What if I told you that you could travel to your favorite destination without spending any extra money? Most people I have talked to are pretty skeptical when it comes to offers for free stuff. The companies offering these types of benefits are doing so in order to gain new clientele and increase their profit, but this does not increase your spending if you play the game correctly. The method I am going to be discussing with you today is traveling with credit card bonuses and points.
Let me be clear: I am not encouraging you to get into credit card debt or to spend more money than you normally would to get these bonuses. That being said credit cards are valuable for a few reasons. First, It is very difficult to have good credit if you do not have any credit history. Using a credit card wisely will allow you to build your credit score in turn allowing you to buy a house or car, take out a business loan or even just rent an apartment at the best rates possible. Second you are earning cash back on purchases you would be making anyway. Depending on the card you choose you can normally expect on average 2 cents back on the dollar. Now this probably wont pay for your vacation by itself and that is where the sign up bonuses come in.
Credit card companies are offering upwards of 1000 dollars after you spend a certain amount on your card within a certain time period. If you use the points wisely that can sometimes cover twice as much in travel expenses. Remember if you don’t plan on spending that amount than the card is not for you. There are some methods that will help you meet minimum spending without changing your budget and I will be posting an article on that in the near future. However if you can hit the minimum spend than you’ve earned free points that can be used for travel to a variety of destinations.
What’s in it for the credit card companies you might ask? They are obviously benefiting from this or they wouldn’t continue to offer these incredible bonuses. Credit card companies make profit from the business owners every time you use their card. These companies are betting that this processing fee will eventually make up for the upfront costs of advertising and bonuses. They also make money when you make a late payment in the form of interest. This is why it is very important to pay off your card in full before the payment comes due. The last way that these companies make money is with annual fees on the cards. Sometimes these fees can be worth it for the first year when you are receiving the sign up bonus, but then should be cancelled or downgraded to a no fee card.
The steps to your first free vacation.
1. Apply for a credit card: If you have a fairly good credit history I would suggest the Chase Sapphire Preferred as a good beginner card with lots of redemption options and a low annual fee. If you are still newer to credit a card that has no annual fee and a lower minimum spend would be better. A review of these cards can be found at this site. Another helpful tip when applying is to apply first for a checking account with the bank for a higher chance of approval. Some banks like Chase will also offer a new checking account bonus.
2. Spend your money as usual: Use your card for all your purchases, until you’ve hit the minimum spend requirement. Pay off your balance in full before any payments are due to avoid unnecessary interest payments.
3. Redeem your points towards travel expenses: Have a wonderful vacation or two on the bank and repeat as often as you can hit the minimum spends.
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