How to Earn Travel Rewards Without Getting Into Debt

Travel credit cards offer an enticing proposition-the prospect of earning airline miles, cash back or rewards points for each dollar you spend. That's fine and dandy, but you won't end up ahead if you carry a balance on your credit cards. The following tips can help you earn rewards, without the debt.

While most rewards and travel credit cards only dole out 1 to 3 percent back for each dollar you spend, the average credit card APR is well over 17 percent. For that reason, pursuing rewards while you're in debt doesn't make any sense. In fact, racking up too much debt could harm your finances for decades to come.

The first rule of pursuing travel rewards is a simple one-pay your balance in full each month. Always paying your balance in full is the only way to avoid paying interest on your purchases. If you do wind up paying interest, it will wipe out the rewards you earn and then some.

One way to make sure you avoid debt is by only using your rewards credit card to pay for purchases you have money in the bank to cover. This can mean only using your card for groceries, gas or other transportation expenses-or basically any regular purchase that you know you can pay for no matter what.

If you're worried having a travel credit card will make it easier to overspend, you can always contact your card issuer and ask them to lower your credit card limit. Not everyone wants a huge limit on their credit cards anyway, and that's perfectly okay.

Here's another tip that can help you stay on track and afford travel-try paying your credit card bill more than once per month. Paying your bill weekly or bi-weekly can help you track your spending and avoid a higher-than-expected credit card bill that is hard to pay off.

Because rewards and travel credit cards offer more and more points for each dollar you spend, it's easy to use rewards as an excuse to go out to dinner or splurge for a new television. But, don't fall into this trap! If you're spending just to earn rewards, you won't receive any financial benefit in the end.

Most travel credit cards offer a signup bonus to incentivize you to sign up. You can usually earn these bonuses by meeting a minimum spending requirement within a few months (e.g. spend $3,000 within three months of account opening to earn 50,000 points). Never overspend to earn a bonus, or you're simply wasting money.

Another rule about signup bonuses-never try to earn more than one at one time. If you try to meet multiple spending requirements within the same timeframe, you may wind up being forced to spend more than you planned. Remember: travel rewards aren't worth it if you wind up buying things you don't need.

When it comes to pursuing travel rewards, your best bet is using rewards credit cards alongside a monthly budget or spending plan. A budget will help you learn to live within your means and set limits on your spending, which can help you avoid debt over the long haul.

Some cards offer special categories that offer more points and miles for certain purchases (e.g. the Chase Freedom). While these categories can be lucrative, never use them as an excuse to spend more. Even if you're earning 5 percent back on a specific purchase, the extra points won't leave you ahead if you didn't need the item in the first place.

Having several different rewards credit cards can help you earn more points and miles over time, but it can also be overwhelming. If having multiple credit card balances leaves you struggling to keep up each month, you may be better off limiting yourself to just one or two travel credit cards.

If you want to avoid being overwhelmed, a simple rewards strategy is probably best. Instead of signing up for multiple travel credit cards that offer different rewards currencies, consider a flexible travel credit card like the Chase Sapphire Preferred instead. This one card lets you earn points you can redeem directly for travel or transfer 1:1 to popular airline and hotel partners.

Another strategy that can help you avoid credit card debt and struggling to afford travel involves setting up automatic payments on your accounts. With autopay set up, your credit card balance will be paid automatically each month, no matter what. Not only can this help you avoid debt, but it can help you avoid making late payments, too.

If your goal is using travel rewards to get more value out of your spending, then you should also keep track of annual fees you're paying on travel credit cards. While these fees can be worth it at times, you should only pay an annual fee if you're getting at least as much benefit in return.

The allure of "free travel" may be enough to get you to try travel credit cards, but keep in mind that the juice isn't always worth the squeeze. If credit cards tend to make you want to overspend, you're probably better off sticking to cash or debit instead. Once you discover you're better off avoiding credit cards, you can focus your efforts on building a solid travel fund for your next trip.