I am so excited, for the first time ever, to be presenting Jimmy -the other half of the Newlyfleds– and his first post!
Jimmy has a brain for numbers and finances. While I tend to shy away from the less-concrete forms of money (like credit) he understands how to utilize it in safe and effective ways. He typically handles the points-based travel plans, like flights and hotels- and I plan everything associated with having our boots on the ground.
Here he is, my main squeeze and the stealer of the window seat, Jimmy:
In this post, I want to just do a basic rundown of how you can be utilizing credit cards to enhance your travel experience. A lot of people shy away from the benefits that can be gained from responsibly utilizing credit. And, hey, I get it. Credit cards can be scary. They give you access to spending power that you wouldn’t necessarily have access to if limited to your bank account, which, if used irresponsibly – even for a month – can lead to years of financial anguish.
Despite any potential pitfalls, there are a number of benefits to putting the majority – if not the entirety – of your spending on credit cards, not least of which is the added security surrounding liability for fraudulent charges should your payment information fall into the wrong hands. The benefits I want to discuss today, however, are the perks attached to credit cards in the increasingly competitive niche that is travel rewards cards.
It is important to note that most people look for a card that has a low-to-no annual fee, but in order to provide benefits and perks, most travel rewards cards do charge an annual fee and, as you will see below, some of these can be quite expensive.
If you have a serious case of wanderlust, the ability for you to earn points on your purchases that you can then use directly for travel -or transfer to a travel partner- is going to be extremely valuable.
Often times, cards offer between 2 and 5 points per dollar spent on categories like airfare, hotel, and dining. Finding a card that maximizes your point earning with your spending profile can lead to excellent returns on purchases that you already make.
Ultimately one’s preference of credit card(s) is a personal choice and one that will differ from person to person.
Some people refuse to pay an annual fee.
Some people want a card that will provide them with automatic insurance for their purchases in case of damage or theft.
Some lean towards price protection so that they can recoup the difference in price if it drops a couple months after purchase.
Some people want the peace of mind that comes from cards offering travel delay and luggage insurance.
There are cards out there that cater to each of these people and some cards would cover many of those bases. Here is what you should look for:
In later posts, I will go into the benefits of the cards in my wallet and how I find value in them.
Find a Point Currency That Works for You
Points are either locked into a particular “currency” (such as Delta SkyMiles or Marriott Rewards) or are transferable. Transferable points will have a list of partners to which you can transfer. Keep in mind that points only have value if you are able to use them! If you only fly Delta, getting 2 SkyMiles per dollar is probably more valuable than getting 3 American AAdvantage miles per dollar.
Many travel cards will also provide credits for certain charges on an annual basis. Some of these are quite broad and apply to basic categories such as $300 towards any travel expenses while others are a little more restrictive such as $15 per month to be used on Uber. Different cards have different rules for applying credit as well. Some cards require you to call in to have the credit applied while others will automatically apply the credit to the applicable charges automatically. The same rule applies as above though: credits are only valuable if you can use them!
Which Status Benefits will Elevate your Travel Experiences
Another thing to keep an eye on is which cards offer status just for having the card. Mid-tier hotel status can be yours just by having certain credit cards while others will require that you hit a certain spending threshold each year. Some of these will even offer top-tier status for higher thresholds!
While you will obviously need to decide whether these make sense for your personal situation, having mid-tier status for less than a $90 annual fee can easily pay itself off with only a few stays per year. It’s not just hotel chains that offer status either; many car rental chains will offer status which includes free upgrades on every rental which can obviously become very valuable if you rent with some regularity.
Which Perks Appeal to You
Benefits provided by a credit card are typically separated into co-branded benefits or general perks.
Perks come in about as many variations as there are Crayola colors. These can range from getting the 4th night of any hotel stay free to $100 off any roundtrip flight for 2+ people to price protection on purchases if an item drops in price in the 90 days following purchase. Some cards will even cover purchases if they get damaged or stolen. Keep an eye out for these kinds of perks as these can add a ton of value to holding certain credit cards.
Most major hotel companies and airlines offer a co-branded credit card, all of which offer the ability to earn points or miles (remember-currency!) for their loyalty program and some of which provide extra perks while staying or flying with the company.
For instance, the Gold Delta SkyMiles Amex offers your first checked bag for free as well as Zone 1 Priority boarding for yourself and up to 8 other people traveling on your same reservation. At $25 per bag, you would only need to use this on 2 roundtrip flights to make up for the annual fee of $95! And if you were to really maximize this benefit by traveling with 8 of your friends or family, it would save $225 on a single one-way trip!
Take the next step up the ladder and you have the Platinum Delta SkyMiles card for $195 which offers all of the same benefits listed above as well as companion certificate for a domestic round-trip flight in economy. On the top of the SkyMiles ladder is the Delta Reserve SkyMiles card which costs $450 per year. That may sound like a lot, but it can be easy get more value out of the card than it costs. The Reserve card offers all the benefits as the Platinum card but adds SkyClub lounge access whenever you are flying Delta and upgrades the companion certificate to include first class flights as well.
As a real-world example, I took a quick look at Salt Lake City to Boston in October which shows up at $415 for economy and $1014 in first class. Using the Platinum card upgrade certificate for a second free economy seat gives you almost double the annual fee in value. Meanwhile, using the Reserve card certificate for the first class flight also nearly doubles the cost of the annual fee in value just from that single perk!
Unfortunately, you never get out of paying taxes and government fees on the free flight, though luckily there is a $75 maximum. Naturally, you would need to keep in mind that this only saves you money if you regularly pay for expensive flights for 2 people or are willing to splurge on a special occasion once a year.
In summary, simply paying attention to the terms of credit cards can really pay off. While certainly not a no-brainer for everyone, it can be very easy to make up the cost of a credit card with a $450 annual fee if you put in the time and effort to learn how to use it.
Keep an eye out for an upcoming post that will give you a peek into my wallet. I will detail our top favorite cards to travel with and how we use the benefits.