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.
You can use your credit cards just like you normally would, and earn free things along the way.
What’s bad about that?
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.
Do you use credit cards to your advantage? In what ways? Are you working towards earning free/cheap vacations? Why or why not?