My Unconventional Travel Emergency Fund: How I Use Credit Card Rewards Points

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credit card rewardsThere’s been a lot of buzz in the personal finance community lately about credit card churning: getting free trips by applying for credit cards in order to get insane points via sign-up bonuses.  I love the idea, but I have a slightly different take on things.

I absolutely love travel.  I’ve had wanderlust since I was a child.  My parents moved around the country with their kids in tow.  New experiences, cultures, and people make me feel alive.  But that’s not why I signed up for my first credit card with travel rewards.

About a year ago, a family member of ours became severely ill.  The whole family was going up to see them.  Except our branch.  None of us were in a situation at that exact moment where we could pump money into an airline ticket.  It was devastating.  It wasn’t a family reunion we were missing; it was a potential goodbye.

And then a miracle happened.  One of my mother’s friends offered to donate her frequent flier miles to her.  The ticket wouldn’t be free, but suddenly it was affordable.  My mother was able to fly up and spend precious time that was slipping to the bottom of the hourglass. I literally cried night after night that we couldn’t be there, but there were also tears of immense gratitude and joy that my mother could, all because of one woman’s complete selflessness.

Another miracle happened.  That family member held on.  We were able to save up and fly my family, kids and all, up to see them.  My mom even got to come again.  But I knew that this could never happen again.  The fact of the matter is, families are so spread out nowadays.  Friends are so spread out nowadays.  We’re just one emergency and empty savings account away from missing some of the most crucial moments in each other’s life.  And that wasn’t okay with me.

So I signed up for a credit card.  I had dodged them for years, my fear of debt paralyzing me.  But I’m at a point in my life where I can trust myself.  I’ve spent my entire adult life without debt (aside from the occasional car loan,) and I knew I would pay my balance in full every month.

I now have two of them, and over 100,000 points across the two programs.  One of them I had to pay a totally worth it $85 annual fee to get the points, and the other I had to spend a minimum of $3,000 in three months (which we achieved by simply using the card only for our regular expenses, and immediately paying off.)  But those points aren’t really there for me to haul off to Europe or the Caribbean any time I please.  They’re there as a type of emergency fund.  The next time someone’s sick, the next time someone’s getting married (I missed out on my best friend’s wedding because of airfare costs,) I won’t have to give it a second thought.  Our family will hop on that plane and go.  Because the people in my life are important.  And knowing I can be there for the best and worst days of their lives wins out over even the strongest pangs of my wanderlust.

Unless, of course, something crazy happens with one of the programs and I have to spend the points before they get devalued and absorbed into another program.  But that’s a whole other post.

If you’re interested in accruing points, too, there’s a few things you must consider first:

  • Can you realistically meet the minimum spend requirement to get the sign-up bonus points, and can you do so while paying off your balance in full every month?  If not, then don’t do it.  The idea is to get the points for free, not to pay insane interest rates on them.
  • Will you be spending more than you normally would just to meet the minimum spend requirement?  If so don’t do it.
  • Have you had trouble with spending responsibly in the past?  If so, it’s probably not a good idea.
  • Do you know which card is offering the best deal?  Some websites have tools to compare card offers, like this one.  You don’t want to end up with points in a program whose future is in question, like I did. (My other points are 100% safe, though.)  You also want to make sure you know how much the points will be worth.

So spend responsibly.  Pay off your debts immediately.  Read the fine print.  Save up rewards. And have an unconventional travel fund ready to go should the worst (or best) happen.

22 thoughts on “My Unconventional Travel Emergency Fund: How I Use Credit Card Rewards Points

  1. thebrokeandbeautifullife

    So true, I feel like there’s always a need to travel just for the basics like seeing family or weddings or work or other day to day things, much less vacations- though I still love using rewards for my fun trips too 🙂

    1. femmefrugality

      Maybe when I’m able to build my efund large enough to get enough tickets to fly my fam round trip…I’d love to take them across the pond just for the heck of it. For now these points are essentially free money to fill in that void.

  2. Britnee

    I agree and never thought about fliers points until you put it this way. It makes sense. We have an emergency fund and if something like this happens that we have to fly we have to use our EF and basically empty it out. I should look into this more. Thanks!

    1. femmefrugality Post author

      You totally should. We are in the same situation. Right before we got the news, we had another mini crisis that had drained our savings. So we were screwed. Using rewards has been like building a travel savings account with free money via the points.

  3. Anne @ Money Propeller

    This is a great concept. We use ours for travel, but thankfully that’s because we are in a position where we can drop everything and pay for last minute flights, if we needed to.
    I love how this idea is so passive… it’s like free money sitting there in the background, so the temptation to spend it is even less than normal, because it can only be used on very specific things.

  4. Suburban Finance

    I’m quite fortunate most of my family members live nearby and we don’t usually have to travel far visit them. You gave me a new perspective, and it’s so true. You never know when things like that might happen, and by having travel rewards in handy you will be able to visit them whenever needed.

    1. femmefrugality Post author

      That’s so awesome that everyone’s so close! A lot of my immediate family is around this area, but extended is pretty spread out. I think we all live in the US right now though lol.

  5. May

    I don’t have a travel card – but do have a cash back card and the rewards are pegged towards auto related expenses. That way if something goes wrong with the auto I know we have the money and it will not impact cash flow.

  6. Kalen

    Great idea! The only thing I would worry about is losing the points. I know it depends on the card, but most cards will wipe out your points for one late payment. We never make late payments and I’m sure you don’t either, but I’ve heard horror stories of card companies making a mistake when someone paid on time and thinking it was late. They got it squared away, but they still lost their points even though it was the card company’s fault.

    1. femmefrugality Post author

      I don’t remember reading that in my card member agreement, but don’t doubt it at all. Good thing I’m vigilant! And I wouldn’t get off the phone until they had fixed the error in that situation. Being vigilant works both ways!

  7. Sonya K

    I use my credit card rewards for free gift cards to retail stores. It helps me to buy clothes for myself and my kids without spending a ton of money.
    I like your idea of banking your travel rewards for emergencies. Luckily most of my family lives nearby.

    1. femmefrugality Post author

      That’s another great idea, Sonya! Using those rewards for free anything can be such a budget saver.

  8. impersonalfinanceroboto

    Great story. I’m glad you and your family were able to take those trips. I actually didn’t sign up for my rewards card with your strategy in mind, but we ended up using most of our points to travel for medical care this summer, which saved us hundreds of dollars, and was great because we knew we were going to have some big bills to pay afterwards!

  9. Kayla @ Red Debted Stepchild

    This is an interesting idea and I love it. I don’t currently trust myself to take on a new CC and use it for everyday expenses because I’m still WAY in consumer debt, but maybe someday I too can use travel rewards to my benefit.

    1. femmefrugality Post author

      Kayla, that’s seriously smart to stay away from them in a situation like that. It could get way to tempting and out of control quickly. I’m cheering you on!

  10. lisavstheloans

    What an interesting spin on travel rewards! I love this idea. I think it’s amazing that your mom’s friend gave her points toward a flight. I’d love to be able to give in that way!

  11. Pingback: Free Travel Through Credit Cards? Ask this first. - Femme Frugality

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