|by Mr Credit Card|
This is a guest post by Miss M from M is for Money. Miss M recent chose a credit card to earn miles and points for her honeymoon and in today’s post, she will take us through her decision process. Perhaps you could learn a thing or two from her. She has got a very interesting blog going, so please check it out and consider subscribing to it.
I have quite the assortment of credit cards, everything from store cards to rewards cards. But there was one popular type of card I did not have, a travel rewards card. These are the credit cards that reward you in airline miles or hotel stays for your spending. I didn’t have much need for one since I rarely travel beyond visits to family. But a recent event has pushed travel into my plans – I got engaged.
Suddenly a honeymoon is in my future, it’s an excuse to take a nice vacation. We’re a frugal couple and don’t typically travel just for fun. So we’re due a nice escape, but that doesn’t mean I want to spend more that I have to. Being frugal means making the most of the money you have. Rewards cards are a way to get something back, a return, on money you’ve already spent. As long as you don’t fall into the trap of spending more than you can afford, credit cards are an acceptable money management tool. So how did I decide which travel rewards card was right for me?
Travel Rewards Cards 101
First you need to understand how these cards work. The details vary from one program to the next, but all have some conversion system for the money you spend. A dollar of spending equals a certain number of miles or points, often on a one to one basis. This means you could be building up airline miles while ing the weekly gas and groceries. You often get extra miles or bonus points when you use the card to pay for travel, perhaps a thousand bonus miles when you pay for a flight.
Next you have to research the different types of programs and their redemption policies. General travel rewards cards usually give you a credit on your monthly statement for travel expenses. Airline and hotel rewards cards typically reward you in travel vouchers, i.e. accrue 25,000 miles and get one free round trip ticket on that airline. Another thing to look for – do they have blackout dates? These are common around the times you most want to travel! But the most important information to find out: how many points or miles are needed to claim a reward? How many miles do you need for a free round trip domestic ticket? How many points are needed for that free hotel night? Some reward levels are set so high it’s not likely you will reach them. What rewards can you realistically expect to receive in the course of a year?
Finally, searching for the right rewards cards requires asking yourself some important questions:
-Where do you plan to go?
-What is your spending style?
-How often do you travel?
-What style of travel do you prefer?
With the wide array of available rewards cards, these questions will help you focus in on the right card for you. Some cards are specific to one airline or hotel chain while others can be used towards any type of travel. Look for the one that suits you best.
My Own Search
I went through this type of decision making process while searching for my own travel rewards card. Beyond gathering information on each program of interest, I asked myself and my fiancée where we wanted to go for our honeymoon and what we wanted to do. Since we haven’t gone on vacation together in several years, we want to go somewhere special, most likely overseas. I would prefer Europe, Mr. M is leaning towards Tahiti. Unfortunately, the number of miles required to earn a free round trip international ticket is higher than we are likely to have at honeymoon time. We simply don’t spend enough, so an airline miles card would not help us. On the other hand, anywhere we go we need a place to stay, so I started to look at hotel rewards cards. The points needed for a free hotel night were within our reach and most had attractive bonus offers we could take advantage of.
I went with the Starwood Preferred Guest Card by American Express. There were several factors behind this decision. First, although I have many credit cards none are Am Ex cards (useful for those Costco trips). Second, the Starwood chain has hotels in every country we are interested in visiting. Their line has every level of accommodation, including some very nice resort properties. Finally, I was tempted by their bonus offer. You receive 10,000 bonus points with your first purchase. Spend $15,000 in the first 6 months and you receive an additional 15,000 bonus points.
Well with a wedding, home repairs and the holidays, reaching that reward will be no problem. That means we’ll have at least 40,000 points come honeymoon time, good for at least a few nights wherever we go. Free nights start as low as 2,000 points, although you need quite a bit more for destinations like London or Paris. With the bonus points, I calculated that the Starwood card would give us the best return on our spending while providing a useful reward. Under different circumstances, the choice might change. Also, the SPG card has one unique benefit, you can turn your points into miles and use them at many partner airlines. You aren’t limited to hotel rewards. For our circumstances, the Starwood Preferred Guest card is the right choice.
A word from Mr Credit Card – I enjoy reading Miss M’s blog. Below are some of her more interesting post which you should check out.