Reap Vacation Rewards: Using Credit Cards to Cut Costs
Summer is right around the corner. And with summer, fortunately, comes great summer vacations. With summer vacations, unfortunately, come a lot of expenses. However, there is an effortless way for you to save money while traveling. The trick? Fully utilize your credit cards. That’s right – swiping your card before or sometimes during your vacations can actually save you quite a bit of cash. Ready to save money while seeing the world? Use these five tips to help stretch your summer vacation money.
1. Know and understand your card’s rewards
If you have the right type of rewards program, you can easily save money simply by spending. Just be prepared to spend a lot if you’re starting from scratch — it takes a lot of rewards points to pay off an entire summer vacation, per Bankrate. However, you don’t have to go big or go home. Even smaller rewards, such as cash back or points for free gasoline, can be put toward your vacation plans. Before you can start using those rewards, though, make sure you know how each of your credit and debit card’s reward programs work.
Sometimes, depending on the cards and what you have saved up for rewards points, it can make sense to consolidate your usage into one card. Bankrate writes that this is especially prevalent if a card has a “tiered rewards structure with a higher level of payouts for a higher level of spending.” This tip, like many of the others, only applies if you are debt free. If you have any sort of credit card debt, ignore the rewards perks until you’ve paid off your debt in full.2. Look for the hidden benefits
Unless you’re a veteran traveler who is fully aware of all of the benefits your card has to offer, there’s a good chance your card has some cool perks that you are missing out on. Time writes that there are multiple cards available, typically airline-affiliated or generic travel cards, which offer airline credits. Those cards can eliminate pesky fees like checking bags, ordering food, or watching moves inflight.
It may not seem like much, but those costs adds up, particularly if you’re traveling as a family – your kids are going to want treats and entertainment to keep them occupied on the plane. Many cards will also offer other perks, too, including rental car insurance coverage, breakdown assistance, and purchase protection. By taking advantage of these rewards, you can eliminate a lot of little fees that add up over a vacation.
3. Participate in credit card churning
But, of course, do it responsibly. Here’s how it works: Pick a credit card and find a way to fully utilize its rewards program. For example, if you find a card that is offering you a $100 statement credit if you sign up and spend $500 within a certain time period, take a look at your spending. If you’re going to spend that much on groceries or other household items within that time frame and you have the cash to pay it off in full, then go ahead and do it. Without doing anything out of the ordinary, you’ll have accumulated $100 toward your next vacation.
When getting started, DailyFinance first recommends getting your finances in tip-top shape, and that means budgeting.“It may sound like a simple path to saving money on luxury vacations and receiving gift cards, but credit card churning requires you to be fiscally responsible, too,” said DailyFinance. Then, pick a vacation destination and work toward it using rewards that come along with one or two cards. Just make sure you’re responsible when opening and closing credit card accounts — recklessly opening and closing accounts could hurt your credit score, per DailyFinance.
And, again, make sure you’re paying off your credit card debt. If you start accumulating debt on your cards, stop working toward reward points and get it paid off.4. Look for onetime reward bonuses
U.S. News & World Report writes that many credit cards provide great onetime reward bonuses that offer you a free flight or hotel room, saving you a ton of money on an upcoming vacation. Of course, those bonuses depend on you spending a certain amount of money within the first couple of months of opening the account, so plan ahead and make sure it’s a feasible amount that you can afford to pay off.
A good card to check out is the Chase Sapphire Preferred Card, which offers you 40,000 bonus points when you spend $3,000 on purchases in the first three months of opening your account. That translates into $500 that you can put toward travel when you redeem it through Chase Ultimate Rewards. The Capital One Venture Card is another good one to look into, per U.S. News & World Report. You can earn a onetime bonus of 20,000 miles if you spend $2,000 on purchases within the first three months, which is equal to $200 in travel.
5. While you’re at it, look for a gas-oriented card
If you’re going to drive rather than fly when heading to your vacation destination, a credit card that includes gas rewards can help you save a lot — as much as 5 percent. But think of the big picture when you’re looking at selecting a card. “A gas rewards credit card has the potential to help you save not only on your trip but for a long time afterward as well, so you must consider your typical pump habits in order to decide whether to get a credit card with as much as 3 percent cash back on gas purchased anywhere or a credit card tied to a particular chain of gas stations, which provides up to 5 percent cash back, but only on gas purchased at affiliated stations,” U.S. News & World Report says.
As an added tip, if you’re not hooked on a single gas station chain, opt for a generic rewards card so that you’re not adjusting your fill-ups to meet your card’s requirements.