Recently, I booked a vacation for Southern California for my boyfriend and I, and it was relatively cheap because I recently opened up a new travel credit card. This particular card offered me 50,000 miles after making ONE purchase in the first 90 days of account opening – I put our cruise on the card, and viola! A few weeks later, I had enough miles to get us two round trip tickets to California.
In case you were wondering, yes, we ARE stopping at Disneyland at the end of our trip! You know I can’t head to California without stopping at the Happiest Place on Earth!
But just because I’ve had luck with saving a ton for Disney by opening up a credit card for travel doesn’t necessarily mean YOU should. Here are some pros and cons for you to consider before you start opening up cards willy nilly and accumulating new hits on your credit score!
**this post contains affiliate links! This means I may receive financial compensation for my recommendations. Please see my disclaimer for more information!**
This pro should be fairly obvious – if you take advantage of the sign up offers many credit cards offer, you can get yourself discounted – or even FREE airfare! Most times you’ll still need to pay taxes and fees, but the savings are significant. Obviously, the further away you’re traveling (say overseas) you’ll need more miles, and most of the time the introductory offer is 50,000 miles, which may cover a good portion of the ticket even if it doesn’t cover the whole cost!
Often times you’ll receive special benefits because you’re a cardholder. For example, I get a pass to the United Lounge once a year thanks to being a card member. Many airlines also offer free or discounted checked bags, savings on in flight purchases, or even miles back depending on when you book your flight!
Miles Remain Active As Long As Your Card Is Open
On one of my travel credit cards, I have about 20,000 miles on there because I used it to pay off a lot of bills. Those miles are still accumulating and are still active for me to use because I still have activity on the card, even if I’m not using my card regularly. I literally only use this card to pay my Hulu every month. It’s a small chunk of change that I can pay off every month. It keeps my card active and keeps those miles in my bank – because many cards will take AWAY any earned miles you got from purchases if you close your account!
However, if you don’t plan on using that airline anymore, it might be more beneficial to just close your account after you pay off your card. This will help you avoid overspending on your cards – which I’ll be getting in to now!
More Credit Cards = More Changes to Mess Up Your Credit
It’s imperative that you remember that these are credit cards, just like any other Visa or Mastercard in your wallet, which means it can be very easy for you to rank up the debt FAST if you’re not careful! Be sure you’re paying off ALL your cards every month, and not spending more than you can afford. As I said, I have a multitude of travel cards, but most of them have just a few monthly charges I use to keep the account active – my entertainment purchases, Starbucks card reloads, etc – little things that I can pay off right away.
When it comes to a big purchase, I look at the terms of each of my cards and decide which one I want to put it on. Will this purchase earn me double miles on one card? Will I get special financing if I use it on another? It’s important to know the terms and conditions of your cards so you can make an informed decision.
Each Application = Credit Hit
Ever notice that when you apply for a credit card, your credit dips a little? That’s because each “hard inquiry” into your credit – which occurs when you’re opening a new card or account – is a mark against your credit score. That mark eventually goes away, but if you open a lot of accounts in a hurry, that can be a red flag for many loan companies if you go to purchase a house or car in the near future.
Avoid this by waiting a long time between opening cards. I waited almost 4 years since I last opened a credit card to apply for my most recent travel card to keep my credit looking great!
Slow To Grow
Unless you’re paying off loans or big bills, it can be hard to accumulate the amount of miles you need to get free airfare after you use those initial 50,000 miles. Remember when I said I’m using my one card for Hulu? I’m never going to get free airfare by paying ONLY for Hulu on that card every month. However, I personally want to hold on to that frequent flyer account and therefore need to keep my card open – I never know if I might need to fly on that airline, and I can still earn miles on that account by actually PAYING for my ticket and flying that way! I travel a lot, but opening cards is not going to pay for my flight every time!
If this isn’t something you think you’ll be doing, it might be in your best interest to close the cards after you pay them off. Be careful, though! If you close your account this can affect your credit. This is usually due to the fact that credit companies analyze the percentage of available credit you are using. If you close an account, that lowers the amount of credit you have, which increases the percentage you are using even without spending more. This can drag your credit rating down!
So, Should You Open a Card or Wait?
There are lots of things to think about before you click the “apply” button on that credit card website, and be sure you’re ultimately making the best decision for your finances. Miles are nice – but having a good credit score is nicer!
If your credit score isn’t high enough to apply for a credit card, don’t worry! Rakuten, formerly eBates, partners with many different travel sites including Expedia. With travel, you will get your Rakuten cash back after your travel date has passed. So even though you may not be able to cover your travel with miles, you will still end up saving money! Learn more about Rakuten and other travel tips in my post about how to save extra cash for your trips!
Do you have any tips or pros/cons you didn’t see on the list? Comment below! And don’t forget to sign up for my newsletter! You’ll receive updates when I post new Disney content!