How to use a Travel Credit Card to Travel for Less

In an effort to bring you some new voices on Ottsworld, here is a guest post from an Ottsworld reader and Youtuber Tim Rutherford. Amy and Tim Rutherford retired in their 40s by trimming $6,500 from their monthly spending. They are passionate about teaching others the strategies that helped them say goodbye to their careers and hello to their freedom. Tim wrote part one to this article, Accumulating Points and Perks, and is now following up with more details on how you can travel for less. All opinions and experiences expressed here are theirs. –Sherry

Together, my wife and I have over 30 credit cards that we use for various purposes. Additionally, we both have credit scores that exceed 800. Our scores have benefited from the number of cards we maintain. But our main reason for having all of these cards is to do more travel for less money.

The majority of our airfare, hotel and rental car expenses are covered with point redemptions throughout the year. However, we do spend cash when it makes sense. In 2018, we flew to France round-trip for $350 each on American; comparable points redemption would have been 60,000 points for each ticket. We currently value our American miles at 1.4 cents per point. So, the points redemption would have wiped $840 of points value out of each of our AAdvantage accounts. Plus, there would have been additional taxes to pay on top of the points usage. The cash option offered a better value.

If this seems complicated, it’s all about a few basics and strategy.

Credit cards = points to travel for less

Form a Points Strategy to Travel for Less

We love transferable points offered by American Express (Membership Rewards points – MR) and Chase (Ultimate Rewards points – UR). Most of our day-to-day spending is focused on growing our MR and UR point balances.

Having a strategy with the points you acquire is an important consideration with award travel. If you have significant loyalty to a specific program (i.e., you have Platinum status with Program X) or if you’ve collected a large number of points in a program, it will likely make sense to continue the accrual of points within that plan. Ideally, you’ll have enough points in your favorite points program to cover your travel needs. Finding yourself a few points shy of your planned redemption can be aggravating.

You may have options when attempting to collect your favorite points:

• Sign up for credit cards that offer points directly in your favorite program. (Sign up for a United Airlines-branded credit card to earn more United points)
• Sign up for a card that offers transferable points into the program you favor. (Sign up for a card offering Ultimate Reward points by Chase that you can subsequently transfer to United or many other partners.)

If you plan to dive deeper into the points and miles hobby, it might make sense to diversify where you earn points. Diversifying points provides more redemption options when you are looking to travel to a specific location. The primary advantage of a diversification strategy is to provide options. Flexibility is key when making your award travel plans and having points in multiple programs will open up your choices for each trip.

For example, if Hilton offers valuable redemption options in Panama City while all of the Marriott properties provide poor redemptions, you may choose the rewards program that offers the most value. If you only have Marriott Points, you may be “forced to pay a premium” to use the only points at your disposal.

Pitfalls to Spreading Your Points Across Multiple Programs

At any time, a rewards program can change the number of points or miles required to stay at a specific property or to fly a particular route. These changes have the potential to negatively (or positively) impact the value of the points you’ve earned. Finding yourself stuck with a pile of points that you cannot use wisely may upset your plan.

Most points have an expiration date. Keeping points active requires attention to detail with a commitment to tracking.

• With Frontier Airlines, you must earn or spend your miles within the last 6 months or risk losing all of your accumulated points.
• With British Airways Avios points, your points expire after 3 years of inactivity.
• With Delta Airlines SkyMiles your miles never expire.

Every points program has nuanced differences (how points are redeemed, how points are earned, property or route valuations, route options, etc.). Understanding these distinctions is the best way to get the most value for the points you’ve earned. Diversifying programs means you’ll need to be up to speed on how the various programs operate.

Organization is even more critical when earning points across multiple plans. If you juggle several credit cards, many points programs and trip planning, your effort may need to grow exponentially.

Airline Credit Cards and Miles

Southwest Airlines is our go-to carrier for domestic flights. We earned Southwest’s Companion Pass (CP) via a now-defunct transfer of points from Marriott. Currently, you can earn the CP by signing up for two Southwest credit cards offered by Chase. If you travel frequently with a companion, this is one of the most valuable tools in a low-cost travel arsenal. It allows a companion to travel for free on every Southwest flight you take from the time you earn the pass until the end of the following year. This is valid for tickets purchased with cash or points. Also, Southwest allows you to adjust your fare price after a purchase has been made. If you see a better fare offered after your initial purchase, they’ll allow you to rebook at the lower fare with no change fees. We love Southwest and our Companion Pass!

When I traveled frequently for business, I preferred to fly United and accrued many miles. Denver is a hub for United and it’s very convenient. United points are most valuable to us for international travel. We maintain a no-annual-fee United card (issued by Chase.) It offers some compelling perks that make this card worth keeping in our credit card portfolio.

Frontier Airlines is headquartered in Denver and positioned as a low-cost leader in air travel. We love the pricing offered by Frontier. My wife, daughter and I flew round-trip from Denver to Los Angeles for the day in 2016. The total for all three tickets was under $100 (yep, about $15 each way per ticket). We have accumulated enough Frontier points for a domestic ticket, but haven’t found a compelling redemption to date. We do not have a Frontier credit card as their points program is not very competitive. Our Frontier trips are all purchased with cash.

My business travel also included the occasional flight on American Airlines. We still carry American Airlines credit cards for various perks. But, we find it challenging to locate decent reward routing on American from Denver. We expect to use these points when our international travel accelerates in a few years.

Hotel Credit Cards and Points

Marriott was my preferred hotel chain for more than ten years of frequent business travel. I am nearing Lifetime Platinum status with Marriott and the fact that they are one of the largest hotel chains in the world (after their merger with SPG) makes their program our favorite. We have both Marriott and SPG cards and the merger is creating new opportunities for earning easy points in this program. It was announced late last year that both Chase and American Express will be offering new Marriott cards as the merger completes. These new credit card products should offer new earning opportunities when they are released.

We have a collection of Hilton points that I gathered through business travel as well as multiple credit card sign-up bonuses. We like Hilton properties and their points are relatively easy to earn, but good redemptions have been difficult for us to find.

Recently, we added the Chase IHG card to our collection. IHG’s purchase of Kimpton also provides new opportunities for aspirational stays. The IHG card offers an annual free night at any property in their chain pending availability. This is a nice perk that makes the annual fee make sense and will keep this card in my wallet. IHG also offers “PointBreak” opportunities on a quarterly basis that provide discounted point redemptions for specific properties. These are often a good value and make our IHG points go further when the stars align with our travel plans.

Travel Cash

Barclaycard and Capital One cards are used for our miscellaneous travel expenses. Both of these cards offer the ability to “erase” travel-related purchases. The initial sign-up bonuses for these cards offer a substantial bucket of funds ($400 – $600) to be used for travel incidentals. The cards return roughly 2% on day-to-day purchases. It can be a challenge (unless you spend a lot) to have travel funds available on these cards after you’ve used the funds from your sign-up bonus. That being said, here are some of the travel items we consider erasing with the points we earn on these cards:

• Airbnb
• Miscellaneous travel fees (trains, buses, rental cars, parking, entrance fees)
• Accommodations that are not covered by one of four hotel reward programs that we use

Miscellaneous Points and Plans for New Cards

Tim and Amy travel for less all around the world!

We have Iberia, British Airways and Club Carlson points we’ve accumulated from various promotions. These points have been challenging to use and we have to monitor them to keep them active. New sign-up opportunities are always on our radar and we’re focused on growing our transferable points. Additionally, keeping our Companion Pass active will be a priority for 2019.

Now you can start booking free or cheaper travel and dip your toe into travel hacking yourself!

If you have questions for Tim or Amy, leave them below or go check out their blog and Youtube channel to learn more about how they have learned to not only travel with less, but live with less ultimately allowing them to get out of the rat race and enjoy a new life model!