Having an emergency fund of credit card points has saved me thousands of dollars on last-minute, emergency travel. Here's how I do it.

elizabeth aldrich costa rica

  • I keep at least 30,000 credit card points at all times for
    emergency flights and hotel rooms.

  • Chase Ultimate Rewards
    earned with my
    Chase Sapphire Reserve
    are my favorite points to have on hand
    because of their high value and flexibility, but I’ve also used
    Hyatt points and Delta miles to save hundreds of dollars on
    last-minute travel.
  • Credit card points are a back-up emergency fund. I always have
    at least six months of living expenses in
    high-yield savings accounts
    to make sure I can cover the
    unexpected.
  • Read
    more personal finance coverage.

I love collecting credit card rewards — specifically airline
and hotel points. Thanks to my credit card points, I can travel
more frequently and stay in luxury hotels I wouldn’t normally be
able to afford.

However, I don’t spend all of my credit card points. I like to
keep a balance of points in at least one of my rewards accounts,
and here’s why.

Keep in mind that we’re focusing on the rewards and perks that
make these credit cards great options, not things like interest
rates and late fees, which can far outweigh the value of any
rewards.

When you’re working to earn credit card rewards, it’s important
to practice financial discipline, like paying your balances off in
full each month, making payments on time, and not spending more
than you can afford to pay back. Basically,
treat your credit card like a debit card
.

How I use credit card points as a second emergency fund

If you think about it, most emergencies involve some form of
travel. When your car breaks down, you’ll probably need a rental
car. You might have to fly back to your hometown at a moment’s
notice to visit a sick family member. If something happens to your
home, such as a natural disaster, a fire, or an insect infestation,
you might need to get a hotel for a few nights.

While it’s not an emergency, I know I’m not the only traveler
who’s found myself trying to book a last-minute trip during high
season only to realize that prices have skyrocketed — FYI, you
can’t “just wing it” when it comes to accommodations in Europe’s
most beloved cities in mid-July unless you’re prepared to spend a
small fortune.

Credit card points can come in handy in all of these situations.
Miles from
airline credit cards
can help you purchase last-minute
emergency flights without spending a fortune, while points from
hotel
credit cards
can get you a few free nights if you’re
unexpectedly stranded. Generic travel credit cards that offer
flexible points can help you cover flights, hotels, rental cars,
and more.

My favorite credit card points to save for emergencies

I mostly save my generic travel points for emergencies because
they can be applied to a wide range of expenses, and flexibility
helps when you’re in a pinch.
Chase’s Ultimate Rewards points
are my favorite because they
offer the highest value and the most flexibility. I earn Ultimate
Rewards points with both my
Chase Sapphire Reserve
and my
Ink Business Preferred Credit Card
. I try not to let my balance
of Ultimate Rewards points fall below 30,000 points, which is
usually more than enough to get a few nights at a hotel or a
round-trip domestic flight.

Hotel points can be good to keep on hand as well, particularly
if you’re saving points that are good for longer stays at budget
hotels. My favorite programs for this are World of Hyatt and IHG
Rewards Club, because both have budget hotels and deals that start
at just 5,000 points per night. I use the
World of Hyatt Credit Card
to earn Hyatt points, and I used to
have the old IHG Rewards Club credit card as well. You can also
transfer Chase Ultimate Rewards from your Chase cards to both Hyatt
and IHG.

Read more: The best Chase
credit cards

I collect these points by aiming for lucrative
sign-up bonuses
and promotions and putting all of my regular
spending on rewards credit cards that align with my spending
habits.

For example, if I’m eating out, I use my
Chase Sapphire Reserve
, because it gets me 3 points per dollar
on restaurants. However, if I’m making business purchases, I used
my
Ink Business Preferred
because it gets me 3 points per dollar
on select business spending categories.

Read more:
Chase Sapphire Reserve card review

How credit card points have saved me hundreds in last-minute
situations

A couple of years ago, I got a call from my dad saying that my
grandpa passed away. I knew that his death was really hard on my
dad, and I wanted to be there to support him during my grandpa’s
funeral.

Unfortunately, I live abroad and last-minute flights can be very
expensive. When I looked them up, they were around $800 round-trip.
Luckily, I was able to use Delta miles I’d accumulated with the

Gold Delta SkyMiles® Credit Card from American Express
to
purchase the flight using 40,000 miles.

Another time, I was traveling through Europe during the summer.
I’d purchased tickets to a Radiohead concert in Florence months in
advance because I knew I’d be staying in a nearby town in Tuscany
during that time. I figured I could take the train to Florence and
spend the night at a budget hotel for the concert.

That would’ve worked out if I’d also reserved my hotel room
months in advance. However, I forgot to do book a hotel until two
days before the concert. Because I was there during the height of
summer, almost everything was completely booked up by the time I
went to make a reservation. The few hotels left were $500-plus per
night, which wasn’t in my budget at the time.

Luckily, I was able to find a few available hotels through the
Ultimate Rewards travel portal. The cheapest one was $400 per
night, still outside of my budget. However, I could also get it for
around 26,000 points. I booked it with points and got to enjoy a
night in Florence at a very nice hotel for free.

Points aren’t a substitute for a real emergency fund

Credit card points can come in handy for last-minute travel
situations, but they’re no substitute for a real emergency fund. If
you end up with unexpected hospital bills or have to pay for your
pet to get surgery, they’re not going to accept points as payment.
It’s important to have at least six months of living expenses saved
up in an emergency fund.

I keep my emergency fund in a
high-yield savings account with Ally
and Betterment so that I
can earn some extra money on interest. I love knowing that I have
both the cash I need to cover an unexpected expense and credit card
points to cover last-minute flights and hotels.

Click
here to learn more about the Chase Sapphire Reserve.


Join the conversation about this story »

NOW WATCH:
We did a blind taste-test of KFC and Popeyes fried chicken —
here’s the verdict

Source: FS – All-Travel destinations-News
Having an emergency fund of credit card points has saved me thousands of dollars on last-minute, emergency travel. Here's how I do it.