Travel rewards can lead to credit woes for many Americans

By Samiha Khanna

More Americans are now practicing “travel hacking”—opening and making purchases with consumer credit cards to earn rewards, hotel nights, or airline miles they can use toward travel expenses.

The strategy makes sound financial sense to 58% of U.S. adults, according to a new Harris poll conducted in June on behalf of the AICPA. However, just 15% of Americans have actually used credit card rewards to pay for all or part of a trip.

The ultimate hack—maximizing rewards so an entire trip is free—is elusive. According to the survey, just 1% of respondents paid for their last vacation using only rewards points.

“Despite the buzz and social media dominance of travel hacking, the reality is that successfully executing such a hack is more difficult than it would appear,” said Sean Stein Smith, CPA, CGMA, a member of the AICPA’s National CPA Financial Literacy Commission. “… Travel rewards, points, and status upgrades are nice perks to have, but chasing these rewards and associated debt levels can have very real consequences on your monthly payments and credit score.”

Travel perks and other noncash rewards are effective at enticing consumers, Smith noted. Twelve percent of the survey’s 1,012 respondents said they had opened a credit card just to earn hotel or airline rewards.

But using credit cards to pay for travel can also lead to financial trouble. According to the poll, 14% of cardholders have used a credit card to finance a trip that they couldn’t pay off in full before their next statement. In the past year, 3% missed a payment or incurred a late fee due to travel expenses. For some, trouble started while they were still on vacation: Two percent reported going over their credit card spending limit while on a trip in the past year, the survey showed.

These results may not be that surprising, given that many Americans lack knowledge of the terms of their credit cards. Almost four in 10 (37%) survey respondents said they prioritized a low annual percentage rate (APR) when choosing a credit card, and 28% said they looked for low annual fees, but less than half (43%) knew even the approximate APR or fees for the cards they already have.

“While it’s encouraging that Americans are looking for credit cards with a low APR and low or no annual fee, these rates and fees fluctuate, and it’s important to monitor them and make sure the features that drew you to apply for the card are still in place,” Gregory Anton, CPA, CGMA, chair of the AICPA’s National CPA Financial Literacy Commission, said in a news release. “Oftentimes, even one missed payment can cause an APR to skyrocket.”

The National CPA Financial Literacy Commission offers the following tips consumers can use to take advantage of credit card promotions without incurring hidden costs in the form of fees, penalties, or blemishes on their credit scores:

Don’t spend more to save more. Sometimes, rewards programs entice consumers into spending more than they otherwise would have. Six percent of survey respondents said they chose a more expensive flight or hotel to earn travel rewards, and another 6% said they have taken a trip just to maintain or elevate their rewards status. But think carefully about whether spending more is actually going to save you money. If spending more results in a missed payment, interest, or fees, it may cost you more in the end.

Some of the internet’s biggest travel hacks involve opening a series of credit cards and strategically moving balances. But applying for multiple cards over a short period can affect your credit score.

Mind your credit score. The Financial Literacy Commission also recommends reviewing your credit reports at least once a year. If you need to open a new card, the Commission suggests finding one that offers a generous signup bonus and requires lower minimum purchases to earn or maintain rewards.

For more information on managing credit cards, consumers can visit the AICPA’s 360 Degrees of Financial Literacy website.

Samiha Khanna ( is a freelance writer based in Durham, N.C.

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