Hi, I’m Zac. Welcome to Travel Freely! If you learn from these 10 mistakes, you’ll be in better off than 95% of people in the world of rewards travel. You might be surprised that so many have to do with credit cards, but when banks are handing out $500 – $1,000 worth of free travel in sign-up bonuses alone, it’s a huge mistake to ignore them. Let’s jump in!
#10 Buying Miles (99% of the time)
If you are a member of several frequent flyer programs, you’ll probably receive emails throughout the year to buy miles. Most of the time, the airlines will even offer a 25-50% bonus on miles you buy. Even with a bonus, I have rarely seen a good deal on buying miles straight from the airlines. The math doesn’t work out, and most of the time you probably pay more for the miles than your “free flight” is worth!
The only case where this would make sense is if you found a great award flight, and you need a few thousand miles to top off your miles to reach your award flight amount.
#9 Impulsive Credit Card Sign-ups
A couple years ago, my wife came home with a smile and said, “Hey, I signed up for a Nordstrom card and got 20% off at the register! She was thinking that it was always good to get a card to save money. Her total purchase was about $100. We saved $20. At the time, she was under 5/24 (Chase’s rule), and we needed to be strategic about our next cards.
Instead of getting a great travel rewards card with a $500+ bonus and ongoing benefits, we used a card signup to get $20. I see this happen all the time with store cards or online pop up ads that attract people to sign up for extra $20-30. If you already have great credit, you need to be getting at least $400 from a signup bonus when opening a new account.
#8 Redeem Miles for Stuff in a Catalog
So you’ve racked up some big sign-up bonuses and earned lots of points. Now, the airlines is eager to offer you a catalog full of overpriced items to get those points back. When you redeem points and miles for travel, your points are normally worth 1.5-2.5 cents a piece. But when you buy stuff in a catalog, you’ll get 0.4 – 0.7 cents!
If you really want some free stuff, consider turning some of your points into cash or gift cards to a store where you can purchase that item. For example, I saw a Nespresso machine in a miles catalog for 30,000 points. Instead of buying it with miles, I used 12,500 points to get a $125 Gift Card to Williams Sonoma. I bought the same exact machine on sale for $120!
#7 Overspending
Some people tend to use a credit card differently than a debit card. As soon as you start overspending because you have a credit card, you are quickly losing the advantage of earning a big bonus and earning extra points on spending. If you’ve been in debt before or have a hard time controlling your spending, this hobby may not be for you. Be cautious. I strongly suggest using a budget app to see if your spending stays the same.
#6 Trusting Offers in the Mail
If you have good credit, you will get letters and emails from all the banks. They will entice you with some great “Limited Time Bonus Offers.” Another common place people are targeted with bonus offers is at the checkout page when paying for flights. You may see an offer like, open “this card,” and you’ll receive $200 off this flight booking. What you don’t realize is that some of these offers are less than what you can find online. Don’t let the marketing language fool you. Always check online or email us. Bonuses can vary as much as 50,000 points! Most people miss out on tens of thousands of miles simply because they don’t do a quick Google search, or check their Travel Freely CardGenie recommendations. =)
#5 Ignoring the 5/24 Rule
Chase has a commonly known, unpublished policy where you will not be approved for their cards if you have opened 5 or more cards from any bank in the last 24 months. Hence, the 5/24 rule. However, most business cards (including Chase business cards) do not count against this rule. To be organized with your free travel, you have to be aware and track this rule.
Put simply, the 5/24 rule means you need to be strategic in with the order in which you apply for credit cards. For example, you need to go after the best Chase cards first in order to avoid any 5/24 rule issues. Read this article for more on the 5/24 rule, and sign up for a free Travel Freely account to track your 5/24 number and get recommendations based on your card profile, including the 5/24 rule.
#4 Closing Old Accounts
Before I got into free travel, I didn’t know much about credit scores. I thought it would help me to get rid of old cards I didn’t use. So, I closed the oldest credit card account that I got when I was 18 years old. #yikes. It killed my credit score. I lost several years of positive on-time payments and responsible credit use.
Instead of helping my finances, closing my oldest card hurt me badly. Make sure you always keep your oldest cards open. That’s why we recommend your first credit card be an “anchor card” that you keep around forever. Get a good “no annual fee” card, or a card that can eventually be “downgraded” to a no annual fee card.
#3 Ignoring Your Spouse
If you’re married, ignoring your spouse is never a good idea. It’s especially bad when talking free travel! Did you know that spouses have separate credit profiles and separate credit scores? This great news means that married couples can double up on all the best cards. Each person can apply with their social security number.
It’s a common mistake the married couples think they both have a credit card. Unless you filled out two separate applications, one is the primary account holder and the other is the authorized user. You are allowed to each have a card as a primary account holder.
For example, instead of one Chase Sapphire Preferred, you could each get one and double your sign-up bonuses. Few people know this. Couples are missing out on hundreds of thousands of points! Not married? Spread the word to your friends and travel companions so you can double up on free flights and hotel stays. =)
#2 Forgetting You Have a Business
Did you know that you can get a business card if you can claim to earn $1 through your own business? You MUST look into business credit cards if you sell household items like your kids’ pre-worn clothes and toys on sites like Craigslist and Facebook Marketplace, sell goods on sites like Etsy, have a small consulting business, own a rental property, or operate several LLCs.
On average, business credit cards have higher sign-up bonuses than most personal cards. They often stay off your personal credit report, too. For those who know about the 5/24 rule, most business cards don’t count towards this either. There’s an extra 100,000-200,000 points every year with minimal effort. Here are two articles related to business cards: Am I Eligible for A Business Credit Card | Amazing Chase Business Card Offers.
#1 Using the Same Rewards Card for Years
I hear this all the time with the average Joe. “Oh yeah I love rewards. I’ve had my Southwest card for 10 years. We get points for all of our spending and get free flights.” This is true, but Joe is missing out on 100,000 points EVERY YEAR. Loyalty is NOT “rewarding” for those who use the same card for 10 years. Joe is only getting 1 point per dollar on this card for everyday purchases, and he hasn’t benefitted from any sign-up bonuses in 10 years.
A family who only got 2 cards per year could easily earn 100,000+ points PER year by maximizing new card offers. For example, you can get a new Southwest card bonus every couple of years, but you can also get more Southwest points by getting a transferable card like the Chase Sapphire Preferred or Chase Ink Business Preferred and earning 2x points on dining and travel. For more on this, read: Are You Sure You Have the Best Rewards Card?
Bonus Tip
The biggest obstacle to maximizing rewards is getting organized. The average person does NOT have a system to help them earn free travel. They lose out on thousands of $$$$ every year. They end up with one or two cards and can’t keep track of the annual fees.
Travel Freely can make this so easy for you. You’ll get the best card offers and an automated system to help you manage it all every step of the way. If you are financially responsible and can pay your bills on time, it’s a no-brainer.
