How to use rewards points
Ah, weddings. If you're a young adult, as much as you enjoy seeing your friends get married, you must think about how much attending all those ceremonies costs. One secret to getting a price break on some of those good times: the benefits of your own spending, thanks to credit card points.
When you fly an airline or stay in a chain hotel, you can sign up for free rewards programs that earn you miles and points for future travel. Since what you earn depends on how many miles you fly or nights you stay, normally you need years to earn enough to get a free trip.
Enter travel hacking: Airlines, hotels and the passenger railroad all offer rewards programs through which you can rapidly earn rewards points. You can redeem points for travel and other goods and services on some general credit cards, too, either booking through the card company's site or reimbursing yourself with points for travel charges on your statement.
Some of these programs offer huge sign-up bonuses that require you spend a certain minimum within a certain amount of time. For example, a minimum to earn a sign-up bonus might be $3,000 on your new card in the first three months. The bonus alone is often enough to get you a free flight or hotel stay.
Travel hacking — which has nothing to do with breaking into databases — means you strategically apply for rewards cards to maximize introductory bonuses.
Caution: If you carry credit card debt, paying that off must be your first priority. Rewards cards tend to come with annual fees and a higher interest rate than other cards; travel hacking is for those with no debt, a good credit score and the discipline and means to pay the card bill in full each month.
Not to mention that spending money you wouldn't ordinarily just to get a point bonus saves you nothing. The key is to use your everyday spending to earn the bonuses.
To start, map out the weddings you want to attend in the next year or two. They will likely be either weddings with expenses you'll pay in full to earn points, or that you attend at a discount after cashing in points.
■General cards. One way to try travel hacking is with a card not specific to an airline or hotel chain.
You earn points whenever you use these cards and sometimes multiple points per dollar for certain categories of spending, such as travel or restaurants. You can sometimes amplify your earning in other ways, too, such as online shopping portals that you access from the card's website.
As you get more adept at this, branch out to airline- and hotel-specific cards; you can usually use these points on partner airlines and hotels.
■Avoiding fees. These cards tend to have annual fees of $75 to $100, sometimes waiving the fee for the first year. Earn and use the points within that year, leaving you free to cancel the card without paying any yearly cost.
True, this can ding your credit score, but usually any effect is minimal and temporary. A history of on-time payment influences your score more than opening a new line of credit.
It's also a myth that multiple cards hurt your credit. As long as you pay your bills on time, your score is safe.