How to Earn Travel Rewards Without Going Broke

Whether you want to pay for an extended road trip close to home or you fantasize about booking premium airfare and luxury hotels around the world, a solid travel rewards plan can bring your dreams to life.

Before you dive in though, you need to understand how airline miles and hotel loyalty points are earned—plus all the moves you'll need to avoid if you want to end up "ahead."

Fortunately, you can earn travel rewards for free by signing up for hotel and airfare loyalty programs and booking travel or completing other qualifying activities. If you want to earn points or miles with Delta SkyMiles, Hilton Honors and World of Hyatt, for example, you would simply sign up for a free loyalty account and use your loyalty number each time you pay for travel with the brand.

You can also earn points and miles through a range of popular travel credit cards, all of which offer sign-up bonuses and ongoing rewards for each dollar you spend. However, you have to be careful when you start using credit cards to maximize your points and miles. Here's a rundown of everything you need to do to earn travel rewards with a credit card without losing money in the end.

Purse Travel Rewards Sign-Up Bonuses with Caution

One of the fastest ways to earn travel rewards is through a big, juicy credit card sign-up bonus. For example, the Chase Sapphire Preferred Credit Card offers 60,000 points worth $750 in travel after you spend $4,000 on purchases within three months of account opening.

Unfortunately, this card's high variable APR (currently 20.49 to 27.49 percent) will cost you big time if you carry a balance from one month to the next. Thus, you should only pursue this bonus if you can afford to pay your balance in full each month.

In addition, you'll need to make sure you can meet the minimum spending threshold for a bonus offer using regular spending and bills. To spend $4,000 within three months of account opening, for example, you'll need to spend a minimum of $1,334 for three consecutive months in a row after sign-up.

If you have to spend more than normal or buy items you don't need to reach this threshold, the bonus you earn won't leave you ahead.

Only Charge Purchases You Have Cash For

This advice may seem obvious, but it's a crucial component of benefiting from travel rewards. Only charge purchases you have the cash to pay for to a travel credit card and be vigilant when it comes to monitoring your balance throughout each billing period.

If you charge purchases without a budget or spending plan in place and wind up with long-term debt, the points and miles you earn with a travel credit card will be costly. The only cure to this issue is paying your balance in full each month before your credit card statement due date. No exceptions.

Account for Credit Card Annual Fees

The best travel rewards credit cards tend to have annual fees but you should only pay these fees if you're getting a good value from the card throughout the year. For example, the Chase Sapphire Reserve Credit Card requires a $550 annual fee. However, it comes with a $300 annual travel credit, a Priority Pass Select airport lounge membership valued at $469 per year, a fee credit for Global Entry, NEXUS or TSA PreCheck membership and a range of travel insurance protections.

As a result, most people who travel often can get decent value from this card.

That said, it's possible to have credit cards with fees you cannot justify. You may also find you're paying annual fees for several travel credit cards with overlapping benefits. With this in mind, you'll want to take stock of the credit card annual fees you're paying and decide if they're worth it. And if not, figure out which cards to cancel and which ones to keep.

Look for Other Rewards-Earning Opportunities

Also, make sure you're considering other rewards-earning opportunities that don't rely on having a travel credit card. For example, doing any of the following can help you earn more travel rewards over time:

• Take advantage of travel shopping portals. Most major airlines offer shopping portals that let you earn airline miles by signing into your account and clicking through to a store before you make purchases online. These portals are free to use and often have 1,000 or more online retailers to choose from. Examples include Delta SkyMiles Shopping and Southwest Airlines Rapid Rewards Shopping.

• Sign up for travel dining programs. Many airlines also offer dining programs that let you earn miles when you dine at participating restaurants. Examples include JetBlue TrueBlue Dining and United MileagePlus Dining.

• Take part in surveys. Some frequent flyer programs let you earn miles for sharing your opinion. Examples include Southwest Airlines e-Rewards and American Airlines Miles for Opinions.

Conclusion

Earning travel rewards is a great way to see the world for a price you can afford but there are pitfalls to watch out for along the way. One of those is credit card interest which can apply if you carry a balance on your favorite travel credit card. Other potential downsides are paying too many credit card annual fees and accidentally overspending to earn more rewards.

If you're planning to earn travel rewards this year, your best bet is jumping in with eyes wide open and having a plan in place. This means only charging purchases to a travel credit card you can afford, earning sign-up bonuses with caution and making sure any fees you pay for a travel credit card are worth it in the end.

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