The golden era of earning points and miles towards aspirational awards may, in fact, be over. If recent reports are to be believed, frugal travelers are not only earning less rewards from their favorite cards, but – more importantly – are not using those towards getting to their next destination.
In a recent report from the American Institute of CPAs, over half of adults polled say they are earning points and miles towards rewards with every purchase they make on their cards. However, many of them are not actually using those points and miles for rewards. Of that same group, only 15 percent said they were able to use their points and miles to pay for the cost of a trip.
When points and miles go unused, it can be argued that they hold absolutely no value whatsoever. To make matters worse, it is possible for frugal travelers to lose money on points and miles collecting as well, due to the annual fees that often come with our favorite points earning credit cards. Is it possible to avoid negative equity while still collecting towards our next big trip?
By being smart about our cards, every frugal traveler can make the most of their points-earning cards. Here are three ways to actualize the value of a card, or determine if it is time to say goodbye.
Use All of the Card’s Benefits
When many of us open a new card, it is easy to get focused on making the minimum spend requirements to receive the influx of points that come with the new account. However, what many of us forget is that many cards come with so much more than a big points boost.
For example: the Platinum Card from American Express offers a world of benefits for frugal travelers, including access to the Fine Hotels and Resorts Collection, along with the $200 airline fee credit every year. The Chase Sapphire Preferred also offers travel insurance benefits when paying with the card, or with Ultimate Reward points – giving flyers a level of assurance in their adventures. When it comes to opening a card, be sure to understand and use all of the card’s benefits to negate the cost of the annual fee.
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The Platinum Card® from American Express
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$450 first year
$450 after first year |
40,000 points After you spend $3,000 on purchases on your new Card in your first 3 months Read Review » |
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The Platinum Card® from American Express |
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Maximize All of the Bonus Categories
While some cards only offer a point-per-dollar bonus on spending, other cards offer a bonus for spending in certain categories. The Blue Cash Everyday Card from American Express is a prime example, as this card comes with three percent cash back on supermarket purchases and two percent cash back on gas purchases.
For cards that offer bonus categories, travelers would be best served to maximize those categories through their limit every year. Through this method, travelers can make sure they earn the most amount of points, miles, or cash back from their cards. Organization methods include color coding cards to correspond with categories, or using a service to help keep points maximized.
When In Doubt – Close (or Transfer) It Out
Even in the best case circumstances, it does not always make sense to keep a card open. If a traveler stops finding value in those points, or have switched their allegiance to another brand, then holding a card for the credit may only cost travelers more in the end.
By closing that card, travelers can immediately stop paying the annual fee, while opening up the opportunity to earn another bonus on that card in another two years. To be a smart frugal traveler, call the credit card company to see if it would be possible to transfer that credit to other cards held with the bank, so that the account is closed but the credit lines remain open.
Even though earning points may not be what they used to, it does not mean we are subject to be beholden to the annual fees. By knowing all the options available, every frugal traveler can make smart decisions about when to hold on to their cards and when to fold the accounts.
How do you make decisions about your keeping or closing your cards? Let me know your thoughts in the comments below!
Written by Frugal Travel Guy @ http://www.frugaltravelguy.com
Written by Frugal Travel Guy @ http://www.frugaltravelguy.com