Thrifty Nomad: Rewards Credit Cards

I love to travel, but my wallet and schedule don’t exactly allow me to accumulate that many miles through frequent flying. I’m often asked: how then, do I manage to travel so often for so little, and my simple answer is this: rewards credit cards.  In this post, I’m going to focus on travel rewards cards, the specific cards with which I’ve had experience, and how to use them efficiently without hurting your finances.

Southwest Airlines Rapid Rewards Card

I spent last Thanksgiving in San Juan, Puerto Rico with my sister. I was itching to go on another trip, and I was hoping to get out of the cold. I looked through my reward credit card accounts, did a little research on which airlines could get me where for the least amount of points, and that led me to booking a ticket to San Juan with Southwest using 47,000 miles.

I love Southwest – it’s my favorite airline. And their Southwest Airlines Rapid Rewards card is easily my favorite travel rewards card out there. Normally, the Southwest Airlines credit card offers new account holders a 25,000 mile bonus after meeting spending requirements (at the time of my trip and this post: spend $2000 in three months), which is pretty standard across rewards credit cards. However, if you’ve ever flown with Southwest, you’ll know that their miles can go a lot further than other airline miles — one way flights can start at as low as 6,000 miles (compare this to 12,500 with United or American), not to mention free checked bags. 

What you might not know (if you’re not a credit card junkie like myself) is that every now and then – maybe a couple of times a year – Southwest doubles their signup bonus to 50,000 miles for meeting the same spending requirement. (at the time of this post, that promo is going on right now.) In my case, that added up to a free round trip ticket to San Juan, Puerto Rico. To be frank, this trip wasn’t the best use of my miles because I could have gone to any number of the 48 contiguous states for half the amount. I ended up using them anyway because I was on a schedule and really didn’t have any flexibility with my dates, and I really wanted leave the U.S. for my vacation (although in the case of P.R., only kinda sorta leaving the U.S.) and just go somewhere new. Had I more flexibility with dates or even destinations, I could have probably traveled for far fewer miles. So, my advice for stretching your miles as much as possible: the more flexibility you have re: when and where, the the opportunities you’ll probably have at saving some miles.

So, as far as airline-specific rewards credit cards go, Southwest has been my favorite, and I especially recommend it if you can catch their 50,000 miles promotion. It’s also worth adding that there is an annual fee, which varies depending on the card you apply for ($69, $99). You are also entitled to anniversary miles for each year you keep your card (and pay the annual fee) – 3000 and 6000 miles, respectively.

Some other airline credit cards I’ve used in the past include American Airlines and United Airlines, which I’ll summarize below.

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San Juan, PR: Contemplating APR and points to dollars ratios.

United MileagePlus Explorer Card

The United MileagePlus credit card was one of the first that I had opened, and I received 30,000 bonus miles for meeting their spending requirement of $1000 in three months. (Currently they are offering 50,000 bonus miles. Offer ends 6/30). Unlike Southwest, the United MileagePlus credit card waives their annual fee the first year, which was a nice draw for me. The 30,000 bonus miles covered airfare for a flight to San Diego, CA, where I had gone for spring break a couple of years ago. Another nice perk included with this card membership – besides free checked baggage – is the 2 United Club passes provided each year, which give you access to their lounges in select airports. My favorite feature of this credit card, however, was that there were no blackout dates: I could redeem my miles for any flight, and simply pay the difference if I didn’t have enough. 

AAdvantage (Gold and Platinum) Card

American Airlines has a number of credit cards through Citi with signing bonuses ranging from 25,000 to 30,000 miles; however, I had received a targeted offer for 60,000 bonus miles with their Gold card (I believe it was 50,000 bonus miles for spending $2000 in 3 months, and then an added 10,000  miles for spending an additional $5000 in 6 months. Going off my bad memory though!) I was super excited about this offer, especially since I already had a fair amount of miles saved up (U.S. Airways had recently merged with American and so my frequent flyer accounts had merged as well) and I was hoping to use my miles towards an international flight. While I did end up getting use out of my miles (I gave most of them to my sister for her San Juan, PR flight), this ended up being the most disappointing of the three airline credit cards. One reason is that I had my heart set on booking something abroad – either Europe or the Middle East – but found that (A) so many dates for economy fare had been blacked out, and (b) any flight that required traveling with American’s partner, British Airways, ended up racking up taxes/fees so high that it felt a bit pointless to use my miles. In the end, I’d only recommend an AAdvantage card if you already prefer flying through American Airlines and/or their partners, and perhaps more so if you want to use your miles towards domestic flights (or any flights that won’t cross the Atlantic/use British Airways). At the time of this post, American is also offering a limited time promo for 60,000 bonus miles

There are a few other travel rewards credit cards I’ve used that are worth mentioning that aren’t affiliated with any specific airline:

Chase Sapphire Preferred Card

A favorite of many credit card and/or travel addicts, the Chase Sapphire Preferred Card is great for the frequent traveler who wants some flexibility in how they redeem their points. Unlike the aforementioned airline credit cards that only offer 2x points/miles on their own airfare, the Sapphire Preferred card offers 2x points on all travel and dining related purchases. Redemption is also easy – points can be transferred to the frequent flyer program of your choice at a 1:1 ratio, or you can do as I did when I got back from Italy and discovered I had overdone it on the souvenir shopping, and just apply the points as a credit to your balance.

BankAmericard Travel Rewards Card

This card offered by Bank of America is one that I’d recommend to anyone who doesn’t want to deal with annual fees (many of which are waived the first year for other credit cards) or high spending minimums. They offer a flat rate of 1.5 points per $1 on all purchases, and a modest signing bonus that varies from  15,000-20,000 points ($150-$200) for spending a minimum of $1000 in 3 months. While the signing bonus isn’t as alluring as other offers, the steady 1.5 points, $0 annual fee and $0 foreign transaction fees is what has kept this card in my wallet for the past few years.

IHG Rewards Club Card

A couple times a year I take inventory of the credit cards I own, and usually end up closing the ones that have annual fees. Not this one. With an annual fee of only $49/year (waived the first year), the IHG Rewards Club Card has one of the lowest annual fees for rewards cards, with perks that more than make up for the fee. Apart from the signing bonus of 70,000 points after spending $2000 in 3 months, the IHG Club card allows you to redeem your points in a number of ways: redeem for nights at any IHG location (such as any Holiday Inn, Intercontinental, Crowne Plaza), airline miles (10,000 points = 2,000 miles with most airlines) or even gift cards. And they sweeten the deal by offering a 10% rebate with each redemption. They also offer 5x points for every $1 spent at their hotels, 2x points for restaurants, grocery stores and gas stations, and 1x for everything else. Lastly, my favorite perk with this credit card (and the reason I keep it around) is the anniversary free night (at any IHG hotel) that you receive every 12 months. Of all the credit cards I’ve had, I think this one has become my favorite. So far I’ve put my earned points towards topping off my miles with both American and United Airlines, and have earned an anniversary night that I put towards an overnight trip to New York, where I stayed at the Intercontinental in Times Square. And at $400/night, the card has paid for itself.

Starwood Preferred Guest Card

The Starwood Preferred Guest Card is another popular favorite among thrifty nomads. Their signing bonus has always been the same, as far as I’ve seen: 25,000 points after spending $3000 in 3 months.  Like the IHG Club card, Starwood offers flexibility with how you redeem your points: flights, hotels, entertainment, among other options. While flights can be booked directly through your Amex account, you also have the option to transfer your points to a frequent flyer program, usually at a 1:1 ratio (but not always), and will even receive a 5,000 point bonus when you redeem 20,000 points at a time. Like many other rewards cards, there is an annual fee that’s waived the first year, which is especially nice if you need time to decide whether or not it’s a card you like. While I ultimately decided to close my account since I thought I’d get better use out of some of my other cards, I do think that for some people this could be a nice card to have if you don’t want to commit to any particular brand of airlines or hotels.

Barclay Arrival Plus World Elite Card

This card is my newest acquisition and so far I’m really liking it. They are currently offering 40,000 bonus miles after spending $3000 in 3 months which is equivalent to a $400 travel statement credit. At 2x miles on all purchases, this card allows for the fastest accumulation of miles, which can be used towards a statement credit on travel expenses. What I really like about their system is that since I received statement credits towards previous travel expenses (in my case that was a hotel stay at a Best Western Hotel as well as a one-way domestic flight with American Airlines), I was also able to earn points on my Best Western and AAdvantage accounts. Hooray for double dipping! Lastly, it’s worth mentioning that you can receive 5% back with each redemption, which, like the IHG and Starwood cards that have similar offers, make it tempting to hold on to since the bank keeps replenishing itself.

As a final note, I want to offer some general advice:

Always read the fine print. I’ve only mentioned some of the highlights (which may or may not be current) of the different credit cards I’ve used, so it’s important to know exactly what you’re signing up for. Know what you’re being offered, what you have to spend in order to get it, and whether or not there is an annual fee (and if it’s waived the first year). And note the interest rate, which brings me to the next piece of advice.

Treat your credit card like a debit card. It’s so important to shake off the “buy now, pay later” mentality when using these types of credit cards, because the interest rates will quickly even out any of the rewards you might receive. Only buy what you can afford, and never carry over a balance.

If you’ve ever used any of these credit cards, or have tried others that you’ve preferred, I’d like to know! Leave a comment below!

 

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