How to Plan Your Next Vacation With Credit Card Points

by Eric Volkman | Updated July 21, 2021 - First published on Nov. 22, 2018

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Want to get away? If you’ve earned sufficient points or miles on your credit card, here’s how you can.

Want to get away? If you’ve earned sufficient points or miles on your credit card, here’s how you can.

Let’s face it -- one of the big reasons we choose the credit cards we do is the possibility of earning free travel. Who among us doesn’t like the idea of a free flight, hotel room, or vacation package (or at least one that’s generously discounted)?

With the increasing scope and sophistication of travel credit card rewards programs, not to mention the same for airlines and hotel chains, it can be daunting to figure out how to best utilize your rewards for travel. Here’s a broad-strokes, quick-and-dirty guide to strategizing rewards travel.

Get your rewards currency ready

Credit cards that earn rewards generally allow customers to redeem them in one or more of the following ways:

  • Travel and merchandise -- Miles or points are earned that can be used to purchase goods and services directly.
  • Transfers to airline and hotel partners -- Many issuers have built a network with such partners, allowing their cardholders to shovel their points into an airline or hotel loyalty program.
  • Cash back -- This straightforward system awards statement credit or physical money back to the cardholder. Cash back is earned through purchases with the card.

It is, of course, possible to book travel via all three types of rewards, although the first is by far the most direct method. If your card earns rewards by way of the two other methods, your first step is to determine whether you’ve got enough for at least a discount on what you’ll be buying.

Next, move your miles or points (or whatever your card calls its reward currency) to the program through which you’ll be doing the booking. It’s now time to go shopping.

Budget your miles and plan your purchase

Before you get close to the “complete purchase” button on your airline or hotel’s website, you should determine how much of those accumulated rewards you’re willing and able to spend.

That sounds easier than it is. How far your miles/points go depends on which aspect of your holiday is most advantageous to fund. After all, different credit card rewards redeem at different rates depending on factors such as how (and if) they’re transferred.

Naturally, the choice(s) will also depend on your travel priorities. Do you value comfort and a high level of service? If so, perhaps it’s best to devote most, or even all, of your budgeted miles/points to a stay in a luxury hotel. But if you’re after a stint in the most exotic, far-off destination possible, it might be better to use your rewards for the long flight to get there.

Meanwhile, certain cards -- like those issued by airlines -- tend to redeem their own facet of travel most favorably.

Many travelers don’t like doing the math. In this case, though, it’s worth the time and trouble -- you want the most bang for your buck (sorry, your miles/points) when paying for a holiday. After all, the more you save on arrangements, the more you can spend enjoying yourself while away.

Stay card-savvy at your destination

Good card management shouldn’t end when you step on that plane. Strategizing the use of the right piece (or pieces) of plastic during your trip is also key.

Similarly to the prudent rewards management principles outlined above, you’ll want to squeeze the most out of the cards in your wallet. What you’re after here is a card that:

Has no foreign transaction fee -- This small but irritating charge, usually around 3%, is your issuer taking a cut of every purchase you make on the card while outside U.S. borders. Take only plastic that has no foreign transaction fee when you leave this country, assuming you have at least one card with this feature.

Earns points/miles fast -- For the most part, traveling means spending. You’re there to enjoy yourself! For that reason, tote along a card that earns at a higher rate on certain categories -- those that reap higher rewards for restaurants would be a good choice in this instance since we tend to eat out much more when on the road. The best travel cards on the market all earn rewards at high rates. There are several offers to consider in the competitive landscape, whether you’re willing to pay an annual fee or you don’t spend enough on credit and prefer a travel card with no annual fee.

Is linked to your go-to frequent flyer program -- If you’re a loyal and constant flyer of a certain carrier and hold the card that feeds points/miles into its program, by all means utilize that card while on your holiday. That’ll give you a fine head start on accumulating a new pile of rewards -- which can eventually earn you another subsidized vacation before long!

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