Pay for holiday travel with points, but start now
August 19, 2019
According to a recent study from Experian, some Americans report spending more money on holiday travel than they do on gifts. How much? The study showed that, out of 1,000 respondents polled, the average holiday travel budget worked out to $930 per person.
That’s a lot of money to spend if you don’t have an ample travel budget set aside, which is probably why 13% of study respondents said unexpected holiday travel expenses were the most frustrating holiday cost they faced.
This all goes to show that, if you don’t plan for upcoming travel expenses, you could wind down the year with less money than you started — and a boatload of regret.
But it doesn’t have to be that way — not if you hatch a plan to save money on holiday travel now. Here are some strategies you can use to score complimentary holiday travel if you’re willing to start right away.
Pick up an airline credit card with a hefty bonus
One of the most expensive components of any trip will always be airfare, which is the main reason airline miles are popular with consumers. With a healthy stash of airline miles, you can book airfare across the country or around the world for only the cost of government-mandated taxes and fees.
Fortunately, most airline credit cards let you earn a big signup bonus good for a few round-trip domestic flights or one international flight if you can meet a minimum spending requirement within a few months. Since you’re on a time crunch, you can also consider airline cards that offer a big bonus after your first purchase. For example, the AAdvantage Aviator Red World Elite Mastercard gives new customers 60,000 bonus miles when they make a purchase within 90 days and pay the $99 annual fee.
Keep in mind, however, that airline credit cards work best for consumers who know exactly what airline they want to fly and have some flexibility in their travel dates.
Consider flexible rewards credit cards
If you must fly on very specific dates over the holidays or you want your pick of airlines, you can also consider a flexible travel credit card that lets you use your rewards in more than one way. A Chase Ultimate Rewards card like the Chase Sapphire Preferred is a good option because the points you earn can be used to book flights with any airline through the Chase portal regardless of your travel dates. In addition, you can transfer your points to an array of airline loyalty programs like United MileagePlus, Southwest Rapid Rewards, and JetBlue at a 1:1 ratio.
The Chase Sapphire Preferred card also offers 60,000 points after you sign up and spend $4,000 on your card within three months of account opening, although you do have to pay a $95 annual fee. If you have bills that can help you hit this spending threshold quickly, you could have your bonus in a matter of months — just in time to book your holiday flights.
Look for rewards credit cards that offer flexible travel credit
Credit cards for travel come in many forms, which is why you should also consider a card that offers flexible travel credit. The Capital One Venture Card is a good example; this card gives you 2x miles for each dollar you spend plus 50,000 bonus miles once you spend $3,000 on your card within three months.
On the redemption side of the equation, you can transfer your points to a handful of airline partners or cash in miles for any travel expenses you want at a rate of one cent per point. This makes the signup bonus worth $500 in travel — which could be enough for a round-trip flight or a few nights in a hotel.
Why is flexible travel credit so lucrative? Not only do you have the option to cover any travel expenses you want with no worry over blackout dates or specific loyalty program rules, but you can redeem your miles after the fact. In other words, you could charge your holiday travel expenses now, earn the signup bonus, then redeem your miles to erase part of your purchases from your bill.
Have a plan to pay your balance in full — or else
While credit cards for travel can be extremely lucrative, the advice we’ve shared here is only helpful if you follow the golden rule of credit card rewards.
Only charge purchases you can easily pay in full once your bill is due.
Considering the average credit card comes with an APR over 17% and credit cards for travel often charge even more interest than that, using rewards for travel is a losing proposition if you plan to carry a balance. After all, earning 1-3% back to use towards holiday travel will actually cost you money if your interest rate is higher than your rewards rate.
The bottom line: Picking up the right travel credit card can be a smart way to save on flights and hotels but only if you can avoid long-term debt.