How Travel Credit Cards Work
First things first, we should look at how travel credit cards actually work. When you research credit cards you’ll find that one category many cards fall into is travel. These cards may be associated with a specific airline or hotel or they may be company agnostic. The thing they all have in common is that travel credit cards allow you to earn miles or points that you can later redeem for airfare, hotel, or other travel expenses.
With most travel credit cards, you’ll earn miles or points for every dollar you spend as well as bonus miles or points for spending a minimum amount of money within a certain period of time after opening a new account.
On average, one credit card mile is worth approximately one cent but with many Chase credit cards, they’re worth 1.25 cents. This may not sound like a lot but they really add up when you take advantage of the bonuses they offer for spending a minimum amount within a certain period of time.
It’s not unusual to see an offer for 50,000 bonus points when you spend $4000 in the first 3 months of being a cardholder. Those 50,000 points are worth anywhere from $500-$625 when redeemed for travel. These bonuses are the real cash cow of travel credit cards. Yes, you can earn points for everyday spending on any travel card, but new cardholder bonuses can be huge!
Many travel credit cards have an annual fee which is important to pay attention to. You have to make sure the math works out for you and most of the time with $99 and $69 fees, it does. Paying $99 to get $500-$625 in return is a no-brainer!
I don’t know about you but I think getting $500-$625 of free travel for paying for things I already had to pay for is a pretty sweet deal!
How I Get Free Travel By Paying My Quarterly Taxes
We already have to pay quarterly taxes, so why not combine that with the bonuses offered on travel credit cards? Here is exactly what I’ve done to get thousands of dollars in free travel.
1. Know how much you owe
How much do you have to pay in each of your quarterly tax payments? If you don’t know this, now is the time to figure it out! Let’s just say you have to pay $5000 every quarter. That’s probably going to be enough to cover the sign-up bonus requirements for most cards but it may not be the best time for you to apply for the card. I’d recommend applying for the card no later than 1 month before your next quarterly tax payment is due.
2. Find the right card
There are a lot of different travel cards available and below, I’m sharing my favorites. Identify the card you want to apply for and what the bonus requires. If you have to pay $5000 and that’s the bonus requirement, you’re all set. If you have to pay $3000 and the bonus requirement is $5000, do the math to figure out if you’ll have enough in expenses to make up the rest. The idea is to only buy things you would normally buy, not overspend to get the bonus.
3. Pay your taxes with your travel credit card
Log on to the IRS website and select credit card as your payment method. You’ll see that there are a few different payment processors and that there is a fee, but it’s worthwhile. Let’s say you’re paying $5000 and you use the cheapest payment processor which currently charges 1.87%. Your total spend is $5093.50 and that $93.50 fee is deductible as an expense. You just paid $93.50 to get up to $625 in free travel. Plus, you’ll earn points on the $5093.50 so you’ll get a total of 55,093 points instead of just 50,000.
4. Pay the card off in full
This is a super important step. Do not use this strategy if you have not already set aside money for your taxes. If you’re not doing that, listen to this podcast about Profit First and use a tool like Qapital to automatically set aside money for taxes. This strategy will not be beneficial for you if you’re not able to pay the credit card balance off in full. It’s just not worth it to have to pay the interest and any late fees. I put all of my spending, business and personal, on travel cards each month and pay all of my cards off in full and it’s gotten me thousands of dollars in free travel.
5. Rinse and repeat!
You have to pay your quarterly taxes every quarter so think ahead to what you want to do next. Do you want to apply for a new card before your next payment is due or are you going to do that 2x per year instead? If you decided to go for 4 bonuses of 50,000 in one tax year, you’d end up with 220,374 when you take the sign-up bonus and points earned from spending into consideration. That’s worth anywhere between $2,204.74-$2,754.67 when you redeem your points for travel! Imagine what kind of trips you could take with all of those points!
My Favorite Travel Credit Cards
There are a lot of different travel credit cards out there and it can be confusing to know where to start so I wanted to share the ones I’m using with you. Some of these are referral links so I may get bonus points if you sign up via that link but I wouldn’t be sharing anything with you that I wouldn’t promote without that bonus.
Chase Business Ink Preferred
The Bonus: 80,000 points when you spend $5,000 on purchases in the first 3 months after account opening. That’s $1,000 toward travel rewards when you redeem through Chase Ultimate Rewards.
The Details: This is my favorite business travel card. It has a huge sign-up bonus and you earn 3 points per $1 on the first $150,000 spent in combined purchases each account anniversary year on:
- Travel, including airfare, hotels, rental cars, train tickets and taxis
- Shipping purchases
- Advertising purchases made with social media sites and search engines (Think Facebook ads and Google ads)
- Internet, cable and phone services
In addition to that, you’ll earn 1 point per $1 on every other purchase. This card has some other handy benefits including auto rental collision damage waiver so you don’t have to deal with rental car insurance, up to $600 in cell phone insurance, and trip cancellation/interruption insurance.
The thing I love most about un-branded Chase cards is that you earn Chase Unlimited Rewards and can book via their travel portal to make your points go 25% further. If you find a better deal with one of their travel partners, you can transfer your points and book with them directly. It’s a very flexible program that can work for you no matter where you want to travel to. You can redeem your points for gift cards or cash back but they’re worth most when you use them for travel. Click here to apply!
The Bonus: 60,000 points after you spend $3,000 on purchases in the first three months of opening your account.
The Details: This card offers 2 points per $1 for Southwest Airlines purchases or purchases with Rapid Rewards hotels and car rental partners. All other purchases earn you 1 point per $1 and you’ll be given 6,000 points on your anniversary. You can get cards for your employees and earn points on those cards as well. Click here to apply!
The Bonus: 40,000 points after you spend $1,000 on purchases in the first three months of opening your account.
The Details: This card offers 2 points per $1 for Southwest Airlines purchases or purchases with Rapid Rewards hotels and car rental partners. All other purchases earn you 1 point per $1 and you’ll be given 3,000 points on your anniversary.
This is my day-to-day card that I use for all of my personal spending and as a result, I haven’t paid to fly in quite awhile. I use Southwest Airlines a LOT because they’re a major carrier in San Diego so if Southwest serves your local airport, this might be a great post for you. Click here to apply!
Next up on my list of cards to apply for is the Chase Sapphire Preferred card. My husband and I are currently alternating card applications so we can each redeem the bonus, just at different points in time.
If your credit needs some work before you’ll be eligible for these travel cards, I have some advice for you. When I came back to the US from the UK my credit needed some love so I got a secured credit card, put my Netflix subscription on it, and set it to autopay. I put nothing else on that card and it made a huge difference.
The Southwest Airlines Companion Pass
This is an insanely valuable program that Southwest offers that just can’t be beat. The Southwest Airlines Companion Pass allows your companion to travel with you, for free. Totally free. You book your flight with them using points or cash and just add your companion. Isn’t that amazing?
The companion pass can be difficult for non-business owners to get, but we have an upper hand. In order to get the companion pass, you have to accumulate 110,000 Southwest Rapid Rewards points in a calendar year. Once you do that, you’ll get the companion pass for the rest of that year and the entire following year.
As a business owner, you can get the Southwest Airlines Rapid Rewards Plus Card and the Southwest Airlines Rapid Rewards Premier Business Card and the bonuses on those cards add up to 100,000 points. You only need 10,000 more to get the companion pass! My husband and I have used the companion pass to book several free flights and soon, he’s going to apply for these two cards so we can get it again.
This strategy has allowed me to do something I love (travel) as a result of doing something I don’t particularly love (paying quarterly taxes) and that makes paying my taxes something I kind of look forward to! Whether you want to travel domestically, internationally, take that big dream trip you’ve always wanted to take, or just having the security of knowing you have points ready to use whenever you need them, this strategy can help you get something extra out of paying your quarterly estimated taxes for your wedding business.
Where will you go with your points?