The short answer: yes, pretty much.
The long answer: you can travel for free sometimes, and for pennies on the dollar regularly. But you have to have a strategy and be careful. I have been getting a lot of questions lately about my travels and my high savings rate. How can the two co-exist?
When I came back to work from a family vacation to Texas, a co-worker asked me:
“You flew there? You don’t have family in Texas?How can you pay for flights and hotels frequently and save a lot of money at the same time? All I can do is road trips to Boston, flying is too expensive. I also stay with family so we don’t pay for any hotels.”
There is nothing wrong with road trips or with staying with family. I’m a big fan of both. However, the world is a big place, and it’s unlikely you can drive and stay with family everywhere.
Fortunately, there is another option: travel for free (or close to free) using credit card points and miles. Before I show you how I use travel rewards to travel for pennies on the dollar, there are a few important disclaimers:
- Travel rewards via credit cards are not for you if:
- You are currently in credit card debt or other consumer debt. You must be able to pay your credit card balances on time and in full every month.
- You feel you would spend more money than usual by using credit cards.
- I’m not an extreme optimizer of travel rewards. I open one card every three months or so, and put my regular expenses on it. There are people who open cards at a much faster pace and find creative ways to hit multiple sign-up bonuses at the same time. This is not what I do.
- This posts contains affiliate links, and this blog may earn a commission if you sign-up for credit cards using such links. There is no cost to you by using the links. Also, not all links are affiliate links. I have done my best to choose the best resources whether they are affiliates or not.
A Real Life Example
I like learning through real life examples. They are more relatable and theory alone can be pretty boring. With that in mind, I will walk you through a trip my family and I took this year. I hope this answers whether traveling for free using credit cards is really possible. I will also highlight some of the principles and tactics of travel rewards.
Trip to Las Vegas and Surrounding National Paks
10 nights of lodging, round trip flights for 2 adults and 1 infant (RDU-DAL), and a rental car for 11 days.
The Flights – we paid for these flights with 23,000 Southwest Rapid Rewards points*. The only out of pocket expense for these flights were taxes and fees of $22 that were not covered by the points. We earned the points as follows:
- 60,000 through the Southwest Rapid Rewards Plus Credit Card
- 60,000 through the Southwest Rapid Rewards Premier Credit Card
To earn the points we had to spend $2,000 on each card within the first 90 days of having them. While the specific spending requirements and bonus amounts change all the time, the standard sign-up bonus for travel credit cards looks something like this:
Earn 50,000 points/miles after spending $3,000 to $5,000 within 3 months of opening the account.
Annual fees are usually $60-$90, and are commonly waived for the first year.
Each of these bonuses can be turned into about $500 to $800 of free travel. Opening 4 cards or so per year can result in $2,000 to $3,200 of free travel per year. This is roughly in line with what I have seen in my own experience. You can certainly be more or less aggressive than this to accommodate your travel needs and wants.
This brings us to take away #1: it’s all about the sign-up bonuses. If each sign-up bonus is worth $600 and the required spend is $3,000. That effectively translates into a 20% discount on everything you buy. Many credit cards also offer ongoing cashback or rewards. These typically range from 1% to 2%, some up to 5% but only on seasonal categories (i.e. Chase Freedom). While ongoing cash back rewards are better than nothing, you can usually derive way more value from sign-up bonuses. This is why I usually try to open a new card once I have earned the signup bonus on my previous one.
Lodging – we split our 10 nights like this:
- Grand Canyon Hotel – 3 nights booked with cash. We didn’t find a way to book a hotel inside the Grand Canyon national park using travel rewards. In the name of convenience and making the most of our time, we decided to pay $400 in cash for these 3 nights.
- Hyatt hotels – 4 nights. We used Chase Ultimate Rewards (CUR) points, transfer them to our Hyatt account and booked the hotels for 20,000 CUR (5,000 per night). CUR points are one of the best travel rewards points that exist. They can be transferred to airlines and hotels (like we did with Hyatt), they can be used to book travel directly through Chase’s website, or they can be redeemed for cash back. If you have opened less than 5 credit cards in the last 24 months and have a great credit score, the Chase Sapphire Preferred card is probably the best place to start.
- Other hotels – 3 nights. The remaining 3 nights were also booked with CUR points, but for these we used the Chase website. In this case, all you have to do is login to your account, look for hotels, pick one, and pay using CUR. When you redeem CUR points this way, they are worth 1.25-1.50 cents depending on which exact card you are using. So the typical 50,000 CUR signup bonus is worth $625 to $750. If you have a business (big or small) or are thinking about starting one, the Chase Ink Business Preferred is an excellent credit card (current signup bonus is 80,000 CUR worth at least $1,000 on travel)
Transportation – a rental car for 11 days. We rented a big SUV since we had a baby car seat and my parents were joining us. The total cash price of renting the SUV was $650. However, our out of pocket cost was $90.
To make this happen we used the Capital One Venture Rewards card. We had 56,000 points (50,000 from the early spend bonus and 6,000 from regular spend). After paying $650 to book the SUV, we used the 56,000 to give ourselves a $560 statement credit. $650 minus the $560 statement credit equals the net $90 out of pocket cost.
The Capital One Venture Rewards card and the Barclaycard Arrival Plus (4th on the list) are fixed value cards. The way they work is simple. You spend money on travel (hotels, Airbnb**, flights, car rentals, etc.) and then you “delete” the expense by applying your points as a statement credit. Fixed value cards are also great to get started since the rewards are really easy to use.
We had an awesome time visiting Las Vegas and 3 national parks (Zion, Bryce, Grand Canyon). Our out-of-pocket costs for the entire trip was $512 (22 for the flights + 400 for ten nights of hotels + 90 for 11 days of renting an SUV). Without using travel rewards, the cost would have been about $2,350 (500 for the flights + 1,200 for ten nights of hotels + 650 for 11 days of renting an SUV).
Right there we saved over $1,800 and remember, we chose to pay extra for the convenience of staying inside the Grand Canyon National Park. We could have stayed in a hotel near by, book it with points, and save even more. One thing I really enjoy about using travel rewards, aside from the awesome savings, is feeling free to splurge elsewhere since the overall cost of traveling is pretty low.
Conclusion and Takeaways
As you can see, traveling for free or close to free using credit card rewards is absolutely possible. As long as you stay organized and pay your balance in full every month there is no downside. I have personally enjoyed several trips over the last few years for pennies on the dollar using credit card rewards.
I hope the example above can help you answer some of your travel rewards questions and give you a place to start. If you have any questions or want to share your travel rewards experiences, let us know in the comments below!
*By earning more than 110,000 Southwest Rapid Rewards points on the same calendar year, we earned the Southwest Companion Pass. Which means when my wife purchases a Southwest ticket (with points or cash) she can bring along a companion (A.K.A. me) for free. Having the companion pass helps us keep more of our Southwest points. The companion pass has gotten a little more difficult to earn. You can no longer do it through 2 Southwest personal credit cards. One workaround for this is to use one personal card and one business card. You can Google “how to earn Southwest Companion Pass” for more info.