Let me start this by saying: I pay my credit card bills in full every month. I have only carried a balance once in all of my credit card years....
John and I are credit card whores.
For example:
In July there was an AMAZING starwood promotion where if you charged $1,000 on a new card within 90 days, you got 30,000 bonus points! 30,000!! (for those of you who aren't familiar with what that means -- that is the equivalent of a 3 night stay at some pretty nice properties).
At the same time, I got an email from starwood telling me I haven't stayed at a property lately, and if I did, I would get 8,000 bonus points... so we did at an airport hotel, used the stay, park, and fly feature, spending less money that we would have spend on parking at the airport, and got 8,000 bonus points.
After we were hooked up by starwood... we started thinking what are we going to do with all of these hotel points...
So John signed up for the American Airlines credit card because they were having a promotion if you charged $750 within 90 days you get 30,000 AA miles, which is only 5,000 short of a Caribbean award ticket. (depending where you are going... probably a $400 value).
Basically for spending money we would have spent regardless:
- $1,000 initial spending on starwood card (to get bonus of 30k)
- $1,000 add'l spending on starwood to get to 40,000 total award points (which is good for 5 nights at a pretty nice hotel, and maximizes value because the 5th night is always free on award stays)
- $750 initial spending on AA card
- $4,250 add'l spending to get to 35,000 total points - enough for one flight
We can go on a 5 night vacation to the Caribbean for the cost of one plane ticket!
The return on spending:
($370 plane ticket + $1585 hotel cost) / ($7000) = 28% return!!
*I based the hotel cost on the Sheraton in Nassau, which in January is retailing for $269 + taxes per night
*I based the airfare value on jax - nas in January $370
Amazing!!!
Based on my awesome credit card whore-ness right now John and I are getting a little more than $1 back for every $4 we spend!
We'll still have to buy one plane ticket for this vacation ($370), and pay for our food/beverages while away, and probably get dinged with the daily resort fee that resorts have started, but it will be an exceptionally cheap, but still very nice, vacation.
*Note that credit card whore-ness does ding your credit score (our score is very high, so we can take the dinging)
*Note that this only works if you pay your balance off every month.
*I was annoyed when I read Dave Ramsey's book, and he told me not to try to use a credit card because "no one really is able to redeem their points". Believe me we redeem them. Hotel points are especially easy to redeem, and plane tickets are possible too, you just need to be flexible.