An Intro to Reward Travel: Credit Cards Are Not *always* Your Enemy

So after an auspicious start to the blog with the review of our trip to Norway, I thought I’d start making good on the promise to show you guys how exactly we manage to go on these trips. It probably seems complicated, but I assure you guys, it’s not. It just take a bit of time investment on the front end (ya know, to learn it all), and then you can pretty easily hop on things at will.

First things first, right? There are two methods to my madness here, both of which are equally important. In late 2015 I started looking into cheaper ways to travel to Europe, since I had been wanting to go over for a long time. I quickly stumbled into the idea of credit card rewards, and while I originally was skeptical, I found that if you manage it correctly, you can earn tons of rewards without incurring any debt/interest payments/horrible life-ruining fees.

The key, obviously, is not to carry a balance from month to month. Now, since I’m not a huge spender and I don’t have a ton of money, I rely most heavily on credit cards’ sign-up bonuses to earn my points. As an incentive, most cards will offer anywhere from 50k-100k points for you to sign up and spend X amount of dollars on them in a given time. Take, for example, the Chase Sapphire Reserve credit card. It offers a 100k point sign up bonus after 4K in spend in 3 months.

That sounds like a lot, doesn’t it? Well, rather than going out and buying yourself four thousand dollars worth of stuff that you don’t need, it makes much more sense to simply transfer all of your spending over to the card. For me, that means my mortgage payment, my car payment, all utilities (water, electricity, gas, phone, internet), insurance payments, etc end up going onto the card. In a month, that total equals about $1900 worth of bills. So, just after 2 months in, I’ve met my spending goal without incurring a ton of extra debt. And, since I already have that money earmarked for bill payment, I simply use that to pay off the credit card.

Then I receive the bonus! 100k points is worth anywhere from $1700-$5000, depending on how you use it. Not too shabby, right? So what do you do if your mortgage doesn’t accept credit card payments? There are actually a ton of services out there that allow you to pay with a credit card and then turn around and issue a check to your bank. Plastiq.com is one of them, but there are a multitude of others. Granted, these folks do charge a small fee for their services, but it ends up worth it in the long run.

After earning the bonus, I simply rinse and repeat with different cards. The credit card market is extremely competitive right now, so there are a ton of good options out there.

Will this hurt my credit score?

I know this question probably bothers a lot of you. The short answer is no. While people generally talk about the amount of inquiries on your report as damaging to your score, the extra lines of credit that you receive will actually increase your score.

As an example, let me give you my own credit history. Since starting this whole thing in late 2015, I’ve gotten 13 new credit cards. (Though only two of them were in 2015, the rest were 2016). That’s right, I averaged essentially one new card per month for the entirety of last year. And you know what? My credit score has actually increased. The reason for this is simple: the number of inquiries on your credit report has a low impact on your overall score, while the available amount of credit that you have (and your overall utilization) has a medium impact on your score. My credit is actually better now than when I started.
The key, again, and I can’t say this enough, is: don’t carry a balance. Otherwise, all the rewards you receive will be eaten into by the interest you’re paying each month. Instead, transfer your regular spending onto the card and use the cash you were going to spend anyway to pay off the card. Trust me, it’s worth it.

What are some of the things I’m getting to do with these rewards?

Flights:

Fly round-trip Los Angeles- Tokyo
Fly round trip Atlanta- Dominican Republic
Fly Houston-Orlando- San Francisco

Fly round trip New York-Madrid
Fly round trip Los Angeles-Dubai
Fly one way New York- Washington DC
Fly New York- Sacramento- Houston

Hotels:

5 night stay at Disneyworld’s Dolphin hotel (free instead of $2100)
6 night stay at the Doubletree Hilton Jumeriah Beach in a 1000sq ft suite ($400 instead of $1700)
4 night stay at the Doubletree Aqaba ($160 instead of $600)

This is just the tip of the iceberg here. There are so many opportunities out there to be taken, and it just takes a (teeny tiny) leap of faith to jump in.

Anyway, this was a brief primer on some of the rewards you can get with cards. Let me know if you guys like this/ would like to hear more/ want an in-depth guide on earning and redemptions. This is something I’m pretty passionate about, and the more people I can bring into this world, the better!

-Carissa the know-it-all

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