credit card advice
Thinking about buying some plane tickets and taking a trip some exotic locale? Or maybe you just want to fly across state to visit some family? Wherever your destination, we assume you want to save as much money on travel as possible.
That’s where your credit card comes in. To entice their customers to spend more, many credit card issuers offer their customers convenient ways to cut back their travel costs through incentives, reward programs and other perks.
I spoke with Founder and President of Airfarewatchdog George Hobica (who claims to have flown about 200,000 miles last year alone) to learn some helpful tips and tricks the next time you use a credit card to book travel.
1. Look for sign-up bonuses
A lucrative credit card sign-up bonus is one of the fastest ways to rack up thousands of air miles.
Typically issuers will offer tens of thousands of miles — usually between 30,000 and 50,000, although Hobica has seen upward of 100,000 in his travels — as long as the cardholder spends a certain amount in the first few months of opening the card, usually somewhere between $2,000 and $10,000.
2. Sign up for every card possible
Another savvy way to travel credits — open as many cards as you need to completely cover your travel plans.
“I recommend people, especially if they can get the card fee-free for the first year, sign up for every possible card,” Hobica said. “If you don’t need a lot of cards after the first year, you can cancel the cards … it really doesn’t hurt your credit rating too much, especially if you haven’t used the card too much.”
Hobica brings up an important point — two things here will affect your credit: when issuers conduct a hard inquiry on your credit during your application process and cancelling cards.
Hard inquiries generate small penalties to your credit that are easy to recover from (as long as you continue using credit responsibly). And while experts generally warn against closing credit cards, the overall negative effect on your credit shouldn’t be too great if the length of credit history on that card you closed is short.
3. Understand travel insurance
One of the most overlooked perks is travel insurance built right into your credit card. If you read the fine print that comes with your card, you might be surprised to learn you’re protected against several unfortunate travel-related incidents, such as delays, cancellations, illness, loss of property, political events (strikes, riots, etc.) and more.
“Let’s say you and your family booked a $5,000 cruise … and two weeks before the cruise, your son breaks his leg,” Hobica said. “A lot of people don’t realize that their credit card may reimburse them for anything that’s not refundable. A lot of people eat these losses because they don’t check the fine print on their credit cards.”
Not all cards offer travel insurance, and the coverage of those that do varies widely, so be sure to thoroughly check your credit card’s fine print.
“Travel insurance can cost you upwards of $500 — it depends on the value of the trip,” Hobica said. “Some credit cards cover you up to $10,000 in value. To insure a $10,000 trip, especially for four people, you could end up spending quite a lot of money [when purchasing separate travel insurance].”
4. Weigh the pros and cons of annual fees
Credit card companies are hesitant to offer hundreds upon thousands of dollars in travel rewards and get nothing in return. Issuers will try to lure you in by offering a $0 annual fee for the first year before charging anywhere from $50 to $500 a year or more.
But there are indeed perks that come with those fees. For example, you might have access to an exclusive airport lounge with a particular card, you may get a free checked bag with any flight or you’ll have a very favorable points and rewards system in return for that annual fee.
But is it really worth it?
“It definitely is if you check bags,” Hobica said. “A lot of these airline cards have free checked bags for you and your travelling companions. A checked bag could be $50 each way and the card fee could be $90 a year … There’s also purchase protection, baggage delay and flight delay. It depends on how much you travel really.”
5. Ask for more
Sometimes the best option is to ask for more out of your rewards. If there’s one thing credit card companies hate more than losing money, it’s losing customers.
“You could also try calling the credit card company and ask for another year fee-free. Tell them you’re thinking of cancelling the card,” Hobica said. “Maybe they can give you 5,000 miles to retain the card, or maybe they’ll waive the fee for another year. It doesn’t hurt to ask.”
Check out our selection of credit cards offering travel rewards so you can start planning the trip of a lifetime.