New to Miles and Points? Here’s Why Savvy Travelers Never Carry a Balance on Their Credit Card

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INSIDER SECRET: Simply put, most of the best credit cards for travel have extremely high interest rates. That’s why it’s so important to pay off your balance in full every month.

If you are just beginning to collect miles and points, you are beginning a journey that will allow you to experience places and adventures you never dreamed of. We on the Million Mile Secrets team have taken flights in first class, stayed in luxurious hotel suites and traveled to must-see destinations, all for a fraction of what these travels would have cost in cash.

Earning miles and points through credit card sign-up bonuses and everyday spending is the fast way to rack up miles and points for your first adventure. But first, you should know the most important rule for using credit cards to earn miles and points: Never carry a balance on your credit card.

Miles and points are an incredible way to travel the world, but not if you have to pay interest charges on your credit card! (Image by Creativa Images/Shutterstock)

The Golden Rule of Travel Rewards Cards

By far, the most important rule to follow when using travel rewards credit cards (or any credit card) is to never carry a balance on your card.

In the world of miles and points, we love to collect large sign-up bonuses. An extra 100,000 points after meeting the minimum spending requirement? Yes, please. A bonus of 80,000 airline miles after spending $5,000? Absolutely. The allure of these bonuses and the points earned from everyday spending is high, but the value of these rewards vanishes if you are carrying a balance on your credit card.


Quite simply, most travel rewards credit cards have extremely high interest rates. Many travel cards have an Annual Percentage Rate (APR) in the 16.99%-24.99% range, and I have one card that charges an astonishing 34.99% APR. If you are spending on a credit card with the hopes of earning miles or points but you’re not paying the card off every month, the interest charges are negating the value of anything you earned.

For example, the Chase Sapphire Reserve® is widely viewed as one of the best travel rewards cards on the market. The Sapphire Reserve earns 3 points per $1 spent on travel and dining. With a reasonable value of Chase points at about 2 cents per point, you are effectively getting 6 cents back per $1 spent (a 6% return on spending), which is a great return. But if you fail to pay off the balance on your credit card, you could be paying nearly 24% interest on the balance. In this case, you not only are negating the value of your points, but you end up paying substantially more money to the credit card company in interest.

This same rule applies to any credit card, even if you aren’t earning miles and points. If you carry a balance on the card, the value of the reward, perk or bonus that you earn will be outweighed by the amount you pay in interest. And perhaps more important, only making purchases that you can afford is a key principle in handling money. All personal finance gurus, credit card experts and financial advisers agree that you should not carry a balance on a credit card.

Bottom Line

If you are new miles and points, travel rewards credit cards are an excellent way to speed your earnings and get you closer to your dream travel destinations. But as appealing as credit card spending can be, you should never carry a balance on your credit cards, since the money you pay in interest will far outweigh the value of miles and points that you earn. So if you are just starting out, open your first card and use it frequently, but pay it off every month. Before you know it, you’ll be on your way for your first award trip, paying only a fraction of the cost.

For the latest tips and tricks on traveling big without spending a fortune, please subscribe to the Million Mile Secrets daily email newsletter.

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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