Maximizing Your Travel Budget with Points and Miles
This series of articles about credit cards, points and miles, and budgeting for travel is brought to you by iBestTravel.
Many consumers who tried to travel this summer faced the harsh reality of skyrocketing fares and hotel rates across the globe. Even destinations traditionally considered “off-peak” experienced high travel demand and subsequent price hikes. Consequently, more travelers are discovering the advantages of integrating points and miles into their travel budgets.
Creating a travel budget with points and miles functions similarly to using cash. You need to set a goal, find ways to earn rewards, and when it’s time to travel, seek the best option that aligns with your budget. However, be mindful of blackout dates, which can occasionally limit your travel plans. Despite these limitations, significant savings can still be realized by choosing the right loyalty programs.
Start by Setting a Travel Goal
One of the most crucial steps in forming a travel budget is determining how you wish to utilize your points. Start by selecting a destination, then decide your mode of travel: Are you aiming for budget travel, first-class experiences, all-inclusive vacations, or perhaps a family trip? Defining your travel goals early on is vital for earning the appropriate points.
Discover the Cheapest Way to Get There
Once your destination is set, the next step is figuring out the most economical way to reach it. Several pathways exist to travel on points, so establish your budget based on the lowest fare. For instance, United Airlines may charge upwards of 60,000 miles for a summer round-trip economy ticket to Honolulu, but booking that same ticket with Turkish Airlines Miles & Smiles can cut the cost down to just 15,000 miles round-trip.
Account for Fluctuating Redemption Rates
When drafting a travel budget, recognizing that award availability and pricing can significantly fluctuate is important. Airlines often use dynamic pricing, leading to increased rates during high demand. For instance, hotels like Hyatt and Marriott employ peak and off-peak pricing that can drastically increase rates during busy periods.
Evaluate Your Spending Habits
It may seem strange to review your spending habits when discussing budgeting with points and miles; however, it is crucial. Your spending behavior will influence the types of credit cards you should consider to maximize point accumulation. The best travel credit cards frequently offer substantial bonuses after meeting certain spending thresholds.
Diversify Your Points Balance
Diversifying your points balance is one of the most effective ways to manage your travel budget. You can’t predict your exact point needs, so a diverse points portfolio provides flexibility in case certain loyalty programs limit award availability. Earning bank points that can transfer to several airlines and hotels is an excellent strategy for maintaining flexibility.
Don’t Forget Taxes and Fees
When developing a travel budget using points and miles, don’t overlook taxes and fees. Domestic award taxes can be minimal, but international flights can incur significant charges, often surpassing $1,000. For example, British Airways is known for imposing hefty fuel surcharges on flights to the UK. Always factor these additional costs into your travel budget.
Research Discounted Awards and Transfer Bonuses
While award pricing can be unpredictable, you can secure significant savings by being aware of discounted awards. Loyalty programs often run sales and offer discounts on award bookings. Familiarize yourself with these opportunities so you can stretch your travel budget further.
Companion Passes
Companion passes can extend your points and budget effectively. Various airlines provide passes enabling you to book a companion’s flight for only the cost of associated taxes and fees. These passes are typically earned through credit cards and can enhance the value of your travel budget.
Encourage Family Member Participation
Lastly, involving family in your points-earning pursuits can significantly amplify your travel budget. Consider adding family members as authorized users on your credit card to consolidate point accumulation, enhancing both earning potential and household financial tracking. You can also engage children through online shopping portals that offer bonus points.
Bottom Line
Formulating a travel budget with points and miles might initially seem daunting, but with thoughtful strategy and a focus on loyalty programs, travelers can extend their travel budgets substantially using airline miles, hotel points, and transferable rewards.
