Are there cards that let you earn points for flights without actually flying? We haven’t taken a flight in years, but in December 2014, I’d like to be able to fly me and my husband from Chicago to Orlando to celebrate his retirement. That gives me a little over two years to earn points through shopping and other things besides flying to try to get two free tickets. Do you think that’s possible? Thank you for your help! – Marla
What a sweet idea! And, yes, with that much time to plan ahead, you should be able to earn that free Orlando trip for both of you. And, fortunately for you, travel rewards cards are increasingly flexible, with options catering to many different types of consumer needs and preferences.
Your best bet is to look for a generic travel rewards card. Many of these cards also offer higher value on rewards earnings. Plus, in contrast to a rewards card affiliated with a specific airline’s frequent flier program, points can be redeemed for any travel purchase with an airline of your choosing. In most cases, you simply purchase the trip and then use the rewards earnings to get a statement credit for the trip cost.
Almost every major card issuer features at least one generic travel rewards card, including Chase, Citi, Discover, Capital One, American Express and so on. Rewards earnings can be redeemed for a number of things, including, of course, free flights, as well as cash back, payment for hotel stays and online purchases.
If you have excellent credit, you can pick and choose among dozens of cards. That is the good news. The downside, of course, is that having that many options can make it tricky to choose the best card for you.
When comparing travel rewards cards, there are three factors to consider, so let’s take a look at each:
1. Look for the cards with the highest cash value of rewards. Rewards cards generally advertise their rewards in points, miles or percent cash back. Generally speaking, each point or mile is worth 1 cent. And the most typical rewards scheme is one point per dollar spent — or 1 percent cash back.
However, several rewards cards offer better value, and the trick is to calculate how much those points would be worth in cash. Check out the Capital One Venture One card, which lets you earn the equivalent of 1.25 travel rewards points per dollar (in other words, the equivalent of 1.25 percent cash back) on all purchases for no annual fee (APR 11.9 to 19.9 percent). Similarly, the American Express Blue Sky card gives you 1 point per dollar earned, but each 7,500-point increment is equal to a statement credit of up to $100 towards your travel purchases, making the effective value the equivalent of 1.33 percent cash back. The Blue Sky card also has no annual fee and an APR of 17.24 percent to 22.24 percent, depending on your credit.
For a $59 annual fee (and an APR of 13.9 percent to 20.9 percent), you can earn 2 miles per dollar spent with the Capital One Venture card, the equivalent of a 2 percent cash-back value toward travel purchases. However, you’d have to spend about $3,000 per year to earn back that $59 fee each year. So if it takes most of the year just to earn back the annual fee, you’re better off sticking with a card without an annual fee.
Some card issuers make it easy to determine the cash value of the rewards points issued, while others force you to pore through lots of fine print to find those details. A good rule of thumb? If you find it hard to determine the cash value of rewards earnings based on the disclosures in the credit card advertisements, chances are that the cash value is below par.
2. Check out rewards card bonus offers. One way to jump-start your travel rewards earnings is to look for the cards with the best bonus offers. Be aware, however, that cards with the best sign-up bonus offers may not give you the best rewards earnings on your credit card charges. Still, there’s plenty of value to be found in bonus offers, and you can easily earn a lot of miles toward your tickets, just by being approved for the rewards credit card.
Each of the Capital One Venture cards, for example, comes with a 10,000-mile bonus for new cardholders who spend more than $1,000 within the first three months, the equivalent of a $100 credit towards your future travel purchase.
Another card that offers both high-value rewards earnings as well as an excellent bonus offer is the U.S. Bank FlexPerks Travel Rewards Visa Signature card. It gives you 15,000 bonus FlexPoints after the first $900 in net purchases in the first 90 days. You need as little as 20,000 FlexPoints to redeem for a ticket valued at up to $400. The card also offers a competitive 2 points per dollar for gas, grocery or airline purchases, 3 points for charitable donations and 1 point for everything else. The annual fee ($45) is waived the first year, and the APR ranges from 13.99 percent to 23.99 percent, depending on your creditworthiness.
3. Watch out for weasel terms. The devil is in the details, as they say, so watch out for card offers that may look attractive, but offer terms that are less than ideal. At the face of it, for example, the Discover Escape card looks like it comes with a one of the best bonus offers — 25,000 miles. However, read the fine print, and you’ll find that you earn that bonus at the rate of 1,000 miles each month you use the card for the first 25 months. Because the card also comes with a $60 annual fee, this means that you will be paying $120 in annual fees (a $60 fee for two years) to claim that 25,000 miles bonus, effectively undermining the value of that seemingly generous bonus deal.
In short, you have your work cut out for you. But I think you’ll have fun exploring the different options and finding the rewards card that works for you. Good luck!
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