Whether you are just starting out earning points or discussing it with friends, you'll notice that most people have similar misconceptions about what it entails. This post aims to address these myths and help encourage people to start earning points.
Myth #1 - It's extremely time consuming
Truth: You get out what you put in. If your goal is to have no more than a couple of credit cards and save money on a trip or two per year, that can be achieved with little to no extra time required. Some of us choose to spend extra time just to save 5,000 points when booking an award flight, but you don't have to do this. Your points won't go as far but you'll still save money.
I spend countless hours hunting for deals to acquire points for either free or close to it. Not everyone has to do this; you can simply earn a sign-up bonus and just accrue points from everyday spending. It adds up faster than you think and before you know it you'll have plenty of points to use on your next trip.
Myth #2 - Credit cards hurt your credit score
Truth: Only when used recklessly. A lot of avid points earners have more than a dozen credit cards and don't experience any negative impact to their credit score; some even report an improvement due to consistently paying off the bill each month. Part of your score is based on your credit utilization rate, which is the total balance on all your credit cards divided by the sum of all your credit cards limits. For example, if you have two cards which each have a $5,000 credit limit and a balance of $500 on each, your credit utilization rate is 10%.
$500 (balance on each card x 2) = $1,000
$5,000 (Credit limit on each card) x 2 = $10,000
$1,000/$10,000 = 10%
Another common reason for a decline in your credit score is applying for many cards in a short amount of time. Just make sure to spread it out a bit. My fiance and I have applied for and received 13 credit cards between the two of us in the past year, and both of our scores have increased slightly.
Myth #3 - Points are great but it's impossible to use them
Truth: This relates to #1 in that it depends on how much time you're willing to spend. With the use of flex points and travel portals, you can book your travel in a few clicks and not have to worry about blackout dates and/or award availability.
If you take it a step further, a little bit of research can help save you even more points and money. By shopping around online you can see how many points are needed and either transfer them from your flex point accounts, redeem with previously earned loyalty program points, or draft a plan on how you can earn the points necessary to book your travel.
A "secret weapon" is to use partner alliances to get the travel you want when you don't have points with every loyalty program. For example, Chase allows you to transfer your points to United & Singapore Airlines, which can both be used to book flights on all Star Alliance member airlines.
Flexibility and planning ahead is key. Booking far in advance will help assure award availability and will often save you a ton of money in fees.
In a nutshell
Before starting, think about what you want to get out of earning points and how much time and effort you're willing to commit. Draft a strategy and timeline for credit card applications. Plan in advance for future trips and don't be afraid to do a little research for different options.