How I Paid $90 on a Round-trip Flight to IrelandPosted on September 29, 2015.
A couple years ago I started paying attention to credit card commercials that offered “2x points for dining”, “double cash back”, “40,000 bonus miles”, etc. The list went on and on about ways you can benefit from applying for credit cards, and how you can use them to score cash back or cheap flights around the world. I didn’t believe them. There had to be a catch. You couldn’t just apply for a credit card and really reap the benefits that were advertised, could you? The short answer: absolutely.
After extensive research on which credit card would give me the best travel rewards, I landed upon the Chase Sapphire Preferred credit card. This credit card has consistently been ranked among the top travel rewards credit cards, and for good reason. Among many other perks, you get:
- double points on travel and dining (travel includes tolls, taxis, hotels, flights, and much more);
- no foreign transaction fees (standard credit cards will often charge you 3% per transaction when traveling abroad);
- great customer service (when you call them, an actual human picks up the phone);
- primary car rental insurance (standard credit cards will typically offer secondary car rental insurance);
- 1:1 transferrable points to eligible partners.
This is the credit card that I used to pay $90 for a round-trip ticket from Minneapolis to Ireland (a $950 value).
Before I go any further, there are a couple very important rules when considering travel rewards credit cards.
- When applying for a credit card, you should always take advantage of the sign-up bonus. At the time I applied for the Chase Sapphire Preferred credit card, they offered up 50,000 bonus points as long as I spent $3,000 within the first 3 months of using the credit card. 50,000 points are worth at least $650. (sign-up bonuses change often for each credit card)
- Make sure to pay off your credit card balance in full, every month. If you don’t, the interest rates will more than cancel out the value of what you earn in points.
Once I was approved and received the Chase Sapphire Preferred credit card, my first goal was to obtain the lucrative 50,000 bonus points by spending $3,000 in the first 3 months.
- 1st step: Setup automatic payments for any bill that allowed me the use of this credit card. In my case, this was the internet, cable, and phone bill. This allowed me to take a big chunk out of that $3,000 minimum spend.
- 2nd step: Used the credit card for any and all purchases.
- 3rd step: Tracked my spending to ensure I reached the $3,000 mark during the first 3 months of use.
After 3 months, I logged into my Chase.com account to see how many points were available. My account had 60,000 points. Not only did I receive the 50,000 bonus points, I received an extra 5,000 points for making 1 purchase within the first week of owning the card. The last 5,000 points were accumulated through my everyday spending (2x points per dollar on travel and dining, 1 point per dollar on everything else).
Every point you accrue per credit card can have a different value, and that value is not necessarily fixed. Depending on how you use points, they can be valued anywhere from 1 cent per point to 5 cents per point (or more, in extreme cases).
I continued to use the credit card on a regular basis, and a couple months later, I accrued another 8,804 points. My new point total was 68,804, and I was ready to put these points to use on a round-trip flight to Ireland.
The flight I wanted was $950 through Chase Ultimate Rewards. I knew that if I used Chase my value per point was 1.25 cents, so my 68,804 points were worth $860.07 (68,804 x $0.0125).
Often times, credit cards restrict where you can spend your points. For instance, the Southwest Rapid Rewards credit card allows you to only spend your points on Southwest.com. However, the Chase Sapphire Preferred credit card allows you to transfer points to eligible partners such as British Airways, Korean Air, Singapore Airlines, Southwest, United, and Virgin Atlantic, which will then allow you to book on their websites using their point systems.
The value of your points depend on your credit card and how you are able to use your points–as stated previously–but also depending on which airline you book through because airlines value their points differently (eg, based on region, mileage, etc). Ultimately, shop around to see where you get the most value for your points. The “points & miles game” is all about maximizing the value of your points.
Chase Ultimate Rewards show you exactly how many points are needed to book the flight. If you don’t have enough points, you can just pay the remaining balance in cash. Or if you would like, you can use however many points you want on the flight, and it will instantly give you an updated price. (See example images below)
In my case, I decided to use all of my points and pay the remaining balance, which was only $90.
The process was simple. I used my credit card on every routine purchase I could for 5 months, and Chase gave me $860.07 to spend towards the flight. Very quickly, my ticket went from $950 to $89.93.
The skeptic’s comments & questions:
Q: Will applying for credit cards hurt my credit score?
A: Short answer: No. Having multiple credit cards will actually improve your credit score in the long run. The details are explained in this article.
Q: Do I have to spend the money on flights? Could I get cash back instead?
A: Yes, this credit card allows you to get cash back, but instead of receiving 1.25 cents per point (by booking through Chase Ultimate Rewards for a flight), you get 1 cent per point. So in my case, I could have transferred $688.04 directly into my bank account. (68,804 x $0.01)
C: But this credit card charges $95 per year.
A: Routine purchases using this credit card will benefit you with hundreds of dollars each year. As you can see, I was just given $860.07, which more than covers the $95 fee. (Once again, this is only applicable if you pay your bills in full every month!)
C: The process of applying for a credit card and using it to book cheap flights seems too complicated.
A: The complicated part is trying to maximize the value of your points, but if you’re not interested in saving a few extra bucks, then you can follow the basic steps that I mentioned above.