How to Use Credit Card Points to Pay for a Vacation

Name: How to Use Credit Card Points to Pay for a Vacation
Item: How to Use Credit Card Points to Pay for a Vacation
Author: Lee Huffman

Extend your travel budget by using airline miles, credit card points or hotel points to save money on your next vacation. Learn the strategies experts use to travel like a pro, and maybe for next to free.

Updated: March 21, 2024

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Going on vacation with family, friends or solo is a great way to create lifelong memories. However, with sky-high airfare and hotel prices, your travel dollars do not go as far as before. By learning how to use credit card rewards points or miles for travel, you can book the trip of a lifetime without breaking the bank.

Let’s dive into what type of credit card travel rewards are available, how to earn points or miles on every purchase and the best way to redeem miles and points for maximum value.

Using Credit Card Points to Pay for a Vacation - FastFact.png

Almost 60% of people are spending more on travel this year than last year, according to Hopper's 2023 Travel Trends Report.

Travel credit cards earn rewards on everyday purchases, and some provide bonus points or miles on certain categories.

Credit card benefits, such as complimentary elite status, free checked bags and airport lounge access, can save travelers money and improve the travel experience.

Redeeming miles and points may reduce the cost of travel, although redemption rules and availability vary by program.

Credit cards with travel protections for things like lost baggage and trip delay coverage help people weather the chaos travel may bring.

Nearly every one of the largest banks in the U.S. offers at least one travel rewards credit card.

Types of Credit Card Travel Points and Miles

Many credit cards award valuable miles or points for purchases, which can turn your everyday spending into free flights, hotel rooms and more.

Learning how to optimize your purchases to earn credit card rewards and maximize bonus categories can earn you an enormous amount of miles or points every month. Just as important is understanding the value of those miles or points and the smartest ways to redeem them for travel to get the absolute best value.

Let’s explore the types of travel credit cards available and how they work.

Airline miles

Airline credit cards offer bonus miles when buying tickets on a specific airline, like American, United, Delta or Southwest. They may also offer bonus miles on select everyday spending categories, such as groceries or restaurants, and airline-specific benefits, like priority boarding, first checked bag free and inflight discounts. Premium airline credit cards may include airport lounge access and accelerate earning elite status based on the cardholder’s annual spending.

Hotel points

A hotel credit card may provide bonus points on hotel stay purchases within the brand and everyday spending, automatic elite status and other benefits like free night certificates. In some cases, like with the Hilton Honors Surpass, cardholders can upgrade their elite status based on how much they spend each year. Many hotel brands have credit cards, with Marriott Bonvoy, Hilton and IHG being very popular for their point-earning potential.

Flexible travel points

Instead of earning miles or points for a specific airline or hotel brand, general travel cards, like the Chase Sapphire Preferred, earn rewards that are redeemable in multiple ways, including for travel. And if the cardholder uses the issuer’s travel portal, they may earn a greater amount of points per dollar spent and a better redemption value when using points. Plus, these programs typically have airline and hotel partners to transfer points to and possibly redeem them for a higher value.

Easy Ways to Earn and Boost Credit Card Rewards Points

Traditionally, it could take years to earn enough miles or points to redeem for a free flight or hotel room for the average traveler. Now, there are numerous options to earn travel rewards on your daily expenses without traveling anywhere. Use these strategies to earn extra rewards in between your flights and hotel stays for free travel.

Spending on credit cards

Using your travel credit card for daily expenses earns valuable miles or points on money you’re already spending, like for groceries, gas and dining. Every dollar you spend on a qualifying purchase earns at least one point or mile. You could also set up automatic payments with your card to earn rewards effortlessly on monthly bills.

Taking advantage of shopping portals

When shopping online, you can double dip on rewards by going through a shopping portal to earn miles or points. The best option is to go through the portal of whichever loyalty program you want to accumulate rewards the fastest with, such as United MileagePlus or American Airlines AAdvantage.

But, each program may award a different amount of points or miles for the same retailer. If you’re unsure of which shopping portal to use for the maximum earning at a retailer, visit Cashback Monitor to see which rewards are available from various programs.

Participating in dining programs

After registering your credit card once through an airline or hotel’s dining program, you’ll earn extra rewards every time you eat at participating restaurants. American Airlines AAdvantage, Southwest Rapid Rewards, United MileagePlus, Marriott Bonvoy and more have dining programs.

Earning welcome bonuses on new credit cards

One of the quickest ways to earn a large number of miles or points is a credit card welcome bonus. You’ll earn a welcome bonus by opening a new credit card and then meeting the minimum spending requirement within a specific timeframe. A common offer is 50,000 points after spending $3,000 within the first three months of opening your account.

Maximizing bonus categories

Travel rewards credit cards often have category bonuses that offer higher points or miles earned on certain types of purchases. The best option is to select a travel rewards credit card whose bonus categories match where you spend the most money. Common bonus categories are travel, dining, gas and groceries. Business travel cards may offer bonuses on phone bills, office supplies, shipping and other common business expenses.

MONEYGEEK EXPERT TIP

Strategies like the Amex Trifecta and Chase Trifecta maximize the points you'll earn by taking advantage of bonus categories from multiple credit cards and pooling the earned points in one account to use for travel.

What to Know When Getting a Travel Credit Card

Rewards from travel credit cards can be incredibly valuable, but you have to be aware of how these cards can impact your finances. Many travel credit cards target consumers with good to excellent credit scores, so if needed, take steps to improve your score before applying.

Also, avoid the temptation to overspend just to earn rewards, and keep your balance below 30% of your credit limit to maintain a good credit utilization ratio, which reflects positively on your credit score. You should also pay your card in full each month to avoid interest charges. If you can’t pay off the entire balance, make at least the minimum payment due on time to avoid late fees and negative marks on your credit report.

But remember, if you carry a balance and pay interest, it will be more than what the rewards earned on the card are worth, so it is best to only charge what you can pay off each month. Otherwise, the extra cost negates any rewards you have earned.

An illustrative image of individuals planning for a vacation with credit card points.

Savvy Vacation Planning With Credit Card Points

Many travelers hesitate to use airline miles and hotel points to travel because they believe they are too hard to use or think that with a travel credit card, it will take too long to earn enough miles or points to pay for a trip. While some loyalty programs make redemptions challenging, others are very straightforward, like Southwest Rapid Rewards, Chase Ultimate Rewards and Delta SkyMiles. To unlock the highest value from your miles or points, it helps to understand the rules on how to use them and any restrictions you may face.

MoneyGeek has lots of advice and guides about travel rewards credit cards that can help you find the best fit for your needs and reach your low-cost travel goals. The following general tips will help you maximize the value of your travel rewards.

Know your vacation goals

When earning and redeeming travel rewards, it helps to know what type of vacation you want to have. Some travelers prefer economy flights and budget hotels so they can travel more frequently, while others desire premium cabin flights and luxury hotels, even if it means traveling less often.

Search airline and hotel websites that match your goals for a vacation before deciding which rewards to earn or where to redeem them. Consider what amenities you want during your flight and if the airline has them, the type of hotel that is available at your chosen destination and anything else that would make you choose one airline or hotel over another.

Plan ahead

It can take time to earn enough miles or points to book your trip, so earning them before the booking window opens allows you to be ready to redeem rewards right away. Airlines typically let you book up to 11 months in advance, while hotels generally allow up to 12 months or more.

Booking award reservations at the beginning of these windows could provide the greatest availability, but you can book an award flight or hotel stay at any time — most airlines do not have blackout dates but they may not have many award tickets available for a certain day, so you need to be flexible.

You can estimate the cost of a plane ticket or hotel stay with points or miles by searching on the company’s website or on your card’s travel portal.

For example, if you plan to travel next summer, search for the flight you want during that time of year for this year to see how many miles or points it may cost to book. It will only be an estimate, as the miles or points needed can change at any time, but you will have an idea of how much you need to have available.

Checking multiple airlines or hotels is helpful as they all have different award amounts, and if you have a travel credit card that transfers points or miles to multiple airlines or hotels, you do not have to go with a specific one.

Be flexible with travel plans

Getting the best deal with your miles or points often involves being flexible. Being able to book on different dates or at different times of the year may yield cheaper prices.

For example, you may find lower prices on Tuesday departures versus Fridays. Additionally, flying out of alternative airports can save as well. For example, instead of flying out of Los Angeles (LAX), you may get a better deal out of nearby airports, like Burbank (BUR), Ontario (ONT) or Long Beach (LGB).

You may also find that a layover in a certain airport is cheaper than another. For example, Delta may charge more to transfer through Atlanta than Minneapolis or vice versa. You may have a slightly longer flight time and maybe a longer layover (or not), but you could spend fewer miles or points for the flight. And then you have them available for your next trip.

Optimize your spending through promotional offers

Credit card issuers, airlines and hotels may offer promotions throughout the year to encourage spending. Even if you don’t have immediate travel plans, register for every promotion because your plans may change.

Credit card promotions may offer increased bonuses or higher elite status based on your purchases. Airline or hotel promotions can provide bonus rewards, free nights or accelerated elite status qualifying for your travel.

Combine cash and miles or points to maximize value

If you don’t have enough miles or points to book a trip (or you’d like to save some for another redemption), there are ways you can stretch your rewards.

Many airlines and hotel loyalty programs allow you to book travel using a combination of points/miles and cash. Alternatively, you can book part of your trip with cash and the rest with miles or points. For example, you may book your departure flight with miles and the return with cash, or you could book three nights at your hotel using points and pay cash for the rest.

Know the value of your rewards

While miles and points offer great savings, sometimes they aren’t the best option when booking a trip. It helps to have a basic understanding of the value of your travel rewards to ensure you’re getting a good deal.

Airline miles are generally worth 1 to 2 cents each, while hotel points are often worth 0.5 to 1 cent, depending on the loyalty program. If you’re getting less value than that, you are better off booking with cash instead. You can keep track of the value of travel points and miles to know what the best redemption amount is at a given time.

Take advantage of partners

Airlines and hotels partner with a variety of businesses that travelers frequent. Take advantage of these relationships to earn additional rewards, elite status credits and other benefits.

Airlines also partner with other airlines, where you can redeem your miles for partner flights to destinations outside their network or on better routes that match your schedule. Flexible point programs like American Express Membership Rewards also partner with airlines and hotels to allow customers to transfer points for a potentially higher value redemption. Occasionally, they may also offer transfer bonuses for even more value.

Best Ways to Redeem and Use Points for Travel

With miles and points, there are numerous ways that you can redeem them. However, it helps to understand how to get the most value from your rewards to avoid low-value redemptions. Understanding what your miles or points are worth and comparing the amount needed for flights and hotels versus the cash price is the first step.

While you can redeem rewards for cash back, online shopping and gift cards, they're typically the worst options. Instead, redeeming for premium class flights, luxury hotels and during peak travel season often provide the best return on your rewards.

Airfare Redemption

Redeeming miles for flights is an excellent way to save money on your next trip. You may get the best value from your airline miles on international business class and first class airfare. Economy flights within the U.S. aren't always the best deal because award prices tend to be too high. However, domestic economy award flights can be a good option when cash fares are high due to holidays and other peak travel periods. Before redeeming your miles or points, compare their value against cash fares to ensure you're getting a good deal.

Luxury Hotel Stays

Many luxury hotels are beyond the budget of the average traveler. Booking your stay with hotel points opens up aspirational travel experiences that create lifelong memories. That is especially true for special occasions, like celebrating a birthday, anniversary or graduation. You can combine your hotel points with elite status from some credit cards for upgraded rooms and other benefits to enhance your stay. Some hotel loyalty programs offer 4th or 5th-night free on award reservations to stretch the value of your points.

Rental Car Expenses

Airline miles and hotel points are best used to book flights and rooms, respectively. However, you can book rental cars using flexible rewards points from general travel cards, like the Capital One Venture Rewards. Some travel credit cards also include complimentary rental car elite status at select companies.

Additionally, you can save on rental cars when your travel credit card offers rental car protection. Primary and secondary rental car protection protects the car against theft or damage. However, you won’t have liability coverage for bodily injury or property damage.

Vacation Packages

Vacation packages save money by combining flight, hotel and rental car reservations in a single booking. Not all airline and hotel loyalty programs allow members to redeem rewards for these packages. Instead, travelers are often better off assembling their own vacation packages by using miles or points from different programs to create an itinerary that works best for the way they like to travel. For example, you might use American Airlines AAdvantage miles to book your flight, World of Hyatt points for the hotel and Capital One Venture miles to cover rental car or other transportation costs.

Point Transfer Opportunities

Flexible points or miles from American Express, Bilt Rewards, Capital One, Citi and Chase offer tremendous value because of how many ways you can redeem them. One of the highest values available comes from transferring your rewards to airline and hotel partner programs. Each program offers at least 10 partner loyalty programs, so you can pick and choose based on where you'll find the highest value. Just make sure that award space is available before transferring points or miles because all transfers are final.

An illustrative image of individuals enjoying their vacation.

Common Pitfalls to Watch Out for in Credit Card Points Usage

Earning and redeeming credit card points or miles can be challenging due to different rules and industry phrases that most travelers aren't used to. By learning basic strategies and following simple rules, you can avoid the biggest pitfalls that scare off many travelers from participating in travel rewards programs. Here are a few mistakes to avoid when making decisions about earning and redeeming credit card rewards.

Hoarding points without redeeming them

Unlike your retirement accounts, travel rewards do not increase in value over time. You should have a redemption in mind for the miles or points you're earning. For example, focus on earning the airline miles and hotel points necessary to book your next vacation. Then, once that trip is planned, shift to the next trip you'd like to take.

Chasing value without considering other important factors

While getting a high value when redeeming travel rewards is a goal, consider other factors as well. Early morning or red-eye flights may offer higher value, but do you really want to wake up that early? Also, you're better off booking a flight or hotel for a city you love at a good value versus traveling to a mediocre destination just because it's a better "deal."

Rewards expiring before you can use them

Many loyalty programs do not expire or extend the life of rewards with occasional activity. However, some points and miles expire after a period of time, no matter what. You've worked hard to earn your rewards, so don't let them expire before you can redeem them. Focus your efforts on earning credit card points or miles for your next vacation instead of a far-off trip that you may never take.

Hidden fees associated with redeeming points

Although you can travel for "free" using miles and points, there are often hidden costs associated with these trips. An airline may charge taxes or fuel surcharges on your flight. Hotels may have resort fees or other costs it charges hotel guests. Even without these costs, travelers also have to consider local transportation, dining out, souvenirs, activities and other money spent on vacation.

Blackout dates or lack of redemption options

Airlines and hotels may not have award availability for the dates you want to travel. Even if there is availability, the prices may be so high that it doesn't make sense to use your travel rewards to book directly. In these situations, it makes sense to use flexible reward points or miles instead. When an award reservation isn't available, booking your trip using flexible reward points through the card’s travel portal could avoid paying anything out of pocket.

An illustrative image of individuals choosing the right travel credit card.

Key Considerations for Choosing the Right Travel Credit Card

There are countless travel credit card options available for consumers and small businesses, so picking the right one can be a challenge. Credit cards offer a variety of rewards, category bonuses, benefits and annual fees to match the needs of different customers. When comparing rewards credit cards, it makes sense to focus on your biggest needs, frequent spending categories and travel goals. Here are a few factors to consider before applying for a travel credit card.

Welcome offer

The welcome offer is an exclusive benefit available when applying for a new credit card. It is the fastest way to earn a large number of miles or points when you meet the card's minimum spending requirement. Some travel credit cards also include companion airfare, elite status credits and other perks as part of their welcome offer.

Minimum spending requirement

In order to earn the welcome bonus, you need to meet the card's minimum spending requirement. This typically involves spending a set amount within a short timeframe. A typical welcome offer requires spending $3,000 within the first three months. However, some welcome offers are earned in two stages to encourage higher spending over a longer period of time. Make sure that you can comfortably meet the requirement without overspending or incurring interest charges.

Annual fee

Many travel credit cards charge an annual fee to compensate for their higher earning power or complimentary benefits. While most people like to avoid paying an annual fee, the value of the benefits could far exceed what you pay. For example, having an airline credit card that includes the first checked bag free per passenger on the same reservation can save at least $240 on a round-trip flight for a family of four.

Look at the card’s benefits and their value against the annual fee it charges to decide whether it is worth paying, given your lifestyle and how you travel, because there are many travel rewards credit cards that do not charge an annual fee.

Travel perks

Your travel credit card may include other perks that justify its cost per year, like priority boarding, airport lounge access and annual credits. These benefits can save money, enhance your trip or protect your flight against delay, cancellation or interruption. In some cases, these benefits offer more value than the rewards earned on your purchases.

While many cards with an annual fee have various benefits, there are cards with no annual fee or a low annual fee that do as well, so don’t assume you have to pay hundreds of dollars a year to get travel perks from a credit card.

Expert Insights on Using Credit Card Points for Vacations

What's one of your favorite ways to redeem miles and points?
How can readers maximize rewards on everyday purchases through category bonuses?
What is the biggest mistake about earning or redeeming rewards that readers need to be aware of?

Julia MenezTravel Hacking Coach and Founder of Geobreeze

Jon Nickel-D'AndreaTravel Blogger, No Mas Coach

Ross JonesPoints and Miles Blogger at WeGetToTravel.com

Spencer HowardFounder of Straight to the Points

Additional Resources

There are numerous resources available that help travelers earn and redeem travel rewards. Many of these resources specialize in one aspect of miles and points, so it is important to have multiple guides available to meet your needs. Using these resources helps you earn extra rewards on everyday spending and maximize your value when redeeming miles and points.

Point.me: An online award flight search engine that shows travelers the best options for booking flights using miles and points. It also features walk-through instructions on how to transfer points and book award flights with a select airline.
Awayz: It is a live cash and award pricer for hotels and airlines to find award availability. It also helps travelers determine whether they should use miles, points or cash to make reservations.
Cashback Monitor: A free online shopping portal comparison tool that highlights the cash back, miles and points you can earn when shopping online. It also provides trends at your favorite stores to know if the current rates are higher or lower than normal.
Rewards Network: Earn miles and points when dining at participating restaurants after registering your credit cards. Select from popular loyalty programs, including American Airlines, United Airlines and Marriott Bonvoy.
Dosh cash back app: A free app that earns cash back rewards automatically when dining at participating restaurants and retailers with registered credit cards. It also gives up to 40% cash back when booking hotels through the app.
AwardWallet: A tool that tracks loyalty program activity, elite status levels and expiration dates of free night certificates. Its primary functionality is free, including a dashboard to see all of your miles and points balances at once. You can upgrade to its premium paid version to access advanced features.

About Lee Huffman

Lee Huffman is a credit card and personal finance expert at MoneyGeek. He has spent 18 years as a financial planner and corporate finance manager, with 12 years of experience writing about early retirement, credit cards, travel, insurance and other personal finance topics. His writings are published on The Points Guy, Investopedia and NerdWallet.

Huffman earned his business management degree from Pepperdine University and his master's degree in eBusiness from the University of Phoenix. He enjoys showing people how to travel more, spend less and live better through the power of travel rewards.

sources

Hopper. "2023 Travel Trends Report." Accessed June 5, 2023.
American Airlines. "Checked bag policy." Accessed June 7, 2023.

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