8 reasons you should throw away your cash-back credit card if you love to travel
This reader post is from Hilary Stockton, who is the founder of TravelSort, which helps savvy travelers earn millions of miles without flying, redeem them for first-class flights, and stay in luxury hotels at wholesale prices. Follow her on Twitter @TravelSort.
My husband and I used to think we were savvy, using a cash-back credit card for most of our spending. But given how much we enjoy international and luxury travel, it was actually a huge mistake. We now strategically apply for travel credit cards that offer attractive sign-up bonuses and we direct our spending to the credit cards that offer the best category bonuses for the type of purchase we're making. Here's why:
1. Travel first class or business class internationally
Thanks to four credit card applications, we were able to book two first-class round-trip award tickets on Cathay Pacific to Bali, via Hong Kong, for this past summer. These tickets retail for more than $20,000 each, which we would never pay cash for, but the experience was fantastic and was a memorable part of our vacation. And because we know how to use credit cards to our advantage, this isn't just a once-in-a-lifetime experience—we plan to travel first class or business class internationally at least once a year, with the miles and points we're earning. And thanks to using miles and points for award flights, we're able to use our trip budget for some incredible hotels, restaurants, and unique local experiences that otherwise would have been a stretch to afford, if we had to pay for airfare.
2. Fly great airlines: Lufthansa, Cathay Pacific, Singapore Airlines, Qatar and others
If we were talking about domestic first class or even first or business class internationally on most American carriers, it would be hard to get too excited. But the great thing about the United Airlines and American Airlines miles and points you earn is that they can be redeemed on Star Alliance and oneworld airline partners, respectively, such as Lufthansa, Singapore Airlines, Asiana and others in Star Alliance, and Cathay Pacific, Qatar, Etihad and others in oneworld. These are among the very best airlines in the world, with seats or suites, dining and service to match. Your credit card miles and points can get you access to award seats that let you travel for just the cost of taxes.
3. Be better rested at the start and end of your trip
Flying in a cramped coach seat on a long-haul flight isn't the most restful or relaxing way to start or end a vacation. Picture instead having your seat turned down into a flat bed more than 6 feet long, with a comfy duvet and complimentary pajamas, so that you can stretch out and sleep en route. By arriving more rested, you'll lose less of your vacation being sore and sleep deprived. Similarly, when it's time to fly home and return to work, you'll actually be able to look forward to the flight and either start to productively get caught up on work, or nap so that you arrive refreshed.
4. Enjoy free nights in 5-star hotels
I won't lie—you won't be getting free nights at the Four Seasons or Mandarin Oriental anytime soon with miles and points, at least not at a redemption value I'd recommend. But you can use hotel credit cards to get two nights at a top Park Hyatt worth $800 or more a night, a night at the Ritz-Carlton, and nights at the best Conrad and Radisson properties worldwide.
5. Enjoy elite status perks with airlines and hotels
Ever wish you were an elite frequent flier so you could enjoy the airport lounge, get priority boarding and avoid checked baggage fees? Or that at hotels you could get room upgrades, free Internet and late checkout? You can, with the right airline and hotel credit cards.
6. Get free one-way award flights
Did you know that you can build in a free or cheap one-way award flight across the country or to Hawaii using American or United miles? With a paid ticket, you would, of course, pay for that transcontinental or Hawaii flight, but if for example you've earned United miles with a credit card, you can use a United free one-way to maximize your award.
7. Avoid foreign transaction fees
Most cash back cards carry foreign transaction fees, which you don't want if you're traveling internationally, or you're buying something from a foreign seller such that the transaction gets processed in another country. Even better are the credit cards that provide points bonuses for spend on hotels, restaurants, or other travel expenses while also not charging foreign transaction fees.
8. How much are you actually earning with your cash back card?
If you're like most folks, you're probably not earning more than a few hundred to $1,000 or so a year with your cash-back credit card. With that same spend, some mileage-earning checking accounts and a few more credit card applications between your spouse or travel partner and you, you could earn 1 million miles and points without flying. And those miles and points will take you a lot farther, and in much greater comfort, than what you would have saved with a cash back card.
Do you have tips for maximizing your travel credit cards?