Because we travel on a budget, we’re always looking for ways to add a few extra dollars to our travel funds. For people who don’t have any credit card debt and always pay of their balance in full every month, credit card rewards programs can be a great way to make a few hundred dollars a year.
There are a variety of cards out there, and the specifics of each card’s reward program and sign up bonus can change at any time. In order to maximize the rewards you receive, it’s important to know how rewards are awarded and redeemed for every card you are considering. It is possible to take this to an extreme, “churning” cards by applying for excellent sign up bonuses and then canceling the cards. Frankly, staying on top of that system would require more time or energy than we want to devote to our credit cards.
The best part of these programs for us is that you get rewards for doing the same things you would have done anyway. We try to sign up for only cards we intend to keep. We look for great sign up bonuses, but also long-term rewards rates, the types of purchases which qualify for higher rewards rates, and the ease of redeeming points. Signing up for credit cards can impact your credit score in multiple ways (hard inquiries, the length of credit history, amount of available credit, among others) so make sure you’re aware of your own situation before applying for credit.
After evaluating my current credit cards, I have come to the conclusion that there are a few spending categories that are currently receiving the minimum rewards rate on all of my cards, and I’d like to get an additional card or two to fill in these holes. At the moment, I regularly use two credit cards (others are kept for the length of my account history, but rarely used). Between these two cards I am earning great rewards on department stores, gas. and groceries, and don’t pay any foreign transaction fees. However, the highest rewards rate for all other purchases is only 1.25%.
While I’d love to cut my entertainment and dining out budgets even further, the reality is that these are a fairly significant part of my spending, and I’d like to get a higher rate of return. The best option here for my purposes is likely a card with rotating categories. While it may not reward my spending all year-long in these categories, it will provide a boost during the months that the bonuses are active. Additionally, I’d like to get a card that offers a higher flat rate than 1.25% for all general purchases.
To meet the first requirement, Chase Freedom is my card of choice. First, they are funning a promotion that increases the initial sign up bonus from $100 to $200. Additionally, because Grace already has this card, she qualifies for a recommending bonus of $50, and I have the peace of mind knowing she has and likes the card. This card has rotating categories at 5% above the standard rate throughout the year, including months that reward restaurants and movies, the areas I need to target. While the standard rewards rate is only 1%, this card fills one of the holes in my wallet.
The online application is quick and easy, and you find out if you are approved instantly. In order to get the $200 bonus, I need to spend $500 with the card in the first three months. Given that I put everything possible on a credit card, I doubt it will take me more than one billing cycle to meet this requirement. In order for Grace to qualify for the $50 bonus, I need to use my card by September 23rd.
All in all, I’m very happy with my latest acquisition, and can’t wait to use some of these rewards I’ve been earning on a flight! Do you use credit card points to cushion your travel fund?