Every year, people who don’t get to travel a lot cite budget as a major contributing factor. It can be difficult for families to budget enough to take the trips they want to take, especially as they get bigger. But if you’re in the process of planning a big trip, you can easily save some significant cash using a travel credit card sign up bonus. Let’s take a look at how to do this in the simplest way possible.
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Word of Warning
Traveling Dad only recommends this technique for people who practice good credit habits. That means paying off your balance in full every month and not building up credit card debt. Credit card interest can and will kill your savings, so please exercise caution and responsibility.
When you plan your vacation, chances are you’re going to have to pay for a bunch of expenses up front. Whether it’s flights, hotels, or car rentals, credit card charges rack up quickly.
Luckily, you can use this to your advantage. Credit cards often come with lucrative sign up bonuses that you can apply directly to the cost of your vacation. The way these sign up bonuses work is simple. Basically, after you spend a certain amount in a fixed period of time, you receive a bunch of bonus points from your credit card. If you time it right, you can apply those points directly to your vacation!
Best of all, plenty of cards exist that allow you to do this simply. While airline miles definitely present great value, it may be too confusing or not worth the hassle to figure out when or where you can use them. Thankfully, with some cards you don’t have to worry about figuring out how much flights will cost.
Let’s take a look at a simple example, a credit card offers you 30,000 bonus points after you spend $1000 dollars in the first three months after you open the card. For most travel cards, each point is worth 1 cent (though sometimes more!). So:
1) Decide where you want to go
2) Sign up for a new credit card
3) Charge your vacation expenses to the new credit card
4) After you’ve spent past the bonus threshold, wait for your bonus points to post
5) Use those points to further subsidize your vacation costs!
In this example. as soon as you’ve spent $1000 on your card you’ll have another $300 to use towards your vacation, assuming a value of one cent per point. Let’s take a look at cards that work this way.
Barclaycard Arrival Plus
One of Traveling Dads’ favorite travel rewards cards is the Barclaycard Arrival Plus card. In addition to its generous sign up bonus, the card offers 2 miles per dollar spent on all purchases with an annual fee of only $95 (waived for first year).
Redeeming miles for travel are easy. Buy your flights, hotels, etc. as you normally would. You can redeem your miles against any travel purchases you make as long as they cost $100 or more. You have up to three months to do this. Couldn’t be simpler. And if you get the sign up bonus while paying for your trip, you’ll be able to apply the points immediately!
Chase Sapphire Reserve or Preferred
The Chase Sapphire Reserve also presents a great option, although it carries a hefty $450 fee. For that fee, you get a global entry credit ($95) and a $300 travel reimbursement which basically cancels out the fee. Ultimate Rewards points earned with the Reserve can be redeemed for 1.5 cents each for travel.
If the $450 annual fee scares you off, you can get the Chase Sapphire Preferred for $95 (waived for first year). With this card you can redeem Ultimate Rewards points for 1.25 cents each. Both cards give you the ability to transfer points to travel partners like United and Hyatt – that can reduce the cost of your vacation too!
Unlike the Barclaycard Arrival Plus, you have to redeem your points up front. The way you’d use this card is pay your initial costs up front and then use points to pay for travel reservations you need to make later (like hotels and cars).
Capital One Venture Rewards
The Capital One Venture Rewards card offers a flat 2x miles per dollar for a modest annual fee of $59 (waived for first year). Like the Barclaycard Arrival Plus, you can redeem your miles as statement credits on previously made travel purchases. The cards offer the same type of rewards scheme so your strategy would be the same as it is for the Barclaycard Arrival Plus.
If you’re planning a vacation and trying to save money, it might be a good time to invest in a new travel rewards credit card. You will be spending a lot of money up front, which can help you earn a sign up bonus, which in turn can be used to defray your trip costs. Remember to pay your credit card balance in full each month in order to avoid nullifying the savings.
What are you favorite travel rewards credit cards to use when booking a vacation?