Beginner’s Guide to Using Rewards Points to Travel

Make your next big family vacation affordable with points.

A lot of people are nervous about using credit cards and trying to earn rewards points, but if you have decent credit and are even a little organized, using points can save you large sums of money and allow you to have wonderful experiences that you may not necessarily be able to afford otherwise, especially if you have a large family.

So how do you do it?  The steps are fairly simple. 

1.) Apply online for a credit card that offers a large rewards bonus. 

2.) Once you are approved and receive your card, set up your account online so you can easily see your spending and points, and pay your bills on time.

3.) Start using your card for all of your normal expenses. Once you reach the spending threshold that you need to earn your reward point bonus, it will automatically show up in your online account (sometimes it takes a few weeks, but it will get there.)

4.) Start using your rewards points! You can do this through your online account, which will have a link that will show you your options.

5.) If you don’t want to keep the card after spending the rewards points bonus, you can always close the card before the next annual fee hits, or you can downgrade the card to one that has no annual fee.

Here’s an example of how it works:

I’ll use one of my current favorites, Southwest Rapid Rewards, as the example.  This card currently offers 85,000 bonus points, worth over $1000 in flights, after you spend $3000 in the first three months.

The spending $3000 part scares a lot of people off, but it shouldn’t!  Most large families are going to spend that much in just food in three months, without spending a dollar more than they normally would. If you do find that you haven’t reached the threshold, you can pay or pre-pay bills with the card (such as medical bills, utilities, etc.) or purchase gift cards that you know you will use for your regular household expenses.

So, say you are approved for your card and receive it the next week.  You just follow the instructions to set up your account online and immediately start using your new card for everything.

Once you have spent $3000 in the first three months, the points will show up in your account online, and then comes the fun part of getting to use them! The Southwest Rapid Rewards charges $69 annually.  So, you’re paying $69 to get over $1000 in flights. That’s a pretty good deal!

You’ll be able to see how many points each flight is worth just by going to the Southwest website and checking the little “points” box. Then just purchase the tickets using the points!

Once you’ve used your rewards bonus points you can decide whether or not it’s worth the $69 to keep the card. Because Southwest has a companion pass program, it can be well worth the fee to keep the card if you’re able to earn the pass.

Don’t be Scared off by the Annual Fee

Some cards do not have an annual fee, and some waive their annual fee for the first year. Some do have an immediate annual fee (usually under $100), but it’s usually much less than the money you are saving in rewards points, so it’s well worth it.

I usually try to plan in advance to use my points within the first year of getting them, because of the annual fee. Because many cards waive the annual fee for the first year, you can plan to get the card, meet the spending threshold, use the points, and cancel the card all in the first year, so that you never pay an annual fee.  Or better yet, you can often downgrade your cards to ones without an annual fee rather than cancel them, which can be better for your credit.

It’s Easy to Meet the Spending Threshold

Most spending thresholds for personal rewards cards will be between $1000 and $4000. Think about all of your trips to the grocery store, plus things like medical bills, school supplies, toys, clothing, diapers, etc.  Plus, if you use your card to pay bills, like your cell phones, power bill, cable and internet, you can usually very easily spend the required amount, without spending a dollar more than you normally would. 

If not, you can always prepay a few bills or get a few large gift cards that you will definitely use over the next few months to meet the spending threshold.  You can also add your spouse or other family members as authorized users on the website or by calling, and sometimes credit card companies even offer bonuses for doing so. Then you’re earning points even more quickly.

  
Ready to give it a go?

Apply for Southwest Rapid Rewards or jump on over to our list of favorite cards.  Have fun!