Back in March, I published the article Are Rewards/Bonus Credit Cards Right For You? This is a personal finance blog, and I know that many are against credit card use.
However, while there are negatives to using credit cards, if you know how to use them to your advantage then there should be no negatives. Using credit cards to your advantage is a huge positive.
One of the main positives of using credit cards is that many nowadays have a rewards system in place (such as the one at the bottom of this article – Barclaycard Arrival Plus™ World Elite MasterCard) to earn free rewards such as gift cards, cash, vacations, and more.
Related: The Best Rewards Credit Cards For This Year
You can use your credit cards just like you normally would, and earn free things along the way.
What’s bad about that?
Nothing!
There is a common myth out there that you have to be rich or well-off in order to travel. That is just simply not true! I often go on vacations where I hardly have to open up my wallet. This is because I save up my rewards points for travel.
I have used my rewards for many different things. I have earned:
- 5 round trip flights to Las Vegas that I used in May of this year to fly me and my friends to Vegas;
- 3 or 4 round trip flights to Las Vegas in 2012;
- Over $500 in gift cards to stores like Lowes and Target (you can also buy gift cards for hotels, cruises, etc.);
- Around $1,000 cash back (yes, it’s actually cash!), and more.
Here are the ways I plan on using credit cards to earn cheap and free vacations:
Spending like I normally would.
I plan on spending money just like I normally would.
I don’t think anyone should be spending extra money just to earn rewards points, because you will be hurting yourself more than helping yourself most likely. If you cannot control your credit card spending, then please stop reading this article! Using credit cards for rewards points is definitely not for everyone out there. Some are much better with cash. Do not feel ashamed!
Anyway, there are plenty of ways to spend money by using credit cards to earn cheap and/or free vacations.
I put my groceries, clothing, gas, phone bill, and everything else that I can onto my credit cards.
It all adds up quickly so I am always able to meet the minimum spending limits that new credit cards ask you to meet in order for them to give you your sign-up bonus (more on this below).
We got married earlier this month, and I put nearly everything on my credit cards. Yes, that means that I will have to pay a lot come this time next month, but I already have the money saved so I can just make one big lump-sum payment towards my credit cards when the payment is due.
Related content: Everything You Need To Know About How To Build Credit
Using sign-up bonuses to my advantage.
Most of the rewards that you will earn are from signing up (and being approved) for rewards credit cards that have high sign up bonuses. This is where a credit card may have a bonus of $400 in travel for you signing up. You usually have to spend somewhere around $1,000 to $3,000 within the first three months to qualify for that though.
All you have to do is spend the minimum amount within the specified time period and then you are on your way to earning free rewards. Yes, it is really that easy.
Also, to some $3,000 may seem like a lot of money to spend in 3 months, but if you add up your normal monthly spending, then you might be somewhere around that. We are around that number, so it’s easy for us to earn bonus rewards.
There are many different types of bonuses out there. I have seen credit cards that offer a measly $25 for you to sign up, and then there are credit cards out there like the Barclaycard Arrival Plus™ World Elite MasterCard® where you can earn $440 for travel fairly quickly.
Related: How Do Credit Cards Work?
I will pay my credit card bills on time.
I have always paid my credit card on time.
I have never paid a late fee or paid money for interest.
There is a myth out there that if you use credit cards that you will 100% have to pay interest and that is simply not true. For most credit cards (I can’t think of a single credit card that doesn’t do this), you only pay interest when you are late paying your credit card bill and you let your balance accrue.
The key here is to pay off your balance by the due date (I always like to pay a few days before just in case something goes wrong with my payment), and then you will NOT have to pay any interest.
I will keep a log of everything.
If you really get into using credit cards to your advantage for rewards points, then it can be easy to make a mistake and end up having to pay interest.
This is something that you definitely do not want to do, as interest rates on credit cards can be fairly high.
Because of this, I will make an Excel sheet that lists out where I am for different credit cards. This way I can use my normal monthly spending to my advantage by knowing which expenses should be charged to each credit card.
Related content: 9 Legit Ways To Find Free Gas Cards
Do you use credit cards to your advantage? In what ways? Are you working towards earning free/cheap vacations? Why or why not?
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RJ says
A few years back before the financial collapse when banks were paying actual interest in their savings accounts instead of the 0.01% that they pay now I would take advantage of the 0% APR transfer for 12 months or longer. Opening credit cards and receiving checks from them to pay my “other credit cards” off. Sticking that money in a savings account paying 5% and getting hundreds to thousands back after a year in interest. It was fun while it lasted, it was a form of gambling for me before I knew any better ^_^
Michelle S. says
How much money do you think you made? 🙂
Michelle S. says
A mile millionaire sounds nice!
Jason @ Phroogal says
I opened a credit card to get 50K points on Carlson and I didn’t keep track of the expenses and I didn’t meet it. I spent only $960. I called asking to see if they’ll make an exception but alas they would not budge. A good lesson to learn.
Michelle S. says
Oh no! That really stinks. That’s exactly why I plan on keeping track closely because I would hate for a small amount to prevent me from getting a bonus.
Christine Berry - Wealth Way Online says
I’m actually trying to build up points for the first time in my life. I think I earn one point (with one dollar value) for every $90 I spend… it’s not a great rate of return but considering the number of things I book on credit cards such as hotels, flights etc I’m sure it’ll add up fast. Well – I hope so!
Michelle S. says
I’m sure it will add up fast! Good luck! 🙂 What do you plan on spending your points on?
John @ Wise Dollar says
We churn pretty actively and have earned a few free trips and some nice cash back as well over the past year. I used to think it would be difficult to hit the spend, but it’s really not you just need to be strategic with how you spend.
Michelle S. says
Nope, it’s not hard at all if you are strategic about it. Good job John!
Holly@ClubThrifty says
I write for Frugal Travel Guy so I think you know my answer. I mainly churn for signup bonuses, although I do keep some cards for ongoing rewards. I need to write a list post of everything I’ve earned over the years!
Michelle S. says
Yes, you should! I am sure you have earned a TON of things. You are the master at it Holly! 🙂
Broke Millennial says
Not using credit cards could be a huge disadvantage. They are a great tool for building your credit history and improving your score — assuming you follow those rules and use the cards properly! Just one missed payment can kill your score.
Michelle S. says
Yes! Credit cards can be great for those who know the rules, and everyone should learn about all the different parts of having a credit card before they have one. For example, I know someone who thought that paying the minimum payment each month was all that they needed to do so that no interest would build up. Sadly, they were paying tons of money in interest each month without even realizing it.
Michelle S. says
Yes, credit cards are definitely not for everyone. For me, I’m bad with cash. When I say bad, I am just horrible! I don’t know what it is, but with cash I can never remember what I spent my money on, and I sometimes treat it as “free money” because it’s not recorded as closely.
Michelle S. says
$800 in rewards is definitely good!
DC @ Young Adult Money says
Both my wife and I churned the Barclaycard earlier this year and the hardest thing for us is finding time to travel, not the expense that comes with it! We did get one hotel room comped when we went to Des Moines for a night/day. I plan on using them for an out-of-town wedding in August as well. I’m thinking Vegas might be a fun little weekend trip for us as well. It’s so nice having the rewards to use!
Michelle S. says
Yes, finding time to travel used to be a big problem for us. I remember strategically planning all of my vacation days. I did not like that at all!
Connie says
I just started churning my first credit card! I still have ALOT to learn but happy that I got started! 🙂
Michelle S. says
Congrats! I hope you earn some awesome rewards. Do you plan on using your points for travel?
Liz says
We are currently working on churning the Barclay’s card. I have no idea what we will do yet for vaca though. I’m running into the same issue as DC.. No time!
Michelle S. says
I hope you find some time!
Andrew says
I remember when I first heard about travel rewards and I thought they were too good to be true…but once I got in the travel hacking game…I got addicted. It’s pretty awesome when you get travel for free or close to it! Can’t wait to get back in once I get my mortgage and passed my co-op board interview…didn’t want any dings to my credit.
Michelle S. says
Yes so many people think that it’s too good to be true. It’s really that simple!
Nicola says
I need to research this more – I don’t know which cards are best in the UK! I need to look at this – I feel like I’m missing out!
Michelle S. says
Yes do it! I’m not sure how the travel credit card thing in other countries work but it’s definitely worthwhile to look into 🙂
Kristin Bonot says
I am definitely on board with smart and strategic credit card use, though I agree that it is not for everyone and people need to find out what works for them best! The best is when I make business purchases- I get reimbursed ANDit contributes to my cash back or points! My boyfriend and I just used our points to book a trip to South America. We had to pay a bit extra as we didn’t have quite enough- but still much better than paying full price tickets.
Michelle S. says
That’s awesome about your trip to South America!
Dan @ Our Big Fat Wallet says
I think it’s a great idea to use credit cards to get some free trips. The problem is that here in Canada I think we have much less selection (and competition) for credit cards. There are a few decent ones available but nothing as lucrative as you have down there. I do have a cash back card I love though – 4% cash back on gas and groceries
Michelle S. says
I hope the lucrative ones start being in Canada soon :). 4% is good too!
Squirrelers says
There are tons of rewards that can be earned, and I too enjoy travel rewards. What I really like is how you highlight that bills should be paid in full on time. As long as we do that, and don’t change our spending habits just to get rewards, it can be more than worth it to find the right card with a rewards structure that works for you. Otherwise it’s like leaving vacations on the table 🙂
Michelle S. says
Yes, who just wants to give free vacations away? 🙂
Dana Wilson says
They are not called REWARDS for nothing. Pay bills on time and do go beyond your budget just to get rewards especially if it’s beyond you can afford. Thanks for sharing this!
Michelle S. says
Thanks Dana!
Jonny Pean says
Generally, I avoid using credit cards. However, I do use them now. However, I make it sure that I always pay in time so that I don’t have to pay interest. Once I got real taste of reward points, I started using it more often now than before. I accumulated lots of points which I didn’t redeem for quite sometime. She was hankering for a particular ‘gift’ (not disclosing here, it’s private 🙂 ). So, one day I just brought her the gift. She’s happy and I too didn’t have to shell out my hard earned money as I redeemed them to buy the gift. Win-win situation for everyone here.. I hope my wife is not seeing this post, otherwise I’m done. However, I want to add here that one third of the $48 billion rewards given by credit card companies are not utilized. I was part of it so long. But I’m not now. I think I’ve become prudent nowadays. 🙂
Michelle S. says
Good job!
Stefanie @ The Broke and Beautiful Life says
I used the Barclay Card to get to Europe in April for $25. Now I’m just trying to figure out which card to churn next.
Michelle S. says
That is awesome Stefanie!
Tanya says
My family of 4 just took a vacation to DC, Philly, and NY. We stayed for free and got our flights free for the whole trip. All we really paid for was food. It was so nice to take a vacation like that and not have to spend a ton of money.
Michelle S. says
Wow that is awesome. Good job!
Karen Martínez P. says
Good post, Michelle.
People have a bad perception of credit cards. I always pay with mine!
From car maintenance and insurance to restaurant meals and grocery. As long as you have the budget for it and make the full payment on time, it shouldn’t be a problem.
Credit cards earn points, help you manage a better cash flow and keep track of your expenses. You also avoid losing money (if someone steals your purse -that’s why insurance fraud exists).
Aiming for the 50″ TV! 😀
Michelle S. says
I hope you get that TV! 🙂
Michelle S says
It definitely helps to keep a log of all the companies, pts, rewards, expiration dates. I agree with the spending like usual- don’t go and buy something just to rack up cash back because it’ll take you time to accumulate points and cash.
Rusty H says
I think using credit cards can be used to your advantage — they can help improve your credit score, but only if you pay the balance every month. It’s easy to get trapped in credit card debt.
Jake says
I know this is a few years late, but this is still an excellent article. American Express has an excellent rewards card for sky miles. I signed up and spent $3000 my first 3 months. They gave me 50,000 sky miles. After that, it’s been 1 skymile for every $1 spent. My wife and I are going to be using those points for our first anniversary.