Branded credit cards can save big bucks on vacation travel, lodging

By Bill Dwyer for Chronicle Media
If you’re interested in taking advantage of airfare and hotel deals through numerous branded credit cards next year, now is the time to start planning. 

If you’re interested in taking advantage of airfare and hotel deals through numerous branded credit cards next year, now is the time to start planning.

It’s late August, the vacation’s over, the kids are back in school, and the looming Labor Day weekend is signaling the end of summer. So next year’s spring or summer’s vacation is far from most people’s minds.

But if you’re interested in taking advantage of airfare and hotel deals through numerous branded credit cards next year, now is the time to start planning.

Major airlines and hotel groups are ramping up their autumn promotions, looking for new customers. Both want your business, and they are partnering with credit companies to reward you.

The practice is called Travel Hacking, an unfortunate term, since the so-called “hacking” is just taking advantage of programs that the credit card, airline and hotel industry want you to use.

A caveat: I’m not an expert, just someone with a few years experience using bonus and earned miles and points to save significant amounts of cash.

And while I have my card preferences, neither I am nor The Chronicle are advocating for any one card or rewards program here.

This article is intended for the sometime traveler who does not travel for business; who travel at most two or three times a year. Couples, parents with kids, and individuals looking to boost their travel options.

For detailed, expert insight into the pros and cons of the many cards available, see the accompanying list list of links.

You should take the time to educate yourself and familiarize yourself with all the many options.

As you’ll quickly learn, the small print matters when using branded credit cards. You have to get clear on what are your travel priorities, what you want to do with any credit cards you obtain.

The main goal is to accrue as many hotel points and airline “miles” as possible via three means: credit card sign-up bonuses, general spending with the card, and targeted spending through programs that maximize the points you can accrue with each card.

A fourth option is buying points and miles from the airlines and hotels, but that should only be done under certain circumstances.

Cash-back cards?

So, what’s in my wallet? Not cash-back cards, because they don’t return near the value for airline tickets, nor in many instances for hotel rooms.

If piling up points for electronics or other consumer goodies is most important to you, stop reading now. Cash-back cards will do just fine for your purpose.

But if the notion of free airline tickets and free hotel stays is intriguing, read on.

I have Hilton, Marriott, Hyatt and IHG hotel cards. And three American AAdvantage cards, though I’m getting ready to cancel the expensive one.

They clearly give the biggest bang for my bucks. I’ve traveled to Europe in business class twice and back once in business class, for just $11.20 in fees.

In June we flew to Rome in business class using 100,000 American miles, 80,000 bonus miles and the rest earned through my spending. (They’ve since raised the required miles to 115,000).

Valuing the two one-way business tickets at the published single round trip ticket price of $3,321, I’d say we got a pretty good deal for just $11.20.

Even at double cash back, I would have had to have made $166,000 in purchases to earn those business class seats through a cash-back card.

While in Italy and The Netherlands, we stayed at a combination of VRBOs, Bed and Breakfasts and hotels. We used a mix of Marriott Rewards points, cash and an anniversary free night award to stay seven nights at Marriott hotels in Bologna and Amsterdam at a savings of approximately $800.

The 130,000 Marriott Rewards points we had between us were mostly bonus points, earned simply by applying and meeting the minimum spending requirement of $3,000 within three months. Using a cash-back card, the least we would have had to spend was $40,000.

Branded credit cards can be highly valuable in reducing or even eliminating certain vacation costs. The more hotel and airline cards you have with points available, the greater your options and flexibility for hotel and flight choices.

But how and where you want to travel and lodge is key. If you drive to your vacation destinations, airline credit cards are of little value to you. (Though Amtrak does offer a card that gives a 25,000-mile bonus).

If your airline or its partners don’t fly where you want to go — unlikely with domestic flights, but quite possible with international destinations — your airline rewards miles are useless.

The same holds true if you prefer staying at Airbnbs or B&Bs. If so, why bother applying for hotel credit cards?

Likewise, if you have one hotel chain’s credit card but there is not one of their hotels in that area, it doesn’t matter how good that card may be or how many points you have in your account.

All the cards I refer to have annual fees from zero to $95. The cards with fees all have annual free-night stays that make up for those fees.

The sign-up bonuses offer the largest benefit, ranging from the 25,000 to 100,000. Those bonuses are credited after spending as little as $1,000 within the first three months to $4,000 the first three months.

Use credit cards for everything you pay for, but don’t use them for anything else. And, of course, you need to use whatever cards you choose wisely, paying off the balances each month and never being late. Interest hikes and other penalties will quickly negate points earnings.

Monthly spending, usually a ratio of one point/miles per $1 spent, can be enhanced by using cards, like the Hilton HHonors and other, that offer three to five points per dollar spent at supermarkets, gas stations and restaurants.

Shopping portals feature some 850 online retailers that offer spending/points ratios generally ranging from 1:1 to 4:1, and as high as 12:1.

All those Christmas, birthday and wedding gifts are probably available through a shopping portal. As are those back-to-school needs and home improvement store items.

Dining rewards programs are another way to maximize your points and miles. American Airlines, United Airlines and Hilton Hotels all have such programs that can give you up to eight time points per dollar spent in restaurants.

Use each card at least once a year to keep the account and points active.

Apply for the cards three or four at a time. Then focus on meeting the required spending minimum, usually $1,000 to $3,000 in the first three months. Some cards give major points after the first purchase.

When you’ve met the minimum, you can apply for other cards.

And remember, both you and your spouse or partner can get most of these cards, so your points/miles haul is doubled.

For optimal effect, both you and your spouse or partner should apply for at least one — preferably two — major airline credit cards and at least three hotel chain credit cards.

Each person should also get one elite points card, like the American Express Starwood Preferred Guest card or the Chase Sapphire Visa, which offer the ability to transfer points to airline and hotels at a 1:1 ratio.

That leaves you with approximately 150,000 points for each of the hotel rewards program and 60,000 miles in each of two airline rewards programs. Plus 50,000 points transferable to either airline or hotel programs.

Assuming you spend a minimum of $2,400 on expenses each month outside of mortgage principle and interest, you can earn another approximately 90,000 points/miles a year by using shopping portals, dining programs and the multiple earnings potential of certain cards.

Next week we’ll look at airline and hotel credit card rewards programs in depth. And show you exactly what your miles and points can get you. 

 

SIDEBAR:

 

Links of interest:

 

View from the Wing

The Points Guys

The Mile at A Time

 

 

Creditcards.com

The Mommy Points

Point Hacks

 

Head for Points

— Branded credit cards can save big bucks on vacation travel, lodging  —