Outlining the best strategies to maximize travel rewards for business travel expenses
In this series of posts, I will be outlining the Strategies to maximize travel rewards for business travel expenses (points and miles) through paying for your reimbursed travel expenses with rewards credit cards. The strategies will give your countless free vacations or put money in your pocket, or both. Regardless if you are about to take your first business trip, you travel a handful of times per year, or are a seasoned road warrior, there will be tips that you can use to maximize the best parts of being a business traveler.
STOP! Before you go any further, please note that the use of credit cards can be extremely beneficial but if used improperly, they can lead to financial ruin. If you someone who has any credit card debt or does not pay off your balances in full every month, these strategies are not for you. Any interest or fees incurred with outstanding credit card debt will negate any and all benefits that you might receive from using rewards credit cards. If you are someone who has credit card debt, I encourage you to pay that off before moving forward with any type of travel reward strategy.
For those of you who do not carry credit card debt, pay off your credit cards in full every month and are organized, please proceed.
In this article, you are going to learn the background information that you need to know to understand what things mean and how you can benefit from them. We won’t look at specific cards yet, but that will come very soon.
The first questions that you might have are probably ‘why do I need this?’ or ‘how is this different from the thousands of other credit card recommendation sites out there?’ You need this if you want to make the most of spending money that you are reimbursed for, in other words, how you can maximize your benefit of spending someone else’s money. This is one of the key ways of how it is different from all of the other sites with similar information. As a business traveler, you likely have considerably more spending on travel-related items each month and year than a ‘normal’ person does but it is not your money that you are spending. Other sites focus on what credit cards those ‘normal’ people can use to get a free flight or hotel here and there. These strategies will tap that spending and give you an unthinkable amount of points.
Before we get into what cards you should apply for and when to use different cards, there are some key things that you should know first.
If all you know about your credit score is from the annoying jingles you hear and see on TV and the radio, that is a start. Basically your credit score tells lenders how good and capable you are of paying back money. The higher the score the better. If you pay your debt-related bills (credit cards, mortgages, car loan, student-loans, etc.) in full every month and have done so for some time, you likely have a decent credit score already but you can always get a free report annually from one of the three credit bureaus (Experian, Transunion, Equifax)
Will these strategies hurt my credit score?
Short answer, No. While it is true that the more inquiries into your credit when you apply for credit cards and loans does affect your score by lowering it, it is usually negligible. Same goes for the age of the most recent account being new. On the other side, having more credit available to you, like when you are accepted for a new card application, it can increase your score. If you follow this strategy and are opening several cards in a relatively short period of time, you might see your score dip slightly but if you are paying everything off on time and in full, it should go back up again.
Points – Miles – Rewards
Unless I specifically call out a specific brand’s rewards program, I use the terms points, miles, and rewards interchangeably, meaning a ‘currency’ that you can use through a specific company that allows you to ‘pay’ for things for free, whether that be flights, hotels, or even gift cards.
Many of you are likely familiar with miles, in that when you spend money with an airline (ex: Delta) you get miles (SkyMiles) for that specific airline and when you get enough of them, you can redeem them for a free flight on that airline (ex: Delta). While these are nice to build up and use for free travel, Transferable Points give you much more flexibility. Transferable points are a type of reward with certain credit cards that you can transfer to a number of airlines or hotels and use them as you would miles earned through a specific program, or spend them directly on travel and other things. These are where we want to maximize our spending.
Point Bonuses – Sign-up Bonuses vs. Spending Bonuses
There are two primary ways that you can earn points by using rewards credit cards. An initial, and usually large, bonus that you get when you sign up, after you complete a certain spending requirement (AKA minimum spend) within a certain period of time (ex: 50,000 bonus points when you spend $3,000 within 3 months of having the card) or a points-per-dollar spent bonus for each dollar you spend with that card (ex: 3 points per every dollar spent on travel, 2 points per every dollar spent on dining, 1 point for all other spending). While you will want to utilize both types of point bonuses, there are times when you want to focus on one over the other which we will get into in this series.
Personal vs. Business Cards
You probably already have a personal credit card in your wallet that you use for a variety of spending but you might not have a business credit card and you might not think that you can get a business credit card because you don’t have a business. Not to be confused with Company cards, business cards are your credit card but to be used for “business purposes” (notice the air quotes here). You don’t need to start a business or even have a business to apply for a business credit card as long as you are “planning” to start one and can convince the credit card company. We will get more into this inside of our overall strategy, but know that business cards often have more lucrative bonuses but potentially higher minimum spending requirements to get them.
This can have a number of different names but with some cards, you are given flexible points that you can use to essentially wipe out an expense. For example, if you have 5,000 points on a card with flexible rewards and then you spend $50 on dinner on that card, you can go in later and say you want to use your 5,000 points to pay for that $50 expense and you will get a $50 credit on your account. While these are not traditional miles, they can help pay for things and cancel expenses that traditional miles cannot.
Not all points are created the same. Just because two hotel chain branded credit cards have 50,000 point sign-up bonuses doesn’t mean that those 50,000 points get you the same thing. Maybe at one brand, 50,000 points is enough for two nights at a resort in Costa Rica while at the other brand 50,000 points is only enough for one night at a low-tier hotel in the suburbs of a major city. That is an exaggeration but is definitely something to keep in mind when accumulating points and customizing your own strategy. We will definitely dive into this further.
If you are only familiar with the credit card ads that you get in the mail or that you saw in college, I want to cut through some of that noise so you don’t worry about things that are not important. While these things can be important for other people, they are not important to the business traveler’s reward strategy.
- Interest rate. You might see 0% APR for the first 18 months to try to convince you that this card is good. Interest rate doesn’t matter to us in this strategy because when you pay your card off in full every month, you never pay any interest.
- Balance transfer rate. Again, much like with interest rate, low % or 0% balance transfer rates don’t apply when you pay off your card and don’t have any balance to transfer.
- Store credit cards. While these might seem enticing being told that you get $50 off or something at checkout if you sign up for this store card (ex: Amazon, Target, etc.) but that bonus is miniscule compared to the $500+ that we will be getting with certain travel cards.
- Physical gifts. If a credit card offers you a physical gift, such as a free T-shirt, run. That is not the card for this strategy.
This should give you a good framework as we start to explore the strategies that you can use to maximize your rewards for your business travel expenses. In part 2, we will look at the Strategies to maximize travel rewards for business travel expenses by opening cards and discuss which card is the best to start with.