How to milk your travel rewards card

By Emma Lunn

You may have heard stories about rewards junkies who traverse the globe using their credit cards' rewards points. But try to do this yourself and the challenges quickly become apparent: juggling multiple cards without hurting your credit, tracking your rewards, making sure your points don't expire and finding a flight that lets you use your hard-earned miles.

To help you get started, we asked three frequent flyers for their tricks of the trade: Eric Rosen (managing editor of The Points Guy, a US-based website that tracks the major loyalty programs), Matthew Kepnes (founder and writer of NomadicMatt.com, a site that explains how to travel on the cheap) and Jason Steele (a travel blogger who shares his travel tips on Steele Street). frequent-flyer

Keeping up with multiple cards and reward programs can be a hassle. How do you do it?

Kepnes: I like using the site, ThePointsGuy.com to figure out what the latest travel deals are. He does a good job of keeping track so I don't have to. Once I have signed up for the latest deals and have used the cards to get them, I simply pay off the balance in full and put the card aside, never to be used again.

Steele: One of the tools I use is a web site called AwardWallet. The free version of their site is very functional, and a more feature-packed version is available for a minimal fee.

What tips do you have for using travel rewards credit cards responsibly?

Rosen: First, you should make sure you are out of all debt, or as much debt as possible, since this is the most important factor in determining your credit score.

Remember, any value you will get out of the points you earn on your travel credit cards will be completely negated -- usually several times over -- by high interest rates on balances you owe.

Is it advisable to open up a card for its sign-up bonus and then cancel the card?

Steele: Yes and no. I sign up for many cards each year for the sign-up bonus, and to give the bank a chance to earn my business. I always keep the card a full year. In most cases, you have 60 days after the annual fee is billed in which to cancel the card and not pay the fee.

Opening up too many credit cards can hurt your credit. How do you limit the damage?

Kepnes: In general, the impact on your score from multiple inquiries is small. That being said, I personally wouldn't recommend applying for multiple cards from the same bank within the same month -- and ideally you should space your applications several months apart.

What are some of the biggest mistakes you see rewards card novices make?

Kepnes: They don't really know what they want from a card. Getting a card is not just about getting the best bonus. It's about getting a card to meet your travel goals and spending needs.

Steele: Another problem is people who accumulate points and miles slowly over many years in the hopes of a particular reward. By the time they are ready to redeem their points or miles, the airline or hotel chain has increased the price of the award or curtailed the award availability.

Finally, people often use reward cards that just aren't that valuable. They might earn 1% back as a credit towards the merchant who co-branded the card, whereas there are several cards that offer 2% cash back or more that can be used at any merchant.

Rosen: Not paying their bills on time is huge. Any time you get hit with late fees or interest, you've basically wiped out any value you've got from a card.

What are some examples of the red tape that makes reclaiming rewards points difficult? How can you get around it?

Steele: The airlines seem to go out of their way to make it difficult to use miles for awards at the lowest redemption rates. Their online systems often fail to include partner award flight availability, and even when they do, their award search engines are filled with "glitches" that persist for years due to deliberate neglect.

I realised long ago that award redemption strategies are as critical as earning miles. Therefore, I search for awards using airline sites: Air France/KLM for SkyTeam awards, British Airways or Qantas for OneWorld awards, and ANA or United Airlines for Star Alliance searches. Once I find the award availability, I call my carrier and book it flight by flight.

See related: If your airline loses your luggage, will your credit card come to the rescue?, Editor's pick: Credit cards that will make you feel like a VIP

 

Published: 10 July 2012