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How to shrink your vacation costs

Created date

March 28th, 2014
Little boy holding toy airplane
Little boy holding toy airplane

Travel expenses can eat up a good portion of expendable income in retirement. You may be able to shrink your vacation costs—or even take a trip for free—by taking advantage of travel rewards programs through credit cards, airlines, and hotels.

One of the fastest ways to rack up big travel rewards balances is to open credit cards with sign-up bonuses. Virginia CPA Brad Barrett has a knack for earning free travel, and he helps others do the same through his blog RichmondSavers.com. Barrett says one of the best cards for earning travel rewards is Chase Sapphire Preferred. When you open that account, you get 40,000 reward points, plus another 5,000 for adding a second user. So a couple could potentially earn a whopping 90,000 points from Chase, which can be redeemed at Hyatt hotels, United and Southwest Airlines, and British Airways.

In and out of the country

For travel in the U.S., Barrett says British Airways miles ironically offer the best value. That’s because BA offers a better redemption system and has partnerships with U.S.-based airlines. For instance, he says a flight from Chicago to Washington, D.C., would require 25,000 American Airlines miles, but purchasing the same flight through British Airways would use just 9,000 miles. Conversely, Barrett says United Airlines typically has the best deals for reward travel from the U.S. to Europe.

“You never want to use British Airways [miles] to fly to Europe because they charge these crazy fuel charges that are about $700 per ticket,” Barrett says.

Barrett also recommends the Club Carlson credit card, which he says savvy travelers can use to get up to 44 free hotel nights. When two travel partners each open a Club Carlson card, they receive a total of 200,000 points redeemable at Radisson hotels worldwide. Radisson guests who pay with Club Carlson cards get the last night of multi-night stays free. By using two cards and stringing together several two-night stays, you essentially get a hotel room for half the points. 

Christopher Barnard is the president of Points.com, a website travelers can use to manage rewards accounts and redeem points. Barnard says another way to accumulate bonus points is to make purchases items like electronics via your loyalty programs’ online shopping malls. If you’re a few thousand points shy of a free trip, you can purchase reward points on Points.com. Barnard says you also can use the site to exchange points with other travelers.

Of course, sometimes it makes more sense to pay cash for travel. Always check discount travel sites before booking trips. Ryan Lile, spokesman for Frequent Flyer Academy (frequentflyeracademy.com), says that as a rule of thumb, try to spend airline miles at five cents each.

“A domestic ticket in economy that costs $250 or 25,000 miles would yield only one cent per mile—a poor value,” Lile says. “But if that same ticket is $1,250, you’re receiving five cents in value per mile spent, a much better rate of redemption.”

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