Hi Taylor – I’ve been using a credit card that gets me airline points for a few years now and I don’t think the math is working in my favor. I might be getting a free flight every two to three years, but that doesn’t seem worth it. Is there a better approach I don’t know about? – Jessica
Hey Jessica – There probably is a better approach, but it still has to be one that’s tailored to you and matches the way you travel and how you spend your money. I’ll throw out a couple ideas and you see what makes the most sense for you.
–1. The right reward type. I’m guessing you have a card attached to a specific airline, so all your spending earns you miles on Southwest or Delta or whatever your plane of choice might be. These cards work well in that your points are focused on a singular reward, but they’re oftentimes reliant on huge amounts of spending to really work in your favor. The average person getting groceries and gas and birthday presents on their Southwest card might not get a lot out of it, while the card used for all the business expenses of a small company can rack up miles in a hurry. If you want to feel like you’re actually earning rewards, you have to be honest with yourself about how active your credit card is. Don’t start spending more just to earn miles, think about what type of card will work best with your situation.
–2. Cost vs reward. Some of the better rewards cards come with an annual fee, which, on its own, isn’t a great use of money. However, if you find a card that rewards the type of spending you already do and comes with significant bonus miles, $150 a year might save you $500 on plane tickets. This is why there’s no one-size-fits-all with travel credit cards; you need to consider your personal needs and habits. For some, an annual fee is money wasted. For others, it’s exactly the opposite.
–3. The credit card shuffle. I’ve seen some people play the credit card game really well. They open a new card, hit the minimum spend for the welcome bonus, and then move on to the next one, racking up thousands in travel rewards over the course of a year. But it’s definitely not something that works for everyone. It takes a lot of discipline, excellent credit, and a really strong handle on spending habits. If someone has ever struggled with debt or tends to spend impulsively, this could do more harm than good. For the right personality and situation, though, it can be a fun and rewarding way to stretch your travel budget.
It can take time to find a card that makes you feel rewarded. Don’t assume it’s your fault or you’re doing something wrong, just keep searching until you find the right setup. Good luck!
Taylor Kovar, CFP®
CHIEF EXECUTIVE OFFICER
