Q: What is the overall strategy using credit card sign-up bonuses to earn travel rewards point?
A: If you have an excellent credit rating you can get approved for new credit cards that offer significant travel rewards point bonuses. These are often in the range of 25,000 miles all the way up to 100,000 miles, so they can be quite valuable for one credit card signup.
You generally have to reach a certain ‘minimum spending requirement’ during a certain time period – let’s say $3,000 for example in the first three months. What this means is in the first 3 months your account is open you need to spend $3,000 total on the card. Because you (hopefully) will pay in full each month this does not cost anything to do; you will merely put your normal spending on this new card to reach the spending requirement.
By learning about the credit card bonuses and the airline/hotel rewards programs, you are able to sign up for credit cards that offer targeted bonuses that you can turn into actual travel throughout the US and the world.
Q: Who can take advantage of this travel rewards strategy?
A: Just about everyone who is responsible with their credit cards! If you are comfortable opening one or more credit cards to earn these rewards bonuses, then you can definitely benefit from this strategy.
If you can’t pay your bill in full each month, or you get into trouble with credit cards by spending too much, then we highly advise that you do not move forward with this strategy. It is not even remotely close to worth it to go into debt just to earn some low-cost travel! Your financial well-being is the most important thing, but once you have that sorted away, this is a really easy and effective way to earn thousands of dollars of free travel.
If you’re fresh out of college and are looking to establish a credit rating in the first place, opening multiple credit cards is not the way to do it. We suggest you find a nice card without an annual fee and use that as your primary card for the foreseeable future. You always want to leave this account open, as your average length of credit accounts make up a portion of your credit score. Leave this open for decades if you can! Our top recommendation is the Fidelity American Express card.
The only other people we don’t recommend using this strategy are those who are going to apply for a mortgage in the next 1-2 years. It really doesn’t negatively impact your credit rating substantially, but the last thing you want is a mortgage underwriter denying you for a loan because you opened a few credit cards recently.
Q: Does it impact a person’s credit rating to open a number of new credit cards?
A: In our personal experience, the impact on our credit rating has been minimal. Our rating has fluctuated within 10 points of our starting figure, and this is more than acceptable to us considering we’ve earned over 1,000,000 miles/points.
We always strongly recommend that you consider your own financial life and unique situation before deciding if this travel rewards strategy is right for you. If you feel uncomfortable opening credit cards to earn these bonuses then you can certainly still open one or two cards that are targeted either to a specific trip you want to take or just to travel in general.
We have decided for our own financial lives that it makes sense to move forward with this strategy, but you need to determine what works for your own life.
Q: What card should I start with?
A: There’s no simple answer that is right for everyone! It depends on a number of things:
- What airport(s) you live near and what airlines are available
- How much you spend on your credit cards each month
- What specific trips you want to plan
- How many cards you feel comfortable opening eventually
Q: How many new cards do you open each year?
A: This completely depends on your personal preference! There’s no hard and fast rule by any means, and it depends on your comfort level with the concept and what your particular life circumstances are at the moment.
Plenty of people open one card, earn the bonus, and then stick with it for years to come. Others open a few new credit card accounts each year to earn these bonuses.
Q: I’m unsure of my ability to reach the minimum spending requirement – should I still open the credit card?
A: In our opinion you really should be certain that you can reach the spending requirements before considering opening a particular credit card. The bonuses are extremely valuable, and you wouldn’t want to miss out on them, as there are always other cards with lower minimum spending requirements you can choose instead.
It is very important that you make note of the spending and time requirements for the bonus when you sign up!
Q: Do I keep using the cards after I’ve met the minimum spending requirement?
A: Again, it depends on your comfort level and personal goals. We often do not keep using the cards after we’ve reached the requirements, but there are certainly cases where the points are so valuable that we do keep on using the card going forward. It really depends on how you value the cards and the points you’re earning.
Q: Can spouses each open up an account for a particular credit card to get two of the bonuses?
Yes, spouses absolutely are each entitled to open an account in their own names. Because of this, a couple can earn double the available signup bonuses if they determine they each want to open a particular card.
Please keep in mind that an account is different from a card. For instance, on my wife’s account she adds me as an authorized user so I get a card on her account.
Q: How do you organize your cards and remember all the necessary information?
We use a simple Microsoft Excel spreadsheet to keep track of everything. On one sheet we list all our cards with the
- Date Opened
- Bonus Points Offer
- Spending and time requirements to reach the bonus
- Which spouse opened the account
- Annual fee and date it will apply (many cards waive the fee the first year)
On the second sheet we list all our logins and account numbers for the many hotel and airline rewards programs we’ve signed up for (free signups for all). It is just too difficult to memorize these logins, so it is easier to have them in one place. We also list the approximate number of points we have in each program.
Q: If you close a credit card, do you lose your unused points?
There are three major types of rewards credit cards and the treatment is different:
- Hotel & Airline branded credit cards: These cards, such as the British Airways Visa Signature® Card and the Starwood Preferred Guest® Credit Card from American Express, transfer the points out to your respective airline or hotel account each month after the credit card statement closes. These points are from then on not linked to your credit card account in any manner. If you happen to close the credit card you will not lose the points in your account since they are now completely unrelated.
- Reward Account Credit Cards: These cards, such as the Capital One Venture and the Chase Sapphire Preferred® Card, award points that reside in your credit card account. So if you do close your credit card you will lose the unused points. In the case of Chase cards that offer transferable Ultimate Rewards points, you would just make certain that you transferred them to a partner (such as Hyatt, United, Southwest or British Airways) prior to closing the account. However, some cards do not have a transfer option, so you’d have to redeem these points for travel-related expenses prior to closing the account.
Q: Do travel rewards points expire?
Yes, points do potentially expire if there is no activity in your airline or hotel for a certain period of time. The time period varies by program, but generally you have between 1-3 years without account activity before they would expire.
Keep in mind it is very simple to have account activity and any activity ‘resets the clock’ on the expiration, so you’d get another 1-3 years after that activity. Examples of types of activity: Any booking of a hotel room/airline flight; a deposit of points — such as from your credit card; transfers from a family member; points earned from a “shopping portal”; a small purchase of points; and many more.
If you’re considering closing a card, it might be worth your time to make one or more purchases on it before you close the card so some points get deposited into your account in order to ‘reset the clock’ on the expiration schedule.
Your points should never expire because the entire goal of earning them is to spend them on wonderful vacation experiences! Not to mention that is really is quite easy to reach the account activity requirement if they are in danger of expiring.
Q: What are the most valuable points?
A: It all depends on your own circumstances, as you might live near an airport that has a particular airline or you might only frequent a certain brand of hotel, but in general we favor the Chase Ultimate Rewards points that you can earn from the Chase Sapphire Preferred Card, Chase Sapphire Reserve and Chase Ink Business Preferred Credit Card.
You transfer these points from your Chase account to one or more of their 10 transfer partners. Our top four choices for best value are: United, Hyatt, British Airways and Southwest.
One other valuable aspect of these Ultimate Rewards program is that you can transfer your UR points to either your account or your spouse’s partner account at the respective partners to pool together your points for one award booking. This is unusual as many programs do not allow you to pool the points together.
Q: Which airlines and hotels allow you to combine points with your spouse/family?
A: We’ve had success transferring Hyatt and Starwood points between spouses, and British Airways allows you to create a ‘family’ to pool points with.
Many of the airline programs charge a significant fee to transfer points, so this is often not possible.
Q: Can you really use these points or are there a lot of blackout dates?
A: We believe in simplicity and stress reduction here at RichmondSavers.com and we dislike blackout dates as much as you do! For that reason we gear our recommendations towards programs that are easy to use and easy to earn points for.
In particular we like three main hotel programs because they have zero blackout dates – if a standard room is available for cash, it is available for points! They are: Starwood (Westin, Sheraton, W, aloft), Hyatt and Club Carlson (Radisson).
The easiest airline program to use is Southwest, as they also have a no blackout policy. The points requirement is just a function of how much the cash ticket costs at that moment.
Our next favorite airline for simplicity is United. They have a great search function at their website, they have a number of airline partners so their availability is great, and it is easy to accumulate their points through Chase Ultimate Rewards and the United MileagePlus® Explorer Card.
Our next favorite option is to use British Airways Avios points to book on American Airlines and Alaska Airlines in the US. We explain that concept in-depth in our using British Airways Avios for amazing reward values article. Though these points are not as easy to redeem as Southwest, you can get amazing value out of them that make them a worthwhile option in certain circumstances.
One important note is that you never want to use British Airways Avios on British Airways planes to fly from the US to Europe as they charge a “fuel surcharge” that in most cases is nearly equal to the cash price of the ticket.
Q: Are there any really great deals on airline tickets using frequent flyer miles?
A: Many of the rewards programs are set in stone based on precisely where you’re coming from and where you’re going to, but there are a few examples of ‘sweet spots’ where you can get amazing value out of your points. Most of them center around British Airways points since they have a distance-based system that allows for unusually good deals:
- Boston to Dublin for only 25,000 Avios round-trip. If you live within 650 miles of Boston and have direct American Airlines or US Airways flights to Boston, it would only be 34,000 Avios, which is still an amazing deal.
- West coast to Hawaii for only 25,000 Avios round-trip using British Airways Avios on Alaska Airlines
- Any American Airlines or Alaska Airlines flight within North America or the Caribbean that is 650 miles in distance one way for only 4,500 Avios (9,000 round-trip) such as NY to Boston, DC or Richmond.
Another way to get great value out of points is to use the ‘stopover’ feature on United Airlines international awards tickets. This really allows you to get a free extra flight in the middle of your trip.
For instance, if you wanted to go to Africa from the US it would cost you 80,000 miles round-trip.
If you decided to ‘stopover’ in Europe on your way out to Africa, you could stay there for months and then catch a flight to Africa. You’d return from Africa to the US and this entire journey would still only cost you 80,000 miles!
There are many examples of these sweet spots such as the American Airlines off-peak chart to Europe or Hawaii.