How to Book Your Dream Vacation With Credit Card Points

Planning a once-in-a-lifetime getaway? Here's how to save money by using credit card points.

<p>Joshua Dalsimer/Getty Images</p>

Joshua Dalsimer/Getty Images

If you’re dreaming of first-class flights halfway across the world, bungalows above crystal-clear water, fine dining at Michelin-rated restaurants, and world-class cocktails, you’re not alone. These trips can come with a hefty price tag, into the tens of thousands of dollars when booking with cash. But if you’re a points and miles enthusiast, you know there are ways to get a fantastic deal on a flight or five-star resort — thanks to your credit card perks.

I spoke with Courtney Alev, consumer financial advocate at Credit Karma, and Dave Grossman, CEO and founder of Your Best Credit Cards, to compile a guide on booking a once-in-a-lifetime vacation using credit card points.

Using credit card points to offset travel costs is nothing new. According to a recent Credit Karma survey, over half of Gen Z respondents (54 percent) rely on credit card points and rewards to pay for travel expenses. Additionally, nearly half of Gen Z respondents (49 percent) use credit card “hacks” to maximize their points and rewards. It’s clear that Gen Z — along with frequent travelers across all demographics — has a strong desire to see the world but is looking for creative ways to save money.

“Personally, I’ve flown Emirates and Etihad first class (both have an onboard shower), Singapore Airlines first class, Japan Airlines first class, Qantas first class, Air France first class, Lufthansa first class (they have a lounge in Frankfurt for first-class customers in its own terminal with private security), and Qatar’s famous QSuites (business class),” says Grossman. “Every single one of these flights has been with points and miles, paying only taxes and fees.”

Inspired? Here’s how to book your dream vacation using points.

<p>Maria Korneeva/Getty Images</p>

Maria Korneeva/Getty Images

Understanding Points Programs

There are three main categories of points and miles: hotel loyalty program points, airline frequent flier miles, and credit card points. There’s a lot of overlap between these categories, so knowing what you want from a rewards program is important.

Hotel points and airline miles work in similar ways. You earn a certain number of points per hotel stay or flight. Most hotels and airlines also have co-branded credit cards, and when you use these credit cards, you will earn points or miles toward that loyalty program.

In contrast, general travel rewards credit cards offer points or miles that can be transferred to multiple airline and hotel partners. Some of the leading issuers are Capital One, Chase, American Express, and Citi. You can redeem your points through each program’s respective travel portals or transfer them to get a better value out of your points.

Grossman is a big fan of transferring points and miles for luxury experiences that would be unaffordable otherwise. “In the air, international business class and especially first class will provide the best value for points,” explains Grossman. “I recently booked a one-way flight on ANA to Japan in first class using 85,000 Virgin Atlantic miles + $290. The cash price was $11,400 [giving a value of] 13 cents per point.” He has dozens of stories like this, showing that there are plenty of ways to get valuable redemption opportunities once you have a firm understanding of the various loyalty programs available.

Setting Your Travel Goals

To start, you need to know what your dream vacation actually is. Maybe it’s a stay at a five-star ski resort in the French Alps or a first-class seat to anywhere. “The more time you give yourself to plan, the more time you’ll have to earn and optimize your rewards points,” explains Alev. “That may even mean delaying travel plans until you have enough points to subsidize the cost of your trip.”

Once you know where you want to go and what you want to do, you need to start thinking about a points strategy that will fit your travel goals. “You should be thinking about your rewards card strategy from the start of the trip planning process,” shares Alev. “Look into the rewards that your current cards offer, which may lead you to realize that you need another card in your wallet that helps you earn more points.”

Ideally, every purchase you make will be on a credit card that allows you to earn points or miles. This rule has a few exceptions, like withdrawing cash at an ATM. Whether it’s the Delta SkyMiles Reserve Card, the IHG One Rewards Premier, the Chase Sapphire Reserve, or another popular travel credit card, each point you earn will help you reach your travel goals.

Grossman explains, “The number one thing to remember if you really want to maximize how you strategize for your dream vacation is to collect transferable bank points (think Amex, Chase, Citi, Capital One), since you will have a range of options when it comes time to book.”

<p>Thomas Barwick/Getty Images</p>

Thomas Barwick/Getty Images

Earning Points

Before applying for a travel rewards credit card, you must review your spending habits. “Make sure you understand which categories you’re spending the most money in, like groceries or restaurants,” says Alev. “Some cards will give you more points for certain categories, and you want to be able to maximize the number of points you’re earning on everyday spending.” Grossman echoes this sentiment, saying, “The first thing to do in setting your miles and points goals is to be realistic about how much you can spend on a credit card per month.”

For example, let’s say you have the American Express Gold Card and the Capital One Venture X. The Gold Card earns four points per dollar on dining purchases and purchases at U.S. grocery stores and one point per dollar on all other purchases. The Venture X earns 10 points per dollar on hotels and car rentals booked through Capital One Travel, five points per dollar on flights booked through Capital One Travel, and two points per dollar on all other purchases.

In this scenario, you would want to use your Gold Card when you’re out to eat or buying groceries, but you’d use your Venture X when booking a hotel room. This way, you’re earning the most points per dollar on your spending.

If you’re getting a new card, do some research on welcome offers. If the card you want to apply for has had a higher sign-up bonus in the past, you might want to wait to apply until you see a similar offer. Welcome offers typically have a spending requirement that needs to be met within a certain time period.

The current welcome offer on the Capital One Venture X is 75,000 miles after spending $4,000 on your card in the first three months of account opening. In comparison, the Platinum Card by American Express has a welcome offer of 150,000 membership rewards points after spending $8,000 on your card within the first six months of account opening. Another great way to earn points is to refer your friends to cards you love. Cards will often give you upwards of 25,000 miles per referral.

Booking Your Dream Vacation

You work hard to earn your credit card points, so you want to maximize their value. “When you have a trip in mind, do research to understand the cost of the basics — things like flights and hotels — and the value in points,” explains Alev. “That way, you’ll have a general understanding of how many points you need to save to feel comfortable traveling without breaking the bank.”

If you’re booking a once-in-a-lifetime trip, you don’t want to rush into anything. These kinds of trips take a lot of planning and should be thoroughly researched well before clicking purchase. When researching, use your credit cards to your advantage.

“If you are new to this, I would figure out where you want to go and do some practice searches to feel out how many points you’ll need,” says Grossman. “If your dream trip is Cancun, you’ll need a lot less points than if it’s the Maldives (and I highly recommend the Maldives!).”

If you have a co-branded credit card, you should be searching for flights or hotel stays with the branded partner. If you have a general rewards card, you should be looking for travel with transfer partners. It’s not helpful if you find a great deal on a flight but don’t have a card that earns points for that airline. On occasion, cards will offer incentives for transferring to various partners, so you can potentially get bonus points if you keep an eye on your travel portal.

“Once you have enough for that first trip, go ahead and book it,” Grossman encourages. “Miles and points depreciate over time (programs increase how many points you need for awards) so they are not something to save for retirement.”

<p>Alistair Berg/Getty Images</p>

Alistair Berg/Getty Images

Example Scenario

Let’s say you have always dreamed of staying in an over-the-water bungalow in the Maldives. This June, you can fly from Paris, France (CDG) to Male, Maldives (MLE), in business class on Emirates for 168,750 points, plus €1,409 in taxes and fees. You can transfer points from Capital One, American Express, Chase, and Citi to Emirates Skywards to book your flight.

On either end of your trip, you could enjoy baguettes and espresso in Paris. Fly from New York City to Paris round-trip in Delta One for as little as 182,700 SkyMiles when you use a Delta SkyMiles credit card. This same flight would cost around $2,900 when booked with cash.

Additionally, let’s say you are a cardholder of the Marriott Bonvoy Brilliant American Express Card, which gives you automatic Platinum Elite status. You decide to stay at the Ritz-Carlton in Male. Your suite is a one-bedroom villa with a private pool over the turquoise water. As a Bonvoy member, you get your fifth night free for every four you book. You stay from June 9 through June 14, soaking in the sun and living in luxury. This would cost you 364,000 points per stay. In cash, this same room would cost you $13,249, including taxes and fees. This gives you a fantastic valuation of more than 3.6 cents per point.

Covering your major expenses with credit card points is a fantastic way to take a dream vacation. Alev adds, “Your goal should be to offset as many costs as possible with travel points so you’re paying as little cash as you can on your trip.” In this scenario, we are using points from multiple credit cards, which helps if you’re worried about accruing hundreds of thousands of miles on one card. 

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