miles and points 101
Now that we covered the basics, let's talk about points. Although points are essentially the same in that they can be used to book free travel, there are some differences in the points you can earn, what their value is and how you can use them.
Co-Branded Airline Miles - are miles earned from an airline specific co-branded credit card (like the Chase Southwest Rapid Rewards® card) that can be used to redeem for free flights. These cards usually come with perks like one free checked bag, priority boarding or a free companion pass. These points CANNOT be transferred to other airlines.
Co-Branded Hotel Points are points earned from a hotel credit card (like the Chase World of Hyatt card) that can be used to book free nights at a hotel. These cards come with perks like hotel status, late checkout and annual free night awards. Points earned from co-branded hotel credit cards CANNOT be transferred.
Transferable Points are points earned from cards like the Chase Sapphire Preferred® Card. Points earned from these cards are transferable meaning you can transfer these points to airlines and hotels, or you can book travel through each bank specific travel portal. These are my favorite kinds of points and the most valuable you can earn.
Fixed Value Points. These are points earned from cards like the Capital One Venture Rewards Credit Card. Anytime you make a purchase that codes as travel, you can redeem your points in the form of a travel statement credit. We have used fixed value points to pay for train travel through Europe, Disney World tickets, cheap airfares and rental cars.
In 2018, we paid for six flights, two weeks of hotels, and train travel through six countries with points alone!
BEFORE YOU START: MILES AND POINTS GUIDE
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The minimum spend is the amount that you must spend in order to receive the sign up bonus. This amount varies depending on the card you apply for and the perks and benefit that come with it.
When you apply for a new card, you will put away your debit and put all purchases on the new card until you meet your spend.
It is important that you have a plan on how to meet the minimum spend before you apply for a card. Click here for ideas on how to meet the minimum spend.
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The annual fee on a credit card is the fee you must pay to hold the card and to earn points, welcome bonus and many of the benefits that come with the card. They range from $49-$695 a year.
This annual fee is billed on your first statement and is not included in the minimum spend amount.
The first year I hold my card, I consider the annual fee a small payment for a very large welcome bonus. At my card member anniversary, I make the decision to keep, cancel or downgrade the card based on the perks and benefits I get. For example, I have kept my World of Hyatt credit card since 2015. For the $95 annual fee, I consistently book rooms that are greater than $350/night.
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Before you apply for your first card you need to learn about bank application rules. These are rules that dictate which cards we are eligible for and likely to be approved for. While each bank has their own individual rules, the most important rule you need to know is the 5/24 Rule.
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Two-Player mode is when you and your partner are both signing up for credit cards. This earns you double the amount of points and it is the reason our family can travel to places like Europe with four kids.
Our strategy is: I apply for a card, earn the bonus. Then I refer my spouse to the same card. He earns the welcome bonus and I earn the referral bonus. Alternating applications helps us get a break from constant pulls on our credit as well.
best credit card for beginners
The first card that I recommend for all beginners is the Chase Sapphire Preferred® Credit Card. The Chase Sapphire Preferred earns flexible points that can be transferred to numerous airlines and hotels including United, Southwest Airlines and Hyatt.
The current offer is 60,000 Ultimate Rewards Points for $4,000 spend in 3 months + up to $300 in statement credits for travel purchased in the Chase Travel℠ portal
With 60,000 Chase points you can:
Book one to two round trip flights to Europe
Book two round trip domestic flights
Book a one-way flight to Europe in Business Class
Book 3-4 free nights at a Category 1-4 Hyatt hotel anywhere in the world or two free nights in a $1,000 a night room at a Hyatt hotel in Paris, London, NYC, etc.
Another flexible points card that I recommend for beginners is the Capital One Venture Rewards Credit Card or Capital One Venture X Rewards Credit Card. Both of these cards have a generous welcome bonus, multiple travel transfer partners and earns 2x points per dollar on all spend. Capital One is very sensitive to multiple inquiries on your credit report, so you want to get this one when you’re starting out. You can read my guide to this card and why I love it so much here.
Final thoughts
Traveling with miles and points is not a “one size fits all”. There is no wrong or right way to do this. Whether you want to fly first class to the Maldives, take the kids to Disney or visit Grandma in Ohio, any redemption that offsets the cost of travel is a good one!
Don’t feel comfortable applying for 4-5 cards a year? It’s ok. You can get a (nearly) free vacation just by applying for 1-2 cards a year if you are strategic and plan ahead. Do what is right for your family. Have a purpose in mind when you’re applying for a card, know how you will meet the minimum spend before you apply and always pay your balance in full.
Happy Travels!
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Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.