The ANSWERS To Your TRAVEL REWARDS Credit Card Questions: ANNUAL Fees, Bonus Offers, Credit SCORES, Cancelling + More...


Getting your first rewards credit card is such a big deal. It's the start of unlocking cheaper travel, better travel and sometimes even truly free travel. You can't argue with that! Jumping in however is less about excitement and more of an "oh my god", I hope I am doing this right and not ruining my life feeling. Here's everything you need to know to breathe easy and maximize your credit card earning...

Does Applying For Credit Cards Hurt My Credit Score?

To maximize your points you want the strongest credit score possible. It means more approvals, more points and better bonus offers. Therefore credit safety is a huge practice in the rewards card travel game. Applying for cards can have an immediate positive and negative impact when you first sign up, but assuming you keep a balance under 30% of your credit limit and let the account age, your score actually improves as your available credit to debt ratio decreases, thanks to a higher line of credit. You can expect perhaps a 5-10 point dip in the first couple months, but generally that will go away quickly. There's a reason top travel bloggers have tons of cards and perfect credit. Start slow, start responsible and never spend what you don't have. 

Why Should I Get A Card With An Annual Fee? 

Do you travel? If so, do you travel enough to take advantage of the benefits offered in exchange for the fee? It's that simple. If you don't travel, the annual fees associated with travel rewards cards can be foolish. If you travel they can save you a fortune over the course of a year, saving you far more than the fee amount. Think about something as simple as checked bags. If an airline card has a $95 annual fee, but offers free checked bags for everyone on your reservation all year, all it takes is one round trip with a companion at $25 per bag per person each way to get your money back and actually save $5. Same applies to cards with higher fees, which offer lounge access, travel credits and other opportunities to save money... if you travel.

Will I Lose My Points If I Cancel A Rewards Credit Card?

Yes, and no. If you redeem your points before you cancel your card you will not lose them. If you do not redeem or transfer your points before you cancel, you almost certainly will. Even when you're on the phone cancelling your card, you can quickly transfer your points to a travel partner if your points are transferrable, if your points can only be redeemed directly with the credit card company, and cannot be transferred into hotel points or airline miles, you'll need to book something using those points before you cancel. Do not cancel your credit card until you've moved or used your points. If you stick to that, you can cancel anytime. 

If I Close A Rewards Card, Can I Get The Bonus Again In The Future?

In its simplest form this technique is called "churning", which means just what you'd think. For years it was very easy to earn a lucrative sign up bonus from a rewards credit card, spend the bonus, cancel and then apply again. Rinse and repeat. This technique obviously caught the attention of credit card issuers who became tired of handing out millions and billions of points to the same customer. Many banks now institute a 24 month rule, where you must wait at least two years to be eligible for the bonus, others are moving to once a lifetime for each individual card and a few select others still allow some form of churning. It's best to research your individual card's policy. As a good tip, if you want to receive a second bonus for a card you like, look into the business version of the card. Even running a household is considered a business. 

How Do I Chose The Best Rewards Card? There Are So Many...

If you have no plans of visiting Hawaii, a Hawaiian airlines card may be foolish. At the same time, many airlines and hotels have partners, with whom you can also use your points. Essentially, you want to choose a card that can cover things you plan to use in the future. Having transferrable points, which are points you can move from the bank that issued you the card directly into an airline or hotel program are great, because they let you choose who your points are with when you need them, giving you greater flexibility to find that open seat or that free night. Choose a card with fees your comfortable with, benefits you can maximize and points which are valuable towards your future travel. I love flying on OneWorld airlines and staying in Marriott hotels, so I tend to get credit cards with points I can use on OneWorld Airlines and Marriott hotels. It can be that simple...

How Do You Keep Track Of Due Dates, Balances, And All That With So Many Cards?

The best thing to do is to create a spreadsheet. Make a list of your cards, their monthly due dates and aim to pay them off in full (or leave a crumb) the day before they are due. Having a visual representation of everything, and ideally a color coded visual representation will really help to ensure that you never miss a payment and offer a nice back up of the points you're earning. If you want to take it to the next level of automation, you can set many of your cards to Autopay in full. The only issue there is that your bill will generally be paid after the statement, so if you spend a lot and get close to your credit limit, it will report as a high balance, whereas if you pay before the statement cuts, it will report as a low balance, no matter how much you actually spent...

How Do You Avoid Paying Interest On Rewards Cards?

Easy. Pay in full every month. Every time. Aside from an annual fee, which you can save money from or offset by traveling, you don't have to pay the credit card company a dime. Interest is calculated when you leave a balance after a statement cycle. If in January your statement cuts and you owe $1000 and you leave a portion of that throughout the month you'll pay interest on that. If however you pay your $1000 balance in full when the statement becomes due, or the day before, you'll never pay any interest. That's how to win. It's the way travel becomes truly "free"...