Have you ever wondered if it was really true that you could travel the World on points? Perhaps you’ve gotten a credit card offer in the mail, or been approached at an airport to sign up for an airline card.
There are so many choices and without a careful disciplined approach you may end up with a scattering of points that are difficult to use.
To further complicate the decision some banks limit the number of cards you can hold and how long you have to wait before applying for a card again. For example, Chase limits you to 5 new cards every 24 months (the 5/24 rule) and they count any new card that shows up on your credit report. So it’s best to apply for cards from Chase first. But more on that later.
If you don’t pay your cards off every month then stop reading now…points travel is not for you:
Rule #1: Don’t play the Points “game” if you maintain a credit card balance.
Rule #2: ALWAYS Pay off your credit card balance on time every month.
You’re probably wondering about your credit score and how signing up for lots of credit cards will affect your score. There are 3 credit reporting agencies (CRAs) that collect, maintain, and report consumer credit information: Transunion, Equifax, and Experian. Here’s a link to learn about the details of what these companies do and how it affects your ability to get loans, credit cards, mortgages, etc.
When you sign up for a new card it will drop your credit score for a month or two but your score will rebound as you pay off each credit card in full for several months. Signing up for a new credit card and paying it off each month can actually help boost your credit score. As you increase the number of cards you own, your amount of available credit increases. Assuming that you do not increase your spending each month your credit utilization (amount owed/amount available) actually decreases which is good for your credit score.
https://www.thebalance.com/who-are-the-three-major-credit-bureaus-960416
Rule #3: Don’t sign up for new credit cards if you anticipate getting a new mortgage or other loan in the next 3-6 months.
Rule #4: Always sign up as primary card holder.
Credit card companies will ask if you want someone else (like your spouse) to have a card on your account. Always decline. If you sign up your spouse they will not be able to sign up for the same card to get a signup bonus.
Rule #5: Monitor your credit score frequently.
Rule #6: Have a goal in mind
It’s important to have a goal so you will make the right decisions about what credit cards to sign up for to achieve your goal. Goals might be: 1)Taking the longest Business Class lie down flight available. 2)Flying to: (Europe, South America, Asia, …). 3)Staying at a fancy resort, 4)…
For example: Freddie and I are planning a 6 week trip to Asia next Spring. 1)We want to fly Business Class with lie down seats, 2)We want one long flight segment so we can enjoy the experience, 3)We want to minimize the points and dollars that we spend on the flight. We have a lot of Chase Ultimate reward miles already and Ultimate Reward miles can be transferred 1:1 to the following airlines: Aer Lingus, British Airways,Flying Blue (Air France/KLM), Iberia, JetBlue, Singapore Airlines, Southwest, United, Virgin Atlantic which also means that we can search for and book partner airlines who are members of One World (through British Airlines and Iberia), Star Alliance (through United and Singapore), and Skyteam (through Flying Blue AirFrance/KLM). I might spend some time searching now to see what kind of reward travel is available for the Spring and how many points we would need. I would then sign up for the credit cards that will get us the number of points needed. If this is too complicated…just sign up for credit cards that get you Chase Ultimate Reward points first (look for 60,000-80,000-100,000 signup bonuses) ….but read the section on collecting Ultimate Rewards first.
