjoy the benefits of free or reduced-cost travel!
A Note on Annual Fees: Understanding the Value
For a long time, we shied away from premium travel credit cards due to their hefty annual fees. However, after seriously assessing our travel habits, we discovered that these cards can actually provide significant value.
Take, for example, our experience with the Capital One Venture card. Its annual fee is just $59, waived for the first year, making it an attractive, low-risk option. On the surface, it seemed ideal.
Then, after a challenging layover during an international flight, our curiosity about more exclusive cards grew. We began exploring options that offered benefits like airport lounge access, initially thinking they were out of our league. To our surprise, these elite cards often offered far better perks than our basic card, making them a more cost-effective choice for our travel needs.
Ultimately, it’s essential to evaluate the benefits of premium cards against their fees. You might find that the added perks can greatly enhance your travel experience and justify the expense!
Why We Love the Chase Sapphire Reserve: A Worthwhile Investment
These days, our go-to card is the Chase Sapphire Reserve. Yes, it comes with a hefty annual fee of $450, but let me explain why it’s well worth the cost.
The sign-up bonus alone is valued at $750 in travel. Just by meeting the minimum spending requirement, you’ve effectively covered the card’s annual fee for the first year.
But the benefits extend far beyond that. The card provides a $300 annual travel credit, which instantly offsets your travel expenses. If you travel at all, you’re already well on your way to covering the fee.
Additional perks include a $100 credit for Global Entry application fees (so you can skip the customs lines) and complimentary access to over 1,000 airport lounges worldwide, allowing you to enjoy free food and drinks instead of paying for overpriced terminal meals. Plus, you earn 3 points for every dollar spent on travel and dining, and 1 point for all other purchases. When used wisely, the rewards quickly outweigh the annual fee.
Higher-end travel cards might not be necessary for those who only travel once a year. However, for us, they pay for themselves almost immediately. If you have a big trip planned and want the points and perks, you can also consider applying for the card for a year and canceling it before the annual fee is charged. Just remember to stay organized and regularly reassess whether your cards are still worth keeping as the fee date approaches!
Will This Hurt Your Credit? Not If You Do It Right!
Many people worry that using travel credit cards will negatively impact their credit scores. I used to be one of them, especially when we were preparing to buy a house a couple of years ago. In fact, my concerns about damaging our credit held us back from exploring travel credit cards sooner.
However, we now have several cards between us and often apply for and cancel cards to take advantage of bonuses or avoid annual fees. Surprisingly, this strategy has actually improved our credit scores! The key is understanding the factors that contribute to your credit score.
By managing your credit responsibly—like keeping low balances, making timely payments, and strategically applying for new cards—you can leverage travel credit cards without harming your credit. With the right approach, you can enjoy the benefits of travel rewards while maintaining or even boosting your credit score.
Tips to Protect Your Credit While Using Travel Credit Cards
To keep your credit score intact while enjoying travel rewards, consider these strategies:
- Maximize Your Credit History: Always keep your oldest credit card open, as the length of your credit history positively impacts your score. If you have an older card with an annual fee that you no longer use, contact the bank to downgrade it to a no-fee card. This way, you maintain your credit history without unnecessary costs.
- Minimize Credit Inquiries: Avoid applying for multiple cards at once. Each application triggers a hard inquiry on your credit report, which can slightly lower your score and raise red flags for banks. If you do decide to apply for several cards for specific signup bonuses, be prepared for a temporary dip in your score. Just remember, this is more advanced strategy, and it’s best to start with a cautious approach!
By following these tips, you can navigate the world of travel credit cards without jeopardizing your credit health.
How to Use New Cards to Boost Your Credit Score
- Pay Your Cards in Full and On Time: Consistently paying off your credit cards each month is crucial. Payment history is the most significant factor in your credit score, so staying on top of your payments will positively impact your score.
- Understand Utilization Ratios: After payment history, your utilization ratio—how much debt you have compared to your total available credit—plays a vital role in your score. When we started with a single card and a $5,000 limit, spending $2,500 gave us a 50% utilization ratio, which isn’t ideal. However, as we opened more credit cards, our total available credit increased while our spending remained the same, significantly improving our utilization ratio.
By paying on time and managing your utilization wisely, you can effectively enhance your credit score while enjoying the benefits of travel credit cards!
Which Travel Credit Cards Should You Start With?
Choosing the right travel credit card depends on your travel habits, as there are many options available. Some cards are tied to specific airlines, like the Alaska Airlines Visa or United Mileage Plus cards, while general travel credit cards offer more flexibility for redeeming points across various travel expenses.
For instance, our first travel card, the Capital One Venture, allowed us to “erase” any travel purchases, making it easy to use points for flights or hotel stays with any provider. If you aren’t loyal to one airline, a general card might be the best choice.
I learned this firsthand when I tried to use Alaska Airlines’ Companion Fare for a trip to Hawaii. The advertised discount didn’t materialize due to hidden fees, which made the fare less appealing than purchasing regular tickets.
Based on our experience, I recommend starting with the Capital One Venture card for its ease of use and low annual fee. Another excellent option is the Chase Sapphire Preferred, which offers 50,000 bonus points after spending $4,000 in the first three months, plus various travel perks like a waived first-year fee and trip insurance. Both cards provide great value, especially if you use them regularly!
Getting Started with Travel Credit Cards
I’ve only just begun to explore how to maximize travel benefits with credit cards! Now that we’ve mastered it, we frequently apply for and cancel cards to optimize our rewards.
However, you don’t need to dive in that deep. Starting with just one travel card that you plan to keep long-term can still provide valuable benefits and help you travel for free.
If you’re curious about the specific cards we currently use, feel free to check out our recommendations. And if you have any questions about how to make this work for you, don’t hesitate to leave a comment—we’re always here to help fellow travelers!