Reading blogs, or just driving past billboards, you’ll find an endless sea of information shoutout the fantastic ways you can earn points and miles. They’re pretty much all true. You can earn thousands, even millions of points and miles each year, without even travelling. The easiest and most convenient way: rewards credit cards. Every purchase, from a cappuccino to a new car can earn points that then turn into vacations.
Understandably, people go mad for any lucrative opportunity to top off their points balance, but in the heat of the moment, too many people commit the cardinal sin of earning points: paying for them. I’ll explain…
Free Points
The word “free” floats too loosely throughout travel, but credit cards offer an avenue for earning points and miles that’s as close to “free” as can be. Annual fees aside, if you pay off your balance in full each month the only “cost” of earning points with a given credit card is the opportunity cost lost via another credit card. No interest and zero balances means that you’re being rewarded every day.
Even cards with high annual fees can be entirely offset, or bring you out ahead each year via key benefits like airport lounge access, fourth night free on hotels and other perks, which means your points aren’t even tied to an annual fee in any direct way. The moment you start paying interest though, you’re paying for your points – a cardinal sin in “the game”.
From there, it can all spiral. A good credit score is made by keeping low balances, under a threshold of 30% of your available credit lines, and keeping long standing credit lines. The points and miles game is a steady run, not a sprint.
Paying For Points
Don’t confuse any of this with points sales, which airlines and hotels frequently run. There are times when these sales can give you the boost you need to cash in for something aspirational, or get you over the finish line in time, and that’s a simple transaction where you buy a set number of points and the transaction ends there. Earning points through credit cards is an entirely different proposition.
You’re doing it wrong in points and miles if you: need to overextend yourself to meet a credit card bonus spending requirement, you start carrying a balance into the next month, or you need to rely on moving money between cards to keep things afloat.
Creating nearly “free” vacations by maximizing your daily spending and personal finances is nothing short of incredible, but if you start paying hundreds in interest and fees to credit card companies for the privilege, then your “nearly free” vacation is anything but.
This is where it’s absolutely crucial to keep your head above water, and stay away from the tunnel vision many points enthusiasts find themselves in. Sometimes you’ve gotta “sit this one out” or wait until a better time, because there’s nothing more valuable than maintaining good personal credit and avoiding long term interest, if you want to play the game for life. It’s a fun game when you can make it work for you, and it’s never worth compromising your future in it, no matter what’s on offer…
Thanks Gil for this piece. A timely reminder to always do things right!
Even collecting points for “free” from credit cards has a nominal cost, given you could alternatively be using a cashback credit card.
0.5% cashback in hard cash straight into your bank account arguably beats 1% (Avios) return in a hypothetical points value that you may or may not find real use for.
The real value of paints maybe in convincing other people to buy them.
Accumulation of point should be Kept incidental to travel and credit card purchases with clearly defined purpose.
Even that should be balanced against cash back opportunities.