Beginner’s Guide to Miles and Points: How to Travel for Nearly Free
One of the questions I’m asked most often on Instagram is, “How do miles and points work?”
The simple answer: You can earn a large number of points from credit card welcome offers and redeem those points for flights and hotel stays. You’ll usually still pay taxes and fees, but points can dramatically reduce the cost of travel.
I’ve used miles and points to book everything from family vacations to business class flights that would have cost thousands of dollars.
This beginner’s guide will walk you through what you need to know before applying for your first travel credit card.
How to Earn Miles and Points With Credit Card Welcome Bonuses
To earn a credit card welcome bonus, you’ll need to spend a certain amount on purchases within a set time frame. This is called the minimum spending requirement.
Minimum spending requirements vary by card and welcome offer. Some Southwest personal cards require just $1,000 in purchases in the first three months, while premium travel cards may require $8,000 or more. Check both the spending amount and the deadline before applying.
For example: The welcome offer on the Chase Sapphire Preferred® Card is 75,000 points after spending $5,000 in the first three months.
That works out to about $1,667 per month. Before applying, add up the expenses you already pay that you could put on a credit card, such as groceries, gas, dining, medical bills, car insurance and kids’ sports. For bills like tuition or utilities, check whether there’s an extra fee to pay by credit card.
If those planned purchases add up to $5,000 over three months and you can comfortably pay your balance in full each month, you have a way to meet the minimum spending requirement.
We’re simply using the new credit card for purchases we would normally pay for with our debit card or checking account. We’re not spending more to earn the bonus.
Once you meet the spending requirement, you’ll earn the 75,000 bonus points, plus the points earned on your purchases.
Those Chase points can be transferred to several airline and hotel loyalty programs, including United, Southwest, Air Canada, Air France/KLM, Virgin Atlantic and Hyatt.
Depending on where and when you travel, award availability and which program you use, 75,000 points could cover:
2–3 domestic flights
2 roundtrip flights to Europe in economy
A one-way business class flight to Europe or Asia
2–6 free hotel nights
The key is to choose a spending requirement that fits your existing budget and pay your balance in full every month. Miles and points are never worth going into debt or paying credit card interest.
Before you apply for your first credit card
Before you apply for your first credit card there are a few rules and guidelines that you need to know. Keep in mind that traveling with points means you will be applying for more than one credit card over a certain period of time. So this prep work before you begin is essential to staying organized.
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It’s important to know what your credit score is before you begin.
You can check your credit score for free at Credit Karma and Credit Sesame. If you currently have a credit card, log in to your account. Many cards offer free credit score checks just by holding the card.
Most travel rewards credit cards are designed for applicants with good to excellent credit, but approval is never guaranteed. Banks may consider several factors, including your credit score, income, payment history, existing debt and the number of credit cards you’ve recently opened.
Applying for a card may temporarily lower your score by a few points because of the hard inquiry. Paying every bill on time and keeping your balances low are two of the most important habits for maintaining healthy credit.
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Airline and hotel loyalty accounts are free, but you don’t need to open every account at once. Start with the programs you’re most likely to use and create additional accounts when you’re ready to transfer points or book a trip.
Each traveler, including children, will need their own airline loyalty account. Make sure the name on your loyalty account matches the name on your credit card rewards account before attempting to transfer points.
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When you first start earning points, you’re going to apply for a new credit card every three to four months depending on your trip goal and budget. There are many ways to keep track of the new credit cards you’re getting.
It’s very important to know the date you applied for a card, date you received the bonus, annual fees, number of points you have and when those points expire. Some people keep a spread sheet, and some people keep the information in a notebook.
You also need to keep track of all the airline and hotel reward account numbers and passwords. Trust me on this one. If you start keeping track of this early, you’ll save yourself a lot of headaches later.
I have an entire post on the tools I use to keep track of my cards and points in this post.
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This is so important when you’re first starting out and building your “stash” of points. If the goal is Europe or Asia, then the Southwest card won’t be one of the first cards you get.
This post contains credit card referral links. I may earn referral points if you apply through one of my links. As always, only apply for a credit card if you can meet the minimum spending requirement within your normal budget and pay the balance in full.