Why I Turn All My Travel Points Into Cold, Hard Cash
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You’ve probably read about travel bloggers who apply for eight credit cards every other month and do all sorts of wacky things to get more and more points from frequent flyer and reward programs.
But I, like most regular people, don't care about first-class flights and champagne vintages. Instead, I’ve turned my frequent flyer points into thousands of dollars I can spend on anything I want, like my everyday expenses.
Here’s how I earn tons of frequent flyer miles — and why I don’t use them to travel.
Earn Credit Card Sign-Up Bonuses
I chose the Chase Sapphire Preferred card, which at the time was offering 50,000 bonus points. But instead of using those points for a first-class flight, I cashed them out for $500.
Why not just get a regular cash back card, you ask?
That’s easy. In my experience, Credit cards that offer points instead of cash rebates tend to have much more attractive sign-up bonuses.
I’m not sure why, but I have a feeling it’s because somebody in the bank’s marketing department discovered more people apply for cards that offer bonuses in denominations of points that sound like a lot, versus the equivalent amount of cash.
“Get a 5,000 point sign-up bonus!” sounds a lot better than “Here’s $50 for signing up for our card.”
For the Chase Sapphire Preferred card, the bonus is always at least 40,000 points if you spend $4,000 in the first three months. That may sound like a high spending threshold, but it’s really not, especially if you put all your expenses on your card.
Think about how much you spend on your everyday expenses over the course of three months: groceries, gas, movies and maybe a meal out every now and then. If that number is less than $4,000, I’m jealous!
Cash Out Your Points
Once you get the points, you have options. My favorite one, which most banks conveniently don’t advertise, is that you can actually cash out your points in the form of a statement credit or even a direct deposit into your checking account.
Using my card as an example, one point equals $0.01, so after three months, you can turn around and cash out your points for $400, plus the points you’ve earned using the card.
If someone told me that I could earn $400 in up to three months by simply applying for a credit card and putting all my everyday purchases on it, I would take that offer in a heartbeat! (In fact, I did.)
I've never seen a sign-up bonus that high for a regular cash-back credit card, and many don’t offer bonuses at all.
Spend Wisely to Earn More Points
Travel rewards cards often have fantastic points-earning structures.
With my card, I earn two points for every dollar spent on travel and dining, and five points for every dollar spent on office supply stores. Most of my spending is covered by those categories.
Now you’re thinking, “But why do you spend so much money at office supply stores?!”
Well, I’m not really buying tons of paper clips and highlighters. Here’s my trick: Most office supply stores sell gift cards for a wide variety of other stores.
Do you have a car? Instead of buying gas with your credit card, go to Staples, buy a Chevron gift card and get five points for every dollar you spend — effectively getting a 5% discount on gas once you cash out those points.
Do the same thing for all your other purchases, and those savings really add up!
Use Shopping Portals for All Your Online Purchases
But did you know most airlines, hotel chains and credit cards also have portals where you can earn extra points for online shopping? They include:
- United MileagePlus Shopping
- Delta SkyMiles Shopping
- Southwest Rapid Rewards Shopping
- Chase Ultimate Rewards (Chase login required)
And sometimes these rewards portals have better earning rates, so you get more for your money.
So that’s why I turn all my travel rewards into cash. What about you?
Nick Porfilio is the CEO and founder of Saveful, a social savings website where shoppers can find and share deals and money saving tips on virtually anything. He built Saveful while he was in graduate school and looking for unique ways to save money so he wouldn’t have to take out a crushing amount of student debt.