Save Money While Traveling with Credit Card Rewards

Credit card rewards programs aren't going to radically change your financial situation but if you play the game right you can reap some modest rewards. Over the course of 2018 we achieved an effective return of 3% (mostly cash back) on our spending. Who wouldn’t want a 3% discount on everything they buy? In this post I'm going to lay out the strategy that works well for our situation (spending habits, credit scores, balance repayment habits, and personal preferences) and if you have a lifestyle similar to ours, hopeful it translates to your situation as well.

Credit cards offer all kinds of rewards and perks such as free flights, discount fuel, free hotel rooms, etc. Those can be great if you have a large amount of very specific types of spending (i.e. you run a trucking company or you travel for work often and can stay at the same hotel chain, use the same airline, etc.). Personally, we like to keep things simple and flexible by using cards that redeem rewards in good old fashioned cash and easy to use travel credits. 

 

our Criteria for choosing a credit card

  1. Maximize cash back: Cash is king because of its flexibility but we are also open to flexible travel rewards since we travel quite a bit.

  2. Simple strategy: If your credit card strategy becomes too complicated you'll never remember which card to use when and you'll end up losing out.

  3. Manageable number of cards: Related to #2, we don't want to carry a zillion cards in our wallets, lose track of them, and not remember which one to use when.

 

Interactive Rewards Analysis

Our current card choices

 

Chase Sapphire Reserve (2018 Effective cash back = $1,163)

Highlights

  • 3x points on travel and dining

  • $300 in statement credits as reimbursement for travel purchases charged to your card each account anniversary year

  • $100 credit every 4 years for Global Entry or TSA Pre✓ when paid for with the card

  • Airport Lounge Access through Priority Pass Select membership

  • Rental car discounts and insurance when renting from National Car Rental, Avis, and Silvercar when you book with the card

  • No foreign transaction fees

Intro/Sign Up Bonuses

  • 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. This alone is worth $500 cash back or $750 towards travel book through Chase Ultimate Rewards.

Annual Fee

  • $450 + $75/ea. additional card holder. The additional account holder gets their own Priorty Pass membership but the TSA-pre benefit and the $300 travel credit is only good for one person.

Summary

$450 is a hefty annual fee but if you take advantage of this card you should all but be guaranteed to make it back and then some. In the first year the 50,000 point bonus is alone worth $500 cash or $750 in airfare, hotels, car rentals and cruises when you redeem through Chase Ultimate Rewards. Additionally, $300 of the fee is essentially refunded if you spend at least $300 in travel each year. The first year you should be up at least $350 if you spend $300 in travel and $4,000 on total purchases within the first 3 months. After the first year, assuming you spend $300 on travel, your fee will effectively be reduced $150. If you spend $5,000 on travel and dining  combined, that makes up for the remaining $150 ($5,000 at 3x points = 15,000 points = $150 cash back or $225 in travel credits towards Chase Ultimate Rewards bookings).

How We Use It

When we got the card the sign up bonus was 100,000 points so out of the gate we had $1,500 in credit towards airfare that we used to book a flights to Africa through Chase Ultimate Rewards. Our first year was by far the biggest payout but we continue to use this card regularly for all things travel such as campgrounds, taxis, Uber, Lyft, airfare (sometimes) and restaurants for the 3x points (3% cash back or 4.5% towards Chase-booked travel). We also take advantage of $300 travel credit which we usually earn within the first month of the year whether it be on campgrounds, airfare, hotels, or taxis. It's also our go-to card when traveling out of the US because there are no foreign transaction fees. We've only used the Priority Pass lounge privileges a few times and it’s nice to have a decent place to hang out and eat free food and drink free drinks but they’re often not conveniently located in the airport making them somewhat difficult to use.. Making up 47.41% of our total spending, our year-to-date effective reward percentage is currently 2.37% which includes 50% bonus on rewards redeemed for flights to Ireland booked through Chase Ultimate Rewards.

Effective reward percentage formula is calculated as follows: (Rewards Earned - Annual Fees) / Total Purchases

Rewards Earned = $300 Travel Credit + ((Reward Points x 1.25) x 0.01)

When points are redeemed for travel they are worth 50% more but since travel costs, when booked through Chase, can be more expensive and we might opt for straight cash at times, we adjust this to 25%, hence the 1.25 multiplier instead of 1.5. We then multiply by 0.01 to bring it back into dollars.

 

Discover Cashback (2018 cash back = $193)

Highlights

  • 5% cash back on purchases within quarterly cash back bonus categories (e.g. restaurants, Amazon.com, gas stations, grocery stores, and wholesale clubs). Limited to $1,500 in purchases or $75 in rewards per quarter.

  • 1% cash back on all purchases excluding cash back bonus purchases

  • End of year cash back match (which doubles your cash back) after the first year

Intro/sign up Bonuses

  • 0% APR on purchases and balance transfers for 14 months

Annual Fee

  • None

Summary

Earn 5% cash back ($75 per quarter | $300 per year | x2 for the first year) if you remember to use this card to spend up to $1,500 each quarter on the cash back bonus categories. The effective reward percentage is great but it's limited in total value because the purchase categories limit its use to only certain purchases and a max of $75/quarter. It’s also easy to exceed the $1,500 in purchases without realizing it and only earn 1% on those purchases when those purchases could have earned 2% on a card such as the Citi Double Rewards card.

How We Use It

We try to only use this card when we can get the 5% cash back but there are times when we forget that the 5% cash back category is changed. We have also exceeded the quarterly $1,500 limit which brings the cash back down to 1% cash back. We also don't take advantage of the Amazon.com 5% cash back because we already have a card that gives us 5% back at Amazon.com and we only spent $700 on gas so we only got $35 cash back for that category. Making up 6.54% of our total spending, our year-to-date effective reward percentage is currently 3.52%. 

 

Amazon Prime Rewards (2018 cash back = $183)

Highlights

  • 5% cash back at Amazon.com and Whole Foods Market

  • 2% cash back at restaurants, gas stations, and drug stores

  • 1% cash back on all other purchases

  • No foreign transaction fees

Intro/sign up Bonuses

  • None

Annual Fee

  • None

Summary

If you're an Amazon Prime member you can apply for this card and receive 5% on all Amazon.com and Whole Foods Market purchases. If you are a Prime member and make purchases at Amazon.com this is a no brainer. An added bonus is that this card can stay at home since it will be saved in your Amazon.com account. One less card in the wallet!

How We Use It

We've been fans of Amazon.com for a long time but even more so now that we're on the road and often in places where there aren't many places to shop. We use this card for all of our Amazon.com purchases and nothing else. Making up 4.39% of our total spending, our year-to-date effective reward percentage is currently 4.98%.

 

Citi Double Cash (2018 cash back = $513)

Highlights

  • 1% cash back on purchases

  • Additional 1% cash back when purchases are paid for

Intro/sign up Bonuses

  • 0% Intro APR for 18 months on balance transfer

Annual Fee

  • None

Summary

This is a simple card that, if you pay your balances (not necessarily in full), you will earn 2% cash back on all purchases. 

How We Use It

This is our catchall card. If we won't get more than a 2% reward from another card, we use this card. If it's not travel, dining, Amazon.com, or whatever the current Discover category is, we use this card. Making up 33% of our total spending, our year-to-date effective reward percentage is currently 1.85%.

Orbitz Rewards (2018 cash back = $369)

Highlights

  • Up to 10% back in Orbucks on eligible hotels (10% back on Orbitz mobile and 8% back on Orbitz.com desktop)

  • 6% back in Orbucks on all flights (Orbitz Rewards members earn 1% back in Orbucks for all flight purchases made on Orbitz when logged into their Orbitz Rewards account, and Orbitz Rewards Visa Card holders earn 5% back in Orbucks for all flight purchases on Orbitz using their Orbitz Rewards Visa card, totaling 6% back on every flight)

  • 7% back in Orbucks at qualifying restaurants

  • 2% back in Orbucks on all other purchases

Intro/sign up Bonuses

  • $100 statement credit when you spend $1500 in the first 90 days

Annual Fee

  • None

Summary

This is one of the more complicated cards that we have. It can be tough to understand your true rewards value because some of it is tied to being an Orbitz Rewards member and some of it is tied to the credit card. Furthermore, there are eligible and ineligible hotels and different promotions at different times.

How We Use It

We use this card anytime we choose to purchase travel on Orbitz as opposed to using Chase Ultimate Rewards. Making up 8.55% of our total spending, our year-to-date effective reward percentage is currently 5.15%.

 
 

 

Summary

By using these cards we have earned a total of 2.62% in rewards so far this year. Considering that the best general use (all purchases) cash back cards we could find pay 2% in rewards, we're beating the market by more than 30%. However, there are many variables that go into choosing the right credit card(s) such as spending habits, how quickly balances are paid, credit scores, total income etc. and these might not be the best options for you. Someone that makes a million dollars a year likely doesn't care about $172 cash back from Discover over a year. Someone that makes $20k dollars a year likely does but might not have the credit history/score to qualify for some of these cards nor would they want or be able to pay $450 a year for a Chase Sapphire Reserve card. Most notably, interest rates are not taken into consideration here because we are fortunate enough to be able to pay our balances in full the majority of the time. While these cards might not be the best choices for you, hopefully you've found some information here that can help you find the ones that are!