Having a good credit score helps your overall financial health in amazing ways. Your credit score is even one of the factors that affect car insurance rates. One of the most economical ways to travel is to use travel reward credit cards.
However, having lousy credit doesn’t maximize the sign-up bonuses or point redemption. Read on to find out how to get travel rewards, negotiate bonus points, and use good credit to travel the world.
Research Credit Card Sign-up Perks
The biggest chunk of points your credit card will ever give you is its sign-up incentive. You can pay for an entire vacation using new member incentives. If you are planning a big trip soon or want to use your average travel expenses towards something, travel credit cards are the way to go.
To qualify for travel cards, you must have an excellent credit score, usually above 690. If you have, in fact, earned superb credit history, there are plenty of cards you could sign up for.
Here are some points of comparison to consider:
- Annual fees
- Reward point redemption value
- Terms to fulfill to get the bonus
There’s a reason why the term “credit card churning” is a popular idea. Some credit-savvy travelers have developed ways to keep signing up for and canceling cards to continue benefitting from sign-up bonuses.
Be aware that most sign-up bonuses require you to spend a certain amount with your card in a certain amount of time to earn the bonus. There also may be annual fees associated with the card and limits on how many cards you can have with one specific company.
Once you know what travel point perks are available upon sign-up, you need to look for a card that fits your spending habits.
Find a Card That Suits Your Regular Spending
To optimize point earning with credit card travel perks use your regular spending to get those points. If you spend extra money to qualify for the rewards points, you’re losing the game.
Credit card companies are not offering these perks out of the goodness of their hearts. These companies literally bank on the assumption that you will spend more in an attempt to get more. That being said, specific card companies partner with different vendors to offer better perks on some purchases than others.
Check out forums that discuss rewards points earnings. Reddit, myFicoForums, and other review platforms compare perks.
Once again, the goal is to match your budgeted spending, not invent new ways to spend money in hopes of getting more rewards. You never save money by spending it.
Maximize Reward Point Worth
Along with those forums to help you find the best card to sign up for, you can also take advantage of apps to optimize your credit spending. There are usually fees attached to these apps, but they can be well worth it when calculating the extra points you earn.
Apps can track your cards and your online spending and advise which card to use on which site to benefit from changing points incentives.
When considering the redemption value of your reward points, a good goal is about 1 cent per point. Any reward program less than that isn’t as worthwhile. It could make the difference between funding a trip to Ocean City and traveling to Zanzibar.
Using your credit card reward center, you can convert points to travel rewards at a better rate than typical redemption. Credit cards offer better in-house deals because they work out deals with vendors behind the scenes.
But how can you improve your credit? Here’s what you can do today to optimize your credit score and put your everyday spending to use.
Improve Your Credit Score
Ultimately, you won’t be able to take advantage of travel cards if you don’t qualify for the account. So get working on improving your credit today.
A good credit score is 670-739. The range considered very good is 740-799, and above 799 is considered exceptional. The average credit score in the U.S. is 703.
The best way to start improving your credit score is to pay your card in full every month. Don’t spend money you don’t already have. Never carry a balance over to a new month.
If you have already racked up credit debt, prioritize paying it off immediately. Unfortunately, it can still take up to two years for your credit score to improve after paying off your credit card debt.
If you have decent credit and pay your bill in full every month, call to negotiate to increase your credit limit. This raising of your credit ceiling is not to encourage you to spend more but rather to improve your credit utilization ratio.
Your credit utilization ratio is the percent of your credit limit you typically spend. The smaller that percentage, the better credit score you will earn.
So before you jet off to Cochem, Germany, check for credit card sign-up bonuses that offer bonus travel points, clean up your credit so that you will qualify for those bonuses, and check the fine print for annual fees and spending minimums.
Maria Hanson writes and researches for the car insurance comparison site CarInsurance.org. She is passionate about helping people find the best insurance to meet their needs.
