Will Award Travel Hurt My Credit?

You have made a great decision to get started with earning credit card points and miles for travel! I understand you’re excited, but it does require attention to planning and understanding some “boring” stuff.

Don’t worry; you will be booking your next vacation soon enough.

Understanding and being realistic about your finances is very important before diving into credit card points and miles for award travel. At a minimum, you need to know and understand your credit score, and be aware of your spending habits.

What Is Your Credit Score?

A strong credit score helps unlock better credit card offers. Typically, scores range from 300 to 850, with 700 and above considered good. To check your credit score, you can get a free report from agencies like Equifax, Experian, or TransUnion. My preferred method is to create a free account with Credit Karma.

If your credit score is below 700, I suggest you pause on moving forward with earning points and miles for travel. Dedicate your time to learning how the credit score is calculated and focus on improving your credit score.

Once your credit score is in better shape, you will not only be in better financial health but you will also be eligible for some of the most desirable travel credit cards.

Understanding Your Spending Habits

To earn the most points and miles for travel, you will apply for new credit cards and want to earn a Sign-Up Bonus (SUB).  Repeat after me: I will not change my spending habits just so I can achieve a sign-up bonus.

There are many options for free personal spending trackers online. I recommend the Empower site because that is what I use. The goal is to understand how much you spend each month and the main categories of spending, like dining, grocery, gas station, and Amazon (I learn every month that I am still spending way too much at Amazon).

Knowing how much you spend each month determines how often you can sign up for a new credit card and achieve a sign-up bonus. Additionally, understanding your spending categories will help you identify which travel credit cards are best for you.

Mitigating Risks and Avoiding Pitfalls

I would love to say I only dipped a toe in when I started with points and miles, but my style was more like a cannonball in a kiddie pool. I am here to guide you through the world of credit card points and miles and can help you avoid rookie mistakes.

Avoiding Debt From Chasing Rewards

Repeat after me: “I will not change my spending habits so that I can achieve a SUB.” Yes, you already said it once, but it is a very important lesson, so repeating it won’t hurt.

Using credit cards to earn points and miles for travel is only beneficial if you do not pay any interest on your credit cards. Getting caught up in pursuit of rewards and overspending is easy but dumb (harsh but true). The value of the points decreases if you have to pay a ridiculous APR because you spent more than you can pay off that month. That money should go towards excursions or souvenir shopping, not to the credit card company.

Setting boundaries on purchases can help prevent impulse buys solely for points. You must manage your spending and have the income to pay your balance in full every.single.month – there are absolutely zero exceptions to this rule.

As much as I want you to enjoy all the benefits of points and miles, please do not continue with this hobby if you cannot abide by this rule.

Know Your 5/24 Count

What is 5/24? Chase Bank has a rule that if you have gotten 5 credit cards within the last 24 months, they will not approve you for a card.

Why does 5/24 matter? You need to know your 5/24 count to ensure you don’t apply for a Chase card and get rejected because of it. Even if denied, an application for a new card will show as an inquiry on your credit report, and we only want an inquiry that will result in a sign-up bonus.

Many people think the opportunity of miles you are missing out on because you want to stay under 5/24 is not worth it. I LOVE my Chase points because I LOVE using them for Hyatt hotels. I try to ensure my husband or I are under 5/24 if Chase has a card I “need.”

Fees Associated With Travel Credit Cards

Have you seen the posts on social media where travel influencers joke about having a mimosa that costs $695? They are calling out the fact that they paid the fee for the Amex Platinum credit card to get access to the Centurion Lounge, and in exchange, they got a “free” mimosa before their flight.

In the beginning of my Award Travel hobby, I got sucked into wanting the fancy Amex Platinum and other “premium” credit cards.  I did not research enough to understand these cards’ limitations and uses.  Eventually, I got organized, started tracking my annual fees, and realized I was paying nearly $2800 per year for 4 Amex Platinum credit cards.  I was dumb!

I currently have only one Amex Business Platinum credit card, and I intend to have only one premium credit card at a time.

Final Thoughts About Financial Responsibility And Award Travel

I like to use points or miles as much as possible to save on travel costs and level up my travel experience. I sometimes stress about not having the points I need for a flight or hotel I want to book. Similar to my ranting about avoiding debt to chase rewards, make sure that you are prioritizing long-term financial goals above the hustle to earn more points and miles.

There will always be more aspirational properties and flights. Don’t stress (I am talking to myself and you) about not having enough points today. You are playing the long game, and the long-term goal is retirement and full-time travel (at least for me).

Thanks for reading, friends! Happy Travels!