I feel like this post is long past overdue. I constantly get asked how Alex and I travel so much and I would like to take this opportunity to clear up a few misconceptions. First things first: we are not independently wealthy, trust fund babies, or anything of the sort. Rather, we live on two meager state salaries. We also both have serious wanderlust genes and our souls are fed by traveling the world.
Now for the million dollar question: how does one reconcile those two things? It seems nearly impossible, no? The answer is yes, if we paid full sticker price for everything we do, especially flights or lodging, we would have had to file for bankruptcy years ago. Enter miles and points, loyalty clubs, and my dear, sweet husband who practically has a second job keeping track of all of the deals and promotions. We can do the actual travel part of traveling on a budget, while saving our money for the fun stuff like great meals and unique activities at our destination.
So with that said, I am going to let Alex take over from here and give you a little introductory lesson in using miles and points to your advantage to travel on a budget.
(For simplicity, I will use the words ‘miles’ and ‘points’ interchangeably throughout the post, as they are collected and redeemed very similarly.)
I truly enjoy the miles/points game. I like the rush of finding a seat worth several thousand dollars and completing the reservation with little money out of pocket. So when you are done reading this article, if you have any questions about how you can get started, I’d be happy to help. If you have a stockpile of points or miles with no idea what to do with them, I can find flights that will work for you.
How do we travel so much? It is all possible because we collect hundreds of thousands of miles and points to get travel for nearly free. This amount of points allows us to fly in business or first class quite often for a just few dollars. Being a member of a frequent flyer club or hotel rewards program can help you rack up miles and points, but you may have to travel for several years to get just one free flight or one night hotel stay. Couple that with the fact that it can be quite difficult to find a reward flight or hotel stay due to complex rules and availability and you have a system that most people do not use because of its perceived impracticality.
The key here is to collect far more points that you would from normal flights and hotel stays adding up. The easiest way to do that is through credit card sign-up bonuses and spending. However, most people become uneasy when credit cards are mentioned due to their association with debt and out of control spending. I will address those concerns in a separate blog post next week. For now, I will just go over the basics of how to play the miles/points game.
We are all incredibly lucky to live in a country where credit card issuers compete so hard to earn your business that they are tripping over themselves to offer the most valuable sign-up bonuses. Issuers will offer tens of thousands of points to just sign up and use their card for a couple of months. I was hesitant at first because it seemed like there had to be a catch. Each credit card sign-up could be valued at anywhere from $400 to $1,000+ depending on how you redeem the points. Why would they repeatedly give me sign-up bonuses for the same airline?
The truth of the matter is, the rules regarding sign-up bonuses are known and can be used to the consumer’s advantage. There are cards that can be ‘churned’ every couple years, and others that can be churned every couple months. Churning is the practice of signing up for credit cards that offer large signup bonuses in the form of miles, points, or straight cash back for the purpose of obtaining the bonus before cancelling the card. In a broader sense, churning can refer to simply maximizing credit card and travel rewards. There are many forums and hundreds of blogs dedicated to the topic that do a far more thorough job of explaining all the ins and outs of the miles/points game.
The credit cards I have fall into 3 categories: Frequent Flyer/Hotel Cobranded Cards, Transferable Points Cards, and Fixed Value/Cashback Cards. For this post, I will not be getting into the minutiae of all three as that would take a long time and most people’s eyes would glaze over. Instead I am going to illustrate a high level overview of Frequent Flyer/Hotel Cobranded Cards and Transferable Points Cards.
Here is an overview of a Frequent Flyer/Hotel Cobranded Cards:
- Sign up for a credit card (Example: American Airlines Credit Card).
- After you spend $3,000 on purchases in the first 3 months from account opening, you earn 50,000 AAdvantage bonus miles.
- Redeem the points for an off-peak award flight to Europe (October 15-May 15) on American Airlines for 40,000 miles roundtrip.
So for simply signing up for this one card, you can have a free roundtrip ticket to Europe! Yes, it is that easy. A couple of years ago, this exact card had a bonus of 75,000 miles and Crystal and I booked two roundtrip tickets to Europe using points alone (a value of ~$1,500-$2,000). Since that time we have each gotten several bonuses for this and other versions of cards that credit to AAdvantage.
Here is an overview of a Transferable Points Cards example:
- Sign up for a credit card (Example: Chase Sapphire Preferred ).
- After you spend $4,000 on purchases in the first 3 months from account opening, you earn 40,000 bonus points. (Totaling 44,000 Chase Ultimate Rewards points).
- Transfer those points into a Frequent Flyer program such as British Airways Avios, which is a member of OneWorld Alliance (list of all UR transfer partners here).
- Redeem the points for a flight on American Airlines (also member of OneWorld alliance).
I used British Airways in this example because they use a distance-based award chart, meaning you pay according to how many miles you fly. This can be quite valuable when flying short distances from a small airport such as Tallahassee. A flight from Tallahassee to Charlotte nonstop might run ~$300 roundtrip or 9,000 Avios. I could get almost 5 roundtrip flights to Charlotte with just the sign-up bonus from the Chase Sapphire Preferred alone! That sign-up would have a value of around $1,500!
The way to take this to another level is by repeating the process over and over, being careful to follow rules on eligibility for additional signup bonuses. For example: Per Chase’s rules, a “new card member offer is not available to: current card members of this consumer credit card or previous card members of this consumer card who received a new card member bonus within the last 24 months,” meaning if you don’t currently have the card open and you haven’t received a bonus for that particular card in the last 24 months, you are eligible to apply and receive the bonus again. There are so many cards to choose from that by timing it right, you could conceivably get bonuses several times a year for various programs and then get the bonus again two years later.
Now, for those of you thinking, “this guy must be wrecking his credit score with all these credit cards,” think again. Tune in next week to find out how I got my credit score above 800 by collecting miles and points. Happy traveling!