Last week I explored the basics of getting travel rewards. This week, let’s talk about how to optimize your rewards and avoid some common pitfalls while trying to do so.
Have a Plan
To maximize the benefits of travel rewards, you need to have a plan in place. Many rewards programs have specific terms and benefits that may only apply to certain airlines, flight, hotels or restaurants. So have a goal in mind when you choose a card and/or airline accordingly.
What are your goals?
- Do you have a specific destination in mind?
- Do you like using a specific airline, hotel or restaurant?
- How many seats will you have to purchase or upgrade?
- How often will you want to do this?
Ben and I wanted to upgrade our seats to business class. We knew we were flying British airways, and with a little bit of research I found we could upgrade from economy to business class for about 25,000 points. For two of us flying round-trip, we’d need 100,000 points.
The Chase Sapphire Preferred (CSP) card offers a 50,000 point bonus for spending $4,000 in the first three months. You receive an extra 5,000 for adding an authorized user (in this case, Ben). We can use CSP rewards 1-to-1 with British Airways as well (not all credit card points work with all airlines.).
I also got a card with American Airlines (AA). It offers 30,000 points for spending $750 within the first three months. I picked AA because I fly domestically with them, and they partner with British Airways. In other words, I can use my American Airline points on British Airways.
So we can get to 85,000 points just through bonuses. We also earn points for spending on the cards themselves. Both CSP and the AA card offer double points on qualifying flight, hotel and restaurant purchases. Most of my initial bonus spending of $4,750 ($4,000 on CSP and $750 on AA) will be spent on just that. So in turn I’m getting another 9,000 points.
I think we can get the rest of the way through our spending. If not, it may be worth it to buy bonus points. AA has special offers where you can get bonus points for every point you purchase. While I understand purchased points may not be the best deal, it may be worth it to top off our balance.
Watch for the Pitfalls
Even the best-laid plans can go off track, especially when you’re not aware of some common travel rewards loopholes. Here are a few to watch out for.
Limited Availability and Blackout Dates
Upgrades depend on availability. Airlines usually only reserve a handful of seats for points purchases and upgrades. So even after all of this research and analysis, we could find that British Airways doesn’t have any upgrades available. Additionally, some credit cards have blackout dates that don’t allow you to use points for flights or upgrades during certain peak seasons. (Luckily CSP doesn’t have blackout dates.)
While it would suck not to be able to experience business class this trip, we would still have the points to use elsewhere. We can use our AA points for domestic travel (and, in an additional benefit, cardholders get the first checked bag for free). I can use my CSP card on many domestic airlines and hotels, so we can still put them to good use when we travel to visit our family over the holidays.
It takes 8-10 weeks for points to transfer
The second caveat with bonus points is to make sure you have enough time for the points to get to you. Both cards say you need to allow 8 to 10 weeks for the points to transfer. So that means we need to actually accumulate the points within the next month or month and a half to ensure that we will have the points for our flight in late summer. Again, that should be a little easier since we have to purchase plane tickets, but it will still take focused spending. Either way, we need to make sure the points can transfer in enough time to use them. For you, that might mean starting your strategy three to four months in advance.
Make sure you can meet the spending limit
Lastly, make sure you know and can meet the spending limit. When I first broached this idea to Ben, he asked if he should apply for a card too. That way we could get 100,000 bonus points rather than 50,000. While that’s a great idea, we won’t spend $8,000 ($4,000 on each card) in the next a month an half. This may be a good idea if we want to try this strategy again in the future, but as of now it’s better to stick with one person and card. Keep in mind, some cards, like Chase, disallow bonus points if you’ve applied for a card within the last 24 months.
Words of Caution
In addition to the pitfalls of playing the rewards game, you can find yourself in deep trouble with taking and spending on credit cards if you aren’t careful. Hence, a few words of caution:
- Know your credit score: You need the income and credit score to get approved for these cards. So know your FICO score and understand that it will take a hit by applying for credit. If you need your credit score soon (buying a house, car, renting an apartment, etc.), it’s better to avoid this game and keep your credit stellar.
- Don’t carry a balance or pay late: Don’t overspend just for points. If you can’t pay your credit card balance, the 16-26% interest you will be paying on your purchase will outweigh the benefit of your points. This is also true if you get charged a late-payment fee because you forgot you spent money on a certain card. Use programs like Mint to keep your accounts organized or like AwardWallet to keep track of all of your points.
- Watch out for annual fees: Most of these cards have annual fees (although they are waived in the first year). Do the math on the annual fee versus the value you get from the card before you make the payment. If the benefit isn’t there, cancel the card before the next annual fee. You can also find some cards with no annual fee.
- Remember your time is worth something: Researching and strategizing this game can easily suck your time away. In fact, that’s why many people get paid to this. While winning is great, it will take time and effort to keep organized and make the process as effective as possible. Keep in mind the cost of your time when researching and playing the game.
I hope you’ve found this second installment helpful. If you’re looking for more information rewards you can check out sites like The Points Guy and NerdWallet. I would also love to here your travel rewards war stories. Email, message or tweet me at the links below.