If you’re reading this article, congratulations on taking the first step towards a sustainable financial future! The Points Party is dedicated to giving you all the information you need about points, miles, and credit cards. We want to empower you to travel the world and elevate your quality of life with minimal or no out-of-pocket cost. Yup, you read that correctly; if you’re clever and strategically, you can make your lifestyle pay for itself.
If you’re a conservative financial planner, you probably use your debit cards for all expenses. That’s a rookie mistake. If you strategically use credit cards, airport miles, and point systems, you can travel the world using your points and miles with little out-of-pocket cost. You can earn incredible benefits on everything you spend, essentially making your lifestyle pay for itself in the long run. But if you’re like most people, you might be terribly confused about this concept.
The Points Party offers a comprehensive beginner’s guide to empower you to make better and more strategic financial decisions. Please continue reading to learn everything you need to know about points, miles, and credit cards. Then, let us show you the ropes of points hacking.
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Debit cards are pointless, literally
Contrary to popular opinion, using debit cards isn’t the wise choice. When you use debit cards, you spend the money you have in your bank account, which acts as a check on your spending impulses. With debit cards, you can’t spend money you don’t have. Debit cards don’t rack up charges, late payment fees, and interest, so you’re not losing any money either. That’s why debit cards are considered the conservative choice.
But debit cards are also pointless, i.e., they don’t offer points for spends. When you pay for items with debit cards, you don’t get anything in return. Comparatively, when you use credit cards, you earn points for all your activities, such as eating out, ordering food, buying groceries or toiletries, shopping online, or paying for services. These points keep adding up and eventually finance major purchases and trips.
If you start using credit cards instead of debit cards, you make your existing lifestyle pay for expensive trips and purchases. That’s the best way to finance a luxurious lifestyle.
Chase Sapphire Preferred
Best for Travel
Always pay your credit card bills on time and in full
Considering the massive benefits, you might wonder why some people fervently advise against using credit cards. While credit cards offer massive benefits, they also carry massive risks.
And that brings us to the golden rule of points and miles: always pay your credit card bills on time and in full. You should never delay your bill payments — not even by one day. Using credit cards also involves significant discipline because you should only use the money you have. You should never spend more than you can afford or purchase items that you wouldn’t otherwise purchase with a debit card.
Basically, use your credit card the way you would use a debit card. The rate of interest on credit cards far outpaces any rewards they offer. If you overspend on credit cards and can’t pay the credit card bill in full, the interest will soon start racking up, putting you in debit. If you need to rely on your credit card for things you can’t afford with debit cards or cash, pay it off as soon as you have the money in your bank.
If you’re using your credit card for regular expenses, select a credit card with the most rewards. But if you’re using your credit card for things you can’t afford, select a low-interest credit card.
Introduction to credit card points and miles
Points and miles are forms of currency. Whenever you take a flight or purchase something with a credit card with rewards, you earn points or miles. Once you’ve accumulated enough points or miles through regular consumption, you can use them to finance additional travels or purchases. If you’re strategic, you can make your points and miles pay for most of your expensive or luxury expenses.
Most people assume that the hotels, airlines, and credit card industries are separate. But they’re extremely interconnected. Whenever you stay at hotels, take certain flights, or use certain credit cards, you earn miles or points that can be used for future travels and purchases. The hobby of collecting points and miles can help you travel the world with minimal out-of-pocket costs.
As you rise up the levels of points, you may also enroll in credit card programs that offer transferable points, i.e., points that you can transfer to the credit card’s partners. The transferable points allow you to redeem points or miles for luxury flights and hotels, so you only have to pay a fraction of the cost.
The primary difference between points and miles is one of semantics. Airlines generally use the word “miles,” and credit card issuers and hotels use the word “points,” but they’re all types of currency that can be redeemed for flights, hotels, and other purchases.
Capital One Venture X
Best for Travel
Types of Miles and Points:
- Airline Miles: Different airlines offer miles that you can claim for future trips with that airline and its partners. If you have United miles, for example, you can use them to finance some of your future flights with United and its partners.
- Hotel Points: Different hotel groups offer points for stays, which can be used to finance free nights at the hotel group’s member hotels. For example, if you have Marriott points, you can spend a few free nights within dozens of hotels under the Marriott group.
- Credit Card Points: Different credit cards have different forms of tie-ups with hotels and airlines. Whenever you use your credit cards, you accumulate certain rewards and points, which can then pay for your hotels, travels, and other purchases.
The most popular miles and points programs
Popular Airline Miles Programs:
- Alaska Airlines Mileage Plan
- American Airlines AAdvantage
Popular Hotel Points Programs:
Popular Credit Card Points Programs:
- American Express Membership Rewards
- Bank of America Premium Rewards
Choosing the right credit card for your needs
When selecting a credit card, you need to consider your general needs. As mentioned previously, you should not use credit cards to make purchases that you can’t afford with your debit card. For all intents and purposes, you should treat your credit card as a debit card while still benefiting from all the points and rewards. You should only use your credit card for expenses you can’t afford with a debit card during emergencies.
The true benefit of credit cards is that the money you spend on everyday expenses has additional value — you get something back whenever you spend money. As you go about your daily life, every dollar you spend gets you closer to your next major purchase or trip. But different credit cards offer different types of rewards and benefits and are affiliated with different airlines and hotel groups. That’s why you need to be extremely careful when selecting credit cards.
Before finding a credit card, you need to establish clear travel goals. Do you want to spend a few days in Europe, take your family to Disney World, or stay in luxurious hotels in the United States? Once you have a travel goal, start exploring credit cards with a discerning eye, focusing only on rewards that benefit you. It’s worth finding credit cards with transferable points, so you can transfer the points to hotels and flights you actually need.
Below, we provide a general overview of some of the best credit cards for rewards and points.
Chase is an incredibly popular credit card issuer that offers numerous credit cards with excellent rewards and point programs. Some of their credit cards offer cashback systems, and others offer points, which can be transferred to airline and hotel partners, such as Marriott, Hyatt, United, and British Airways. However, Chase implements a 5/24 rule, which means you aren’t eligible for Chase credit cards if you’ve opened 5 or more credit cards over the past 24 months.
The following are some of the best Chase credit cards:
- Chase Sapphire Preferred Card
American Express has a wide range of points-earning credit cards with excellent rewards programs. Amex credit cards are known for giving out amazing welcome bonuses according to a once-per-lifetime restriction. That means you can only claim the bonus from one credit card once in your lifetime. If you want to open a credit card, you should wait for the biggest bonus possible before applying. Amex credit cards offer transferable points.
The following are some of the best American Express credit cards:
- American Express® Green Card
- Blue Cash Preferred® Card from American Express
- Blue Cash Everyday® Card from American Express
- The Platinum Card® from American Express
Capital One offers the unique ability to transfer miles earned on the Capital One Venture and Capital One Rewards credit cards to their airline partners, such as Emirates, Singapore, and JetBlue. Depending on your card and reward program, you can earn one airline mile per dollar spent on the card or more — the benefits change regularly. However, you can have a maximum of two Capital One credit cards at any point.
The following are some of the best Capital One credit cards:
- Capital One Savor Rewards Credit Card
- Capital One Venture Rewards Credit Card
Frequently asked questions about credit cards
Will I also receive rewards after the welcome bonus?
There’s a persistent myth that credit cards only offer a welcome bonus to reel people in, and they offer no worthy rewards. But that’s simply not true. Different credit cards allow you to earn points at accelerated rates for different types of expenses, so the points and miles can add up significantly over time. You can earn 3x to 5x bonus points per dollar spent for things like grocery shopping, gas, and dining out.
Why should I pay for a credit card?
Most of the top credit cards carry an annual fee exceeding $100, and some may even cost north of $500. Rookies might be scared off by those numbers. But if you’re strategic and clever, you can receive a lot more than what you pay for the credit cards, making the annual fee worthwhile. Some credit cards also offer perks for frequent travelers, such as free breakfast in hotels, lounge access, hotel upgrades, free nights at luxury hotels, and more.
Can excessive credit cards negatively affect my credit score?
Your credit score is based on your credit mix, new credit, length of credit history, amount of debt owed, and payment history. If you pay off all of your credit cards in full every month and keep your utilization rate fairly low, your credit score won’t suffer negative consequences. You might suffer a minor hit in your credit score when you apply for a new credit card, but that hit is only temporary. If you use your credit cards carefully, your credit score will improve over time.
How to earn miles and credit card points
By now, you probably have a fairly strong grasp of how airline miles and credit card points work. The basic principle is simple — you apply for credit cards that offer points on all of your spends, which can then be used for additional purchases. But to maximize your credit card’s capabilities, you need to understand the avenues from which you can earn miles and points.
The easiest way to accumulate credit card points is through welcome bonuses. Most premier credit cards offer a welcome bonus, which you can generally avail yourself of after spending a certain amount on the credit card within a specific period. You should read the details carefully to avail of the welcome bonus. Whatever the minimum limit might be, make those spends on your credit card within the given period to receive the bonus.
Make all of your payments through credit cards. Whether you’re shopping for groceries, dining out at restaurants, paying your cellphone bills, paying rent, or paying for gas, you should only pay using credit cards. Different cards offer different levels of points for different types of spends, so allocate different cards for different expenses. You should also select credit cards that suit your spending habits. If you’re strategic, the points should accumulate quickly.
Most airlines have reward programs with links to some of the top shopping outlets and retailers. Instead of shopping directly from the retailer’s site, you can visit the platform through the airline’s reward program. When you go to your airline’s reward portal, you can find a gallery of the affiliated shopping platforms through which you can shop and earn significant miles and points. You are still shopping with your preferred retailer, but you’re also getting points.
Whenever you stay at a hotel or take a flight, sign up for the hotel or airline’s loyalty program. You will earn miles and points every time you fly at the airline or stay at any of the hotel’s group’s locations. Over time, those points and miles will accumulate enough that you can avail of free night stays or award flights to your chosen destination. Please note that you only earn miles on “paid” tickets — not the tickets you redeem through miles.
Making sense of airline alliances
If you’re a frequent traveler or aspire to travel the world, you must understand airline alliances. Most of the major airlines in the world are a part of one of three alliances — Oneworld, Star Alliance, or SkyTeam. For example, American Airlines is a part of Oneworld, United is a part of Star Alliance, and Air France is a part of SkyTeam. Most airlines in the world (with some exceptions) belong to one of the major alliances.
If you have miles from one airline, you can also use those miles in other airlines within the same alliance. That means you don’t always have to fly from the same airline — you can also use other airlines in the same alliance. Once you have this information, you can flexibly travel using multiple airlines while collecting miles and points that can later be redeemed. Unfortunately, hotels don’t have such alliances, so hotel points are only valid for the same group.
Delta SkyMiles® Platinum Card
Best for Regular Delta Flyers
Next steps to get started with miles and points:
- Sign up for loyalty programs that allow you to earn miles and points
- Apply for credit cards that offer bonus points on your frequent expenses
- Go through your credit cards’ and loyalty programs’ fine prints to understand your benefits
- Allocate specific credit cards for different types of expenses
- Start using your credit cards for all of your payments
Points and miles can quickly accumulate and allow you to avail of major benefits. But you need to be careful and strategic. As mentioned previously, don’t chase after points and miles for the sake of status or points — go slow, learn the ropes, and become a savvy spender.