Are you leaving money or miles on the table when it comes to travel? You might be if you don’t have the right credit card working for your family to earn travel rewards. Find out a few simple steps from our Frequent Flyer TMOM for maximizing your miles and identifying the right credit card to do just that.
A travel rewards credit card is an invaluable tool for earning “free” travel. So many traveling families, however, don’t maximize their value. Inertia is powerful; it is so much easier to stick with the card you already have than it is to change your financial world around.
With a little research and not a huge investment of time, however, many families could save hundreds of dollars on future travel each year just by picking a better credit card or two. With dozens of options from every major bank, how can you possibly choose? There are a few important questions you should ask when deciding whether you have the right card for your family.
Do You Pay in Full Each Month and Use Credit Responsibly?
Always ask yourself this threshold question before using a travel rewards credit card at all. The frequent flyer miles game and credit cards aren’t for you if your family doesn’t pay every card off in full every single month. These types of cards are usually high interest and you’ll quickly consume whatever benefits you accrue from the miles and perks if you can’t pay in full and pay on time. If you have trouble with credit, call the travel rewards game quits for now.
What Types of Spending Do You Do?
Assuming your credit life is in order, take a look at your spending. Different cards offer greater miles earning potential on different kinds of purchases. Some offer big bonuses on travel and dining. Others offer huge potential at office supply stores. Still others are best used on gas and groceries.
Look at your current credit card statement and figure out where you spend the most money already. This should significantly narrow the field of credit cards you should be considering. My family, for example, has major travel and dining expenses so we have opted to carry the Chase Sapphire Preferred card which offers double points earning on those purchases. Chase’s Ultimate Rewards points also transfer to several airlines I fly often like Southwest and United as well as quite a few hotel point programs, making them even more valuable to me because of their flexibility.
Large families with a legion of hungry teen boys, for example, probably rack up huge grocery bills. There are a number of credit cards that earn extra points or miles on groceries. I think the Amex EveryDay Preferred Credit Card (earns Amex Membership Rewards points) or Blue Cash Preferred Card from American Express (earns cash-back) both happen to be excellent choices.
If you have a long commute by car, your family probably has significant gas expenses. There are so many cards that earn 5x on gas purchases, and if you’re getting less, you’re losing out. Gas expenses are a common bonus category, for example, on the no annual fee Chase Freedom card. Several American Express cards that are good for groceries also have bonuses for gas purchases.
How Do You Spend Your Miles?
Miles are almost always at their most valuable, dollar-for-dollar, when you redeem them for business or first class seats. While traveling in style is an amazing perk if you have miles to spare, the reality is that the vast majority of traveling families don’t have huge frequent flyer mile balances. Most families redeem their miles exclusively for coach class tickets.
For many of these families, a cash back card may be a better bet than a miles-earning card. After all, cash is much more flexible and not subject to massive devaluations at the whim of an airline. If you are the type of family who is redeeming for coach class tickets on major school holidays without a lot of flexibility, it is going to be rare that you find a great frequent flyer mile “deal.” I’d opt for the cash back card if this describes you. Alternatively, consider a mileage card with an airline like Southwest where points have a fairly fixed value and seats are always available to purchase using those points.
Are You “Hub Captive?”
If you live in a hub city for a major airline, you may be well-served to carry that airline’s credit card. These cards usually carry an annual fee of just under $100, but they offer special perks like free checked bags or early boarding. These aren’t cards that you would necessarily use for anything other than airline ticket purchases, but they are good second or third cards to keep.
For the vast majority of Atlanta-based flyers, for example, having a Delta credit card like the Gold Delta Skymiles Credit Card from American Express just makes sense. The annual fee is $95 but if you and your family are always flying Delta and checking a bag or two, then having the card is important for taking advantage of the free bag benefit.
For many years, someone in my family has carried the United MileagePlus Explorer card from Chase simply to take advantage of the free bag benefit on United (United has a large hub in my hometown San Francisco International Airport). With a family of four usually checking at least two bags at $25 apiece each way on a single roundtrip, we would more than get our money’s worth out of the $95 annual fee by flying United just once a year.
If you live in a city with a lot of airline choices and fly a variety of airlines, however, having a card with a hefty annual fee but a fee bag benefit may not make sense from the perspective of number crunching.
The Bottom Line
Credit cards offer a convenient way to earn points or cash towards offsetting your travel expenses. But don’t leave miles or money on the table because you are too lazy to switch out a card or two as your family’s travel habits and preferences change. Put your money to work for you!