The fun part of managing your money responsibly is… spending it! For many, including us, traveling to new places is one of the highlights of each year. Sometimes those are a road trip distance away, (although – the idea of a road trip is often better than the actual road trip) sometimes they’re a short flight, and sometimes you’re on a plane so long your body melds into the seat. What they all have in common, and the focus of this blog, is that they come with added expenses. But good news! By being purposeful with your planning and strategic with your choices, you can travel for greatly reduced costs. We want to share how we are using credit card travel rewards to book an upcoming trip to Ireland.
Since everyone has normal, every day expenses to pay for their lifestyle, it makes sense to pay for those expenses in a way that can put some of that money back into your pocket. Credit Cards, when used responsibly (read – paid off each month, in full, 100%, no exceptions) can be just that method, and can help you reduce travel expenses considerably.
Here’s how we booked our upcoming Ireland trip using travel rewards, with a comparison to the different methods to see how much we saved.
Option 1 – Standard travel website
If you go to Google Flights, and look for a trip from Miami to Dublin in late April 2020, you’ll find that the only direct flight option is Aer Lingus, Ireland’s official airline. Using the time period of our trip, a Round Trip ticket in Economy class, with their “Smart” option that includes 1 checked bag each way, will run you $1,036.00 each. You could simply pay for 2 of those, and you’re done. $1,036.00 x 2 = $2,076.00, total Option 1. For purposes of comparison, we will use this same flight for the next 2 options.
Option 2 – Chase Ultimate Rewards portal
I have had a Chase Freedom credit card since I was 19 or 20 years old. Just a basic card, with no annual fee. Everything I buy using it earns Chase Ultimate Rewards, which is the credit card’s point system ‘currency.’ Ultimate Rewards points can be redeemed for all different types of merchandise, gift certificates or, what we’re interested in today, travel. Let’s say I had 80,000 Ultimate Rewards points saved up when I was looking to get the Ireland tickets. How could I use them?
I log into the portal (screenshot above) and enter my travel dates from Miami to Dublin, entering the same parameters as Google Flights. Chase UR portal uses cxLoyalty as a search engine, and it locates the same flight I targeted above, for a slightly higher price of $1,077.00. For the basic Freedom card, Chase UR points ratio to dollars is 100:1. This means I would need 107,700 points to pay for 100% of 1 ticket. Since I only have 80,000 points, (equal to $800) and I need 2 tickets, Chase conveniently deducts the points I have available, and asks if I want to pay the balance with a credit card. This can be any credit card, it doesn’t have to be their Freedom card. Option 2 $1,077 x 2 = $2,154. Then subtract the $800 for redeeming the UR points, $2,154 – $800 = $1,354.00 total for Option 2.
Savings over Option 1 = $722.
Now we’re cooking.
Option 3 – Transfer to Travel Partners
Previously, we never pursued credit cards that came with annual fees. That just seemed like a waste of money – but that was because we were not familiar with credit card travel rewards. Enter, Chase Sapphire Preferred! This card, with an annual fee of $95, allows you to do something the Freedom cannot – transfer Ultimate Rewards points directly to travel partners.
Different Conversion Rates
Transferring directly to travel partners is where you can really see savings. This means instead of purchasing travel within the Ultimate Rewards portal, you send them out to the airlines’ currency themselves. In the case of our Ireland trip, the Aer Lingus airline uses Avios as their rewards currency. British Airways, Iberia, Aer Lingus, and new addition Qatar Airways, are the four airlines that share this loyalty program. We checked how many Avios it would cost for the same flight Miami to Dublin, by going to Avios.com and clicking “Spend Avios.” It turned out to be 41,250 Avios for 1 round-trip, same flight as before.
The amazing perk is that Ultimate Rewards points transfer at a 1:1 ratio to Avios. This involves creating a user account online at Avios.com, or in our case, British Airways’ website. (explained more below). Once created, my 80,000 UR points, which knocked off $800 in Option 2 above, would now be good for 80,000 of the 82,500 (41,250 x 2 tickets) total Avios cost of the SAME TRIP! Could it really be, that within Chase UR portal the 80,000 points only gets you $800 worth of my $2,076 total needed travel, but upon transferring out to travel partners, it all but covers the entire $2,076? Yes!
Plus taxes though. In this case, the taxes for each Avios-redemption flight were $286.00 per ticket. So, total Option 3 $286.00 x 2 tickets, plus approx $6 for the 82,500 – 80,000 = 2,500 point delta. Total Option 3 $578.00.
Savings over Option 1 = $1,498
Savings over Option 2 = $776
Does that $95 annual fee still scare you?
Beware!
Now, the above value is amazing, but as with most things that can save you serious dough, there are a few obstacles to navigate.
- Snags – Not everything will work perfectly. In the Ireland case, we were not able to transfer the Ultimate Rewards points from Chase to Avios online. The transfer just wouldn’t go through, so we had to make some phone calls to Avios and to Chase. The Avios site is also a little clunky overall. The final resolution took place over the phone with Avios. We were able to transfer the points from Chase to a newly created British Airways login. Then, still on the phone, booked the Aer Lingus flights using the Avios in our British Airways account. This part was very easy to do, the points transferred instantly to British Airways, and instantly to book the flight. But it took some doing to get to that point.
- Limited number of awards seats – the airlines only make available a certain number of the seats for awards travel. If someone books them before you, they’re gone. Even if there are more ‘cash-buyer’ seats available, you won’t be able to use your Avios to pay for them. This means you need to be flexible on your travel dates, which is understandably easier for some trips than others.
- No going back – Once you transfer points OUT of Chase, you can’t transfer them back in. Be absolutely sure you’re going to book the flight before you transfer out. It would be a shame to move a stockpile of points to Delta, only to change your mind and need to fly United. Keeping points within Chase maintains max flexibility.
- Travel Partners are limited – limited really isn’t the right word. At present Chase can transfer out to 10 airline rewards and 3 hotel chains. This is a ton, and should be good to help you book trips to all but the extremely remote spots.
In closing
At the outset, I mentioned something super important that I will now reiterate. As someone who used to carry credit card debt, and who went to great lengths to conquer it, I can attest that using credit card travel rewards is only for those who:
- responsibly pay off their cards 100% each month, and
- for whom using a credit card does not lead to buying more than normal.
Disclaimer aside, if you’re ready to look into these advantages, I recommend to start here with the ChooseFI site. They do a great write-up on the advantages and strategies for your first travel card, and all the ones after that!
Happy travels!