On a similar note...
On a similar note...
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So you’ve found your travel buddy for life. You talk excitedly about where to go for your honeymoon, your birthdays or your next anniversary, but when it comes time to price out airfare, hotels and a rental car, you come up short — and that’s before you factor in a budget for food and other costs.
Until you have an idea: What if you signed up for a travel rewards credit card and got a bonus in time to book your trip for later this year? Even better, what if you both got a travel rewards card? Double the bonuses!
But your partner is strongly opposed. They think travel rewards cards are complicated, sketchy or too good to be true. They were always taught to distrust credit cards. They worry about spending unnecessarily just to get a bonus. They’re happy with the no-frills card they’ve been carrying for years. While their reasons are valid, you can’t help but feel some resentment. How can you both get what you want?
Get your budget on lock
Your partner’s apprehension about applying for travel cards and hitting a spending minimum for a bonus may tie back to your household’s money habits. If they’re worried about unnecessary spending — or worse, getting into credit card debt — those are valid concerns. This is a good time to look over your past credit card and bank account statements and ask yourself:
How much do we typically spend per month? Would you easily reach a spending minimum for a credit card bonus, or would you have to overspend?
Where do we spend the most? Are there specific spending categories like grocery stores or dining out that make up most of your budget? Is there a credit card that would reward you more for that spending?
Are any of those expenses too high? Do you need to cut back to avoid getting into debt, or to free up money to pay down debt you already have?
Do we have any major, one-time expenses coming up? If you plan to replace an appliance, put major work into your car or buy a new sofa in the next month or so, that could be an opportunity to snag a sign-up bonus without spending more on typical monthly costs.
Colin Moynahan, Certified financial planner and founder of Twenty Fifty Capital Financial Advisors in Charleston, South Carolina
Don’t spend an extra $1,000 a month just so you can hit a 50,000-point bonus equivalent to maybe $200.”
If you’re overextending yourself or paying down credit card debt, it’s worth shelving the idea of getting a travel rewards card until you reach a better financial position.
“Stay on top of your balances and don’t spend ‘dumb money,’” says Colin Moynahan, a certified financial planner and founder of Twenty Fifty Capital Financial Advisors in Charleston, South Carolina. “Don’t spend an extra $1,000 a month just so you can hit a 50,000-point bonus equivalent to maybe $200.”
However, if you both have historically stuck to a realistic budget and have disposable income, there may be deeper reasons for your disagreement.
Tackle credit cards as a team
If you’re used to managing your money in a certain way, your partner’s suggestions to change that, no matter how well-intended, can come across as a criticism of your own system. But this presents an opportunity to change how you each think about your credit card habits, because it’s not about you anymore.
Britton Gregory, a certified financial planner and principal at Seaborn Financial in Austin, Texas, says that when he encounters clients with mismatched credit card goals, usually the issue is inertia. Changing financial products like credit cards takes effort.
“More often it’s that one client is interested in a particular card and the other one doesn’t care,” he says. “It’s not that they don’t mesh because they don’t want to join forces, it’s just that they each have had their own cards for a while.”
Britton Gregory, Certified financial planner and principal at Seaborn Financial in Austin, Texas
You are now a unit that has to make joint decisions.”
When it comes to handling money as a couple, Gregory advocates a “yours, mine and ours” approach: You each contribute to a joint checking account and use credit cards funded by that joint account for shared expenses, while each maintaining your own individual accounts and credit cards for your own expenses. The rationale is that you combine forces while still maintaining some autonomy.
“It forces them to accept a truth, which is [that] to a greater or lesser extent you are now a unit that has to make joint decisions,” he says.
Try 'The Five Whys' technique
Gregory recommends couples set aside distraction-free time on a regular basis to chat about finances — and not surface-level “here are the bills due this week” conversations. This is the time to turn off the TV, put away the phones and start getting real.
He recommends an exercise he calls “The Five Whys,” where you ask your partner questions and keep asking why until you get to the heart of what’s really going on (this may or may not involve exactly five questions). A conversation may go like this:
You: Why do you want this credit card?
Partner: For the points.
You: Why do you want the points?
Partner: Because I want to travel.
You: Why do you want to travel?
Partner: To see the world.
You: Why do you want to see the world?
Partner: Because my parents never took me on trips.
You: Why didn’t your parents take you on trips?
Partner: They wanted to, but couldn’t after my dad got laid off.
“When people start getting that edge to their voice,” Gregory says, “now you’re hitting pay dirt.”
Appeal to your partner's frugality
Sometimes it helps your partner see the point of rewards cards if you can quantify the savings you’d get by redeeming points.
Point values vary from card to card and can change over time, so try attaching a sign-up bonus to something tangible that you know it can actually cover: roundtrip airfare to your family reunion or a one-week car rental, for example. That can be a lot easier to wrap your head around than a five-figure sum of points with no plan to spend them on anything real.
If you use credit cards responsibly on expenses you planned for anyway, rewards can be a form of free money.”
If you use credit cards responsibly on expenses you planned for anyway, rewards can be a form of free money.
“My advice for situations like this typically begins by asking the couple: ‘If you found a dollar on the ground, would you pick it up?’” says Ben Smith, a certified financial planner and founder of Cove Financial Planning in Milwaukee. “This should be the mentality of credit card holders, specifically those with reasonable credit scores and those that hold cards with solid reward benefits.”
Compromise with cash-back cards
If your partner is on board with a rewards card but is still uneasy about committing to points that are good for travel only, a cash-back card could be a good middle ground.
“To me, a cash-back card gives most people more flexibility, depending on the card,” says Justin Owen, founder of Owen Financial Planning in San Angelo, Texas. “It’s money in your pocket, and you can do with it as you please.”
Justin Owen, Founder of Owen Financial Planning in San Angelo, Texas
A cash-back card gives most people more flexibility, depending on the card.”
You can even treat your cash-back card as a travel card by either redeeming enough rewards for a statement credit that covers a travel expense, or redeeming cash back and then moving an equal amount of cash into a separate savings account meant for future travel.
If a system like this works for you both for a while, your partner may warm up to the idea of applying for a travel card later on.