PHOTO: Are you ready for a rewards card? (Photo courtesy of Thinkstock)
Airline cards, hotel cards and flexible travel cards can make travel a lot more affordable.
If you’re savvy enough, it’s easy to rack up enough miles to pay for a round-trip international flight that would normally cost thousands. With enough time and signup bonuses, you can even stitch together a week-long trip that includes flights, hotel stays and a rental car.
Unfortunately, there are a ton of pitfalls to avoid as you wade into these murky waters. Using credit is always risky, and you can easily wind up in debt. If you’re not careful, your pursuit of rewards can wreck your financial situation altogether.
Before you dive in, it’s important to know you’re ready. Here are some signs you’re mentally (and financially) prepared for a rewards credit card:
You’re free of consumer debts:
If you carry credit card debt or other high-interest debts, you should probably steer clear of rewards credit cards.
Because rewards cards charge higher interest rates than most traditional cards, carrying a balance could be extremely costly. Only pursue rewards when you’re free of consumer debts and know you can stay that way.
You track your spending or use a monthly budget:
If credit cards make it too easy for you to overspend, a rewards card might be a bad idea.
When you’re earning points and miles for each dollar you spend, it’s easy to let things spiral out of control. You’ll do less damage with a rewards credit card if you track your spending closely and/or use a monthly budget.
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Credit card rewards require more than just using your card. You must keep track of your due date, signup bonuses, annual fees and then your rewards. If you don’t keep track of it all, it’s easy to let your rewards expire, get hit with late fees or even hurt your credit.
On the flip side, a simple credit card rewards spreadsheet can help you keep track of your rewards, payments and due dates.
You have a specific travel plan in mind:
If you want to avoid wasting your efforts on rewards you can’t use, make sure to do some upfront research before you choose a rewards card. Some airline loyalty programs work a lot better to certain destinations, and you’ll need to know which program is best for your home airport, too.
If you’re unsure of where you want to go, make sure to sign up for a flexible rewards card instead of one that works with a specific loyalty program. The Chase Sapphire Preferred card and Barclaycard Arrival Plus World Elite MasterCard are solid options that offer some flexibility.
READ MORE The 3 Best Rewards Cards with No Signup Bonus
You have proper credit:
If you have poor or fair credit, you may not be able to qualify for a rewards credit card at all. Before you apply, make sure your credit is good or excellent.
According to credit reporting agency Experian, a FICO score of 670 or better is generally considered “good.” However, you may need to have a score of 720 or higher to qualify for the top travel credit cards on the market.