Its rare I buy travel these days without …
a) shopping around for the best deal
b) trying to get some form of cashback
c) using a points earning credit card to pay
It is with the above in mind that I have come to use a kind of 2 (or 3) step system when it comes to booking travel. A system that will see me get as much out of any booking as possible.
In a sense its a bit long winded, but I don’t mind taking an extra 5 minutes to make a booking if I know that those extra minutes will help me fund further travels.
So here goes, hopefully this makes sense, and works for your guys too. What I should say though is that obviously percentages of cashback change all the time, so whilst the examples I’ve given below were correct at time of writing (March 2015), they could have easily changed by the time you come to read this.
Step 1 – Cashback Sites
If you’re not already using cashback sites to make online purchases, you should be! Granted it wont save you millions, but the savings are significant enough to warrant spending a couple of minutes logging in to your account and then clicking through to your chosen brand before making your purchase.
Here’s a couple of ‘savings’ I’ve made since the turn of the year with topcashback.com …
The amount (spent) column always seems to be a bit random, but the cashback column is the important one. Taking the two biggest payouts and breaking them down looks a little like this.
- Carphone Warehouse (pending hence not showing as green in the picture) – Purchase was £59.99. Cashback was £26.25. My new Iphone 5S has cost me £33.74.
- Coverwise Travel Insurance – Purchase was £48.00. Cashback was £11.04. Gold standard insurance for the cost of bronze standard.
… so taking the biggest two earners, its £107.99 spent, but £37.29 back via the cashback website. That’s roughly 35% I’ll get back against my spend. It could take a month or two for me to receive the cashback, but I’ll just have to be patient and enjoy it when the time comes. The money I’ve ‘earned’ or ‘saved’ can either be paid out into an account, paypal (not recommended as paypal takes a cut) or exchanged. Personally I exchange, and I’ll explain why in step 2.
Step 2 – Credit Card
Now to the bit where I pay, and part with my heard earned cash. Although it sometimes costs more (Ryanair, Easyjet, I’m looking at your here), I will always pay for travel with a credit card so that it is protected, and moreover I will nearly always pay with my Tesco Mastercard, and therefore collect Tesco club card points for each purchase.
This goes for everyday purchases too. Its rare I pay for anything with cash now, where possible I always pay buy card and collect those points.
So what do points make? … prizes obviously, or in my case airmiles. Each quarter I get sent a number of Tesco Club Card vouchers based upon the amount of points collected.
- I get 1 point for every £4 spent on my Tesco credit card, and for every 100 points I collect I get a £1 voucher from Tesco.
- I get 1 point for every £1 I spend in store with Tesco when using my Tesco Club Card.
The vouchers themselves can either be used to save money on a future Tesco shop, or can be exchanged for airmiles – either Virgin, Avois, or BA. Roughly speaking, £2.50 worth of vouchers will get you 625 virgin miles, or 600 Avois or BA miles … UNLESS there is a special promotion whereby you get a bonus percentage of miles. As it happens Virgin is currently offering such a bonus, 30%. So right now my £2.50 Tesco voucher is worth 812 miles instead of 625 miles.
Now here comes the bit where you go back to step 1 and the exchanging of cashback earned. With Topcashback.com, the money you earn through cashback can be exchanged for Tesco Club Card points (up to £50 a year), and comes with a nice little 5% bonus. So £50 cashback exchanged will equal £52.5. That extra 5% or £250 is another 600 odd miles in the bank. Check out this post by air miles blog Head for Points for a bit more info on this.
*Remember that when spending airmiles on flights, that you still have to pay taxes!
OK so here are a few rough examples I’ve worked, based around a £300-500 purchase using my Tesco card. Granted you wont make hundreds of £ in cash back or airmiles through points, but I think you make enough to warrant those few extra clicks.
You’ll notice here that I’ve added a column and row around Ebookers who are also now offering a cashback intensive of their own. I don’t always use them, but its another route to getting a bit more out of your purchases should you choose to book through them. Almost goes without saying that any cashback earned through Ebookers needs to then be spent with Ebookers on future purchases.
|Purchase: Flights||£300 spend|
|Cashback %||Cashback £||Tesco Points|
|Step 1||Cashback site||2||6||0|
|Step 2||Credit card||0||0||75|
|3||9||75 (£0.75 of vouchers)|
So here I would earn back £9.00 against my £300 purchase and earn the equivalent of 188 Virgin miles / 180 Avois in Tesco points.
|Purchase: Hotel room||£400 spend|
|Cashback %||Cashback £||Tesco Points|
|Step 1||Cashback site||10.5||42||0|
|Step 2||Credit card||0||0||100|
|13.5||54||100 (£1.00 of vouchers)|
Here I would earn back £54 against my purchase and earn the equivalent of 250 Virgin miles / 240 Avois in Tesco points.
|Purchase: Package Hol||£500 spend|
|Cashback %||Cashback £||Tesco Points|
|Step 1||Cashback site||7.35||36.75||0|
|Step 2||Credit card||0||0||125|
|9.35||46.75||125 (£1.25 of vouchers)|
Here I would earn back £46.75 against my purchase and earn the equivalent of 313 Virgin miles / 300 Avois in Tesco points.
Why I use Tesco, and alternative credit cards
Now, my Tesco Mastercard is my card of choice because I do pretty much all of my food shopping at Tesco, and fill up my car at their petrol stations. It is however not your only option. If you shop anywhere other than Tesco, there’s probably a better card out there for you.
TSB have an Avois credit card where you get 1 avois point per £5 spent (17.9% variable APR), or if you get the premium version you’ll scoop 1.25 avois per £5 spent (13.95% variable APR). Both are good options for those of you wanting to save points to use against flights with BA.
Maybe you’re a Virgin Atlantic fan, in which case you might choose one of their own cards. I have a Virgin white credit card (17.9% variable APR) which rewards me with 1 Virgin flying miles for every £2 spent using the card.
There’s plenty of options, and a trend is now developing where you’ll not only be sent a Mastercard, but also an American Express card for the account too. More often than not, using the American Express card reaps higher rewards. If you’re in the market for a new credit card, it might also be worth looking at any sign up bonuses on offer, AND if you chosen card comes with a fee or not. Again, headforpoints.com is a great help here and breaks down many of the cards on offer into plain English that even I can understand.
Whatever card you choose and use, make sure you set up a Direct Debit to pay off the minimum amount due at the end of each month. Dont go racking up loads of debt on your card just for the sake of a few points or miles, its not worth it and I certainly wont be held responsible for it. Personally I pay my Credit Card of every other day, and I would suggest you do the same so that you don’t lose track of your spending. A bit of self control goes a long way in this game!
Where I’m at personally with airmiles?
So cashback is kinda self explanatory right? You want money back because in a round about way it is effectively just a delayed discount. But why do you want to collect points and airmiles? Well, the best way to justify the collection of airmiles is to simply tell you that they’re just another form of currency, and that you spend them just as you would a pound, euro or dollar for the most part. You can spend them on flights, hotels, car hire and any other number of travel related purchases. One more time I’ll refer you to headforpoints.com for a more thorough explanation.
Anyway, so those example above were theoretical examples, based upon current rates (March 2014), but in the 18 months I’ve been collecting miles/points, what have I actually been rewarded with?
In short … not too much. This is a long term game. Saving up points and miles takes time, even when you go to great lengths to ensure that you get as much out of any purchase that you can.
That’s not to say I am still empty handed. I did manage to use avois points to part pay for a pair of Eurostar tickets for the gf and I. It wasn’t an amazing use of avois, but it did mean that 2 return ticket to Paris only just us £70 (plus 8000 avois).
Virgin miles wise I currently have just shy of 30,000 miles. This could get me 2x upgrade to Premium Economy, or a companion ticket in economy, should I pay for a full price ticket myself. Neither of those are too bad at all really, but considering my gf has a similar number of Virgin miles, when it comes to flying to see her family in Grenada sometime in the next 12-24 months, we’re going to lump our miles together and see if we can somehow score 1x companion ticket and 2x upgrades. Not sure if it’ll work, but we can only try, and if it did work all we’d need to pay would be the taxes.
God I hope this has all made some kind of sense, otherwise I’m going to feel like a right idiot.
I guess that in short what I am saying is, use cashback sites and pay for travel using a credit card that earns you some kind of points, but remember to pay off those cards asap, and that rates of cashback will always vary, between different cashback websites, and depending upon what you are purchasing – e.g. as a rule flights alone seem to earn no more than 2% cashback, whereas booking a hotel room can earn up to and around 10%.
I would also argue that in order to maximise cashback and points earnings that you should extend this shopping method to regular your regular everyday shopping too, not just travel related purchases. TV’s, laptops, clothes, shoes … anything really. Just remember to pay off your credit card!
** Last thing – the topcachback links in this post are referal links, so if you sign up via them I will earn a commission. Hope that’s cool!?