We loved hearing from so many of you after the last Behind the Curtain post, thanks to everyone who shared how you are using your points. Below, Michelle provides her own insights along with some great resources for managing and optimizing your credit card points. – Shaun
I currently live over 5,000 miles and almost 12 hours of flight time (plus layovers!) away from home. Fun fact, that’s the flight time for the longest domestic flight from Boston to Honolulu. And in making that round-trip journey three to four times a year (don’t worry, I’m staying safe and am not currently traveling at the moment!), I had to get creative in paying for it!
Enter.. Credit cards! Used efficiently and smartly, credit cards can be a valuable tool in your financial plan. Not only do credit cards provide an added layer of consumer protection and security, but you also get the additional bonus of points or miles, potential perks with airlines or hotels, and other various non-credit benefits. At the most basic level, these points or miles are an investment towards your next bill or trip – perfect for frequent trips to Hawaii! So how do you get started? Good news, there’s no “right” way to collect points and miles! While there are definitely more efficient ways than others, I will share what works for me.
I currently hold 4 active credit cards. I use each card for different types of purchases depending on the earning potential and redemption benefits of the card. For example, two of my credit cards have earnings categories for groceries, though one has higher reward value than the other. One awards 1% cash back and the other 4 points per dollar (we’ll save the comparison in value for another time). For me, the redemption value of 4 points is worth more than 1 cent (1% cash back on $1), so I put all of my grocery purchases on that one card.
Keeping track of your credit cards, both financially and in maximizing their earning potential, takes some effort. Financially, managing multiple credit cards is not much different than managing one – spend and pay your balance each month. However, maximizing earning potential for multiple cards is slightly more work than setting up the monthly auto-pay. You will need to determine the types of purchases you will be putting on each card and diligently spend as you planned. Like your investments and your overall financial plan, you should periodically review your credit cards and their respective benefits to ensure that you are maximizing earning and redemption potential (looking at you Seth and Shaun!) to the greatest extent. By doing so, you are maximizing your investment in your future plans and bills (and saving actual cash to invest for growth)!
Here are some additional additional resources to help you learn about, track & manage your points:
- The Points Guy publishes hands-on advice to help readers maximize their travel experiences using points
- One Mile at a Time is also a blog about travel with guides to using miles & points
- Award Magic and Point Pros are 3rd party services that do the heavy lifting of finding the optimal way to use your points for big trips
- AwardWallet is a single portal to track all points across air/hotel/credit card companies