A Frugal Person's Guide to Travel Credit Cards
I recently wrote one of those posts that I wish I had been able to find earlier in my own travel journey. That post outlines some travel credit card basics and my own personal travel card story, including a roundup of the flights I’ve been able to get for free or at a discount since getting my Chase Sapphire Preferred travel credit card in late 2015. However, when I was writing that post, I realized that there was another aspect of my personal travel credit card story that probably needs a post of its own:
I don’t really like spending money.
Since spending money on a travel credit card is the primary way to accrue travel credit card points, this particular trait can cause some problems. If you are also a frugal person torn between wanting to benefit from a travel credit card and breaking out in hives at the thought of making large purchases, read on for tips on how I make this whole conundrum work for me.
My Frugal Lifestyle
Let’s start by stating the obvious: I’m well aware that frugality is relative. There are plenty of people who spend a lot less money than I do on a monthly basis. But because I’m single and have no children or dependents, there is no one else in my household using my travel credit card except me. Since I am not feeding a family (or housing a family, or clothing a family, or taking a family on vacation), even in months when I go a bit overboard with happy hours, I still don’t spend the type of money on my travel credit card that would result in multiple free flights each year.
Because I just don’t spend that much money in a year.
These side effects of being a single solo person aside, I’m also a natural saver with a pretty aggressive personal savings goal this year. While I do tend to spend money in large chunks on house or tech upgrades (then break out in hives), I try to limit my spending on an ongoing basis and save as much money as possible each month.
With all of this going on, how do I ever earn free flights?
Mindset Shift: Free Stuff that Takes Awhile to Earn Is Still Free Stuff (and Free is Good)
One of the first things I had to come to terms with when I finally got approved for the travel credit card I wanted is the way that points are accrued doesn’t benefit people who don’t spend much money. Aside from the initial points bonus available on most travel credit cards, and additional bonuses that are generally available for referring someone to the card, the way you earn points on a travel credit card is by spending money on that travel credit card. And the less money you spend, the less travel credit card rewards you earn.
But that is not a bad thing.
This may seem obvious, but I'll emphasize it anyway (just in case): going into debt for travel credit card points is never a good idea. If you are carrying a balance on your card that requires you to pay interest, that credit card interest rate will likely negate any travel reward benefits you earn. In a nutshell, spending as little as possible is always a better long-term financial decision than spending more money than you should be spending just so that you can earn points faster.
If you are a person who doesn’t spend much money, you can still earn travel credit card points… but like me, it may take you longer to earn points than you initially expected. That’s ok, because free stuff is free stuff, no matter how long it takes you to earn. All you can do is focus on the things you can control that increase your credit card reward earnings while also staying focused on your overall financial goals.
Like optimizing your spending.
Optimize the Money You Are Spending on Your Travel Credit Card
The largest points bonus in the life of any credit card is the initial points bonus. Since no travel credit cards are regularly giving existing users the type of points bonuses that they are eligible for on initial signup (at least, no cards that I know of), the initial points bonus is not one you want to miss. After all, you only get one shot to accrue this pile of points.
If you aren’t regularly spending $4,000 in 3 months (a common spending requirement and timeframe to earn an initial credit card points bonus), you may need to get strategic about when you apply for a travel credit card. If you have a large purchase planned in any given calendar year, apply for the credit card you’ve chosen before that purchase and use the card to make it. In other words: optimize your big spending so that it helps you earn points.
If you don’t have any large purchases planned, see if you can move some spending that you wouldn’t normally use a credit card for over to your credit card during the initial points bonus earning period. Even if there is a small transaction fee required, this fee may be worth it for a few months to earn the bonus points. Check with your landlord to see if paying rent with your card is an option. Make sure to move all your ongoing monthly payments to the card immediately (gym membership, utilities, cable/internet, cellphone, TV subscriptions, etc.) so that spending also helps you reach the requirement to earn the initial points bonus.
After the initial points bonus, focus on optimizing the type of spending you are doing on the credit card. If you are like me and only have one credit card, this is less applicable to you. But if you are balancing more than one card, research which card pays out the most points for each type of spending. If one of your cards gives triple points on travel and another card does on groceries, use each of those cards for the spending that earns you the most points.
Optimize your travel credit card points
Most travel reward credit cards will allow you to use your points in a variety of ways. Generally, using points for travel (instead of online shopping or cash back) gets you the most value for your points. Do some research to make sure this is true for your card so you can spend your travel credit card points in the smartest way possible.
Aside from spending your travel credit card points on travel, some travel credit cards (including my card, the Chase Sapphire Preferred) earn travel credit card points that can be transferred to many different airlines. Occasionally, airlines offer a transfer bonus (so you can gain some extra value by transferring your points to an airline when their bonus is active). While transferring points is not required, in some cases you can gain additional value by transferring your points, so it may be worth looking into.
Other ways to optimize your travel credit card usage
Many travel credit cards have online shopping portals you can shop through to earn some additional points on top of those you would have earned on regular online spending. Check out the online shopping portal for your card to see if it includes any of the websites where you already shop regularly. If so, start going through the portal to those websites to earn additional points.
If you have a strong credit history and a good credit score, cycling your cards may be a good option for you. This is not a strategy I’ve employed, because canceling credit cards and opening new ones too often can negatively impact your credit score if you do not have a lengthy credit history (and I don’t). However, if your credit history supports this strategy, canceling cards and signing up for new ones on a somewhat regular basis is a common method to quickly increase your reward point balances (because you are eligible for an initial point bonus every time you get a new card). This is an option that you’ll need to research to determine if it is a good fit for you and your credit situation. As is true of most of the strategies mentioned in this post, this is not a requirement to get value from your credit cards: I’ve had one travel credit card for almost 4 years and I still utilize it to offset my travel costs regularly.
Frugality > Points
At the end of the day, travel credit card rewards are great… but they are not the primary way I pay for travel.
Saving money is.
This post includes some ideas to help you make every dollar you are spending get you the most value possible in terms of travel credit card points, but not spending a dollar is almost always the better option. Don’t get discouraged if it takes time to accrue rewards, and don’t spend more money than you are able to pay off each month on your card (because that strategy will work against you in the long run). Remember, free stuff is free stuff, no matter how long it takes you to earn.
Are you a frugal person with travel credit card tips I haven’t mentioned in this post? I would love to hear from you in the comments.