Take a Vacation on Your Credit Card Rewards

A few years ago, Rene DeLambert and his wife, Lisa, celebrated their 25th wedding anniversary by spending two weeks on Grand Cayman Island. A big bulk of this trip was on their airline and credit card issuers' dime.

"I did the suite overlooking the water, the car, the air, the scuba diving virtually all on points," DeLambert recalls. "It was a $6,000 vacation," but when all was said and tallied, the couple had only paid about $2,000 out of pocket, mostly on food. (Their credit cards' annual fees are also included in what they paid.)

DeLambert, who runs the blog Delta Points, is an extreme mileager -- someone who has made a full-time hobby out of gaming the travel rewards system. Some of his tactics aren't likely to appeal to the average consumer. For instance, DeLambert takes "mileage runs," trips taken solely for the purpose of scoring more miles and, more importantly, maintaining his elite status. That's how you increase your chances of being upgraded to business class, he says.

Still, there are some strategies less-frequent fliers can utilize if they want to take a trip primarily on points or miles.

Devising a Game Plan

First and foremost, "you need to plan in advance," says Scott Mackenzie, founder of Hack My Trip, because traveling for free requires a certain amount of strategizing. Here's why:

Frequent fliers generally use travel loyalty and credit card rewards programs in tandem to minimize the cost of travel. Travel loyalty programs generally award customers points or miles every time they fly a particular airline or stay at a sponsoring hotel. Credit card rewards programs, of course, generate points on purchases.

Savvy travelers can score a free vacation by using, for example, airline loyalty miles to fund a flight and credit card rewards points to pay for hotel rooms. But that's not the only redemption option out there.

To bolster offerings, credit card issuers, hotels and airlines often partner with one another. This creates opportunities to pool points or miles. For example, airlines generally offer high redemption rates of around "1 to 3 cents per mile" when you book an award ticket through their loyalty program, says Ed Perkins, contributing editor for Smarter Travel. But their inventory is limited and it takes time to accumulate miles -- especially when you don't travel often -- so it may be a good idea to transfer your credit card rewards to a partnering airline rewards program to snag a deal on a plane ticket.

It takes time, however, to figure out your preferred program's often-complex terms and conditions and to calculate what redemption options are most worthwhile. (Points can be worth more or less depending on where you are looking to apply them.)

The travel loyalty game "is as simple or as complicated as you want to make it," says Tim Winship, editor and publisher of FrequentFlier.com. "If you are willing to invest a significant amount of time and energy in keeping up with what the programs are doing and how they interrelate ... you can certainly squeeze more value out (of them)."

Mackenzie estimates the average consumer needs "ideally a year" to target an airline or hotel chain, sign up for the right affinity programs, identify applicable partnerships and scour for deals that maximize earnings potential. This time frame also allows you to work on the other big component of scoring free travel: building up ample reward reserves.

Racking up the points

Using a robust rewards credit card to pay for everyday purchases -- with the caveat, of course, that you're paying off monthly balances in full, lest you lose the points to interest -- is the obvious way to accumulate points over time. "Run as many household bills through your preferred credit card," Perkins says. You'll still be paying off your credit card bill every month with the funds you had planned to use to just pay the bill, but this way you're getting something out of it.

There are also ways to rack up rewards more quickly.

"The most lucrative by far is credit card sign-on bonuses," says Greg Davis-Kean, author of the Frequent Miler blog. These promotions allow prospective cardholders to earn tons of miles or points once they meet certain spending thresholds. For example, one credit card company is offering 40,000 bonus points -- the equivalent of $400 in gift cards or $500 in travel rewards -- if a new cardholder spends $3,000 in the first three months of opening the account.

The caveat here is to pick your introductory incentives -- and their associated credit cards -- wisely. Remember, you'll have to spend to qualify for the bonus and you don't want to wind up with credit card bills you can't afford. Plus, opening too many credit cards in a very short time frame could ding your credit score.

Shopping for Extra Points

You can also earn extra points or miles by patronizing your issuer's online shopping portal. Oftentimes, these portals offer well over standard earning percentages on purchases you could be planning to make anyway. One credit card company, for example, has been known to feature 10 percent cash back at Macy's. "Depending on your shopping habits, the points can add up fast," Davis-Kean says.

And if you're looking to bulk up on airline loyalty points, check to see if your preferred carrier has a dining program. "If you drink at one of their approved restaurants or bars, you automatically get points," says Jason Kessler, founder of FlyandDine.com.

Other Tips and Tricks

Travel rewards credit cards "come pretty well-loaded with benefits," Winship says, so anyone who flies enough, even for business, to warrant their often high annual fees may want to add one to their payments arsenal.

Benefits include free airport lounge access, waived baggage and/or foreign transaction fees and even additional redemption options, such as redeeming miles for a travel statement credit.

The best card for you, however, depends primarily on which airline or hotel you're most likely to frequent. It's not a good idea, for instance, to apply for an airline card if the carrier doesn't have a hub in your area.

Winship also suggests customers call up airlines if they're hitting a wall when trying to book award tickets online. While many carriers charge for phone service, the fee will be imposed only if the customer books a flight, and the trade-off may be worth it.

Customer service representatives "can do things that you can't do," Winship says, which in turn enables customers to "increase significantly their odds of getting where they're going using" miles or points.