The following guest post is by Craig Ford. Craig blogs at Help Me Travel Cheap where he helps newbies turn credit card sign-up bonuses into free travel.
To entice you to sign up for a credit card most credit card companies offer a sign-up bonus.
The sign-up bonus is the life blood for a growing population of American travelers. They scour the web looking for the best credit cards with sign up bonuses. They get the cards, get the bonuses, and turn a single credit card application into a vacation that most of us only dream of taking.
The objective is simple: try to collect and redeem many frequent flyer miles so youâ€™ll never have to pay for a vacation again.
Why are people hesitant to use credit card sign-up bonuses to accumulate miles?
People who collect frequent flyer points and miles sometimes have a hard time understanding why everyone doesnâ€™t use this strategy for getting free flights. There are five common reasons why people avoid credit cards with cash back offers sign up bonuses in an effort to earn travel miles.
- It sounds too good to be true. Iâ€™m afraid of getting scammed. Surely there must be a catch that I simply donâ€™t understand. My response: Credit card companies play the averages. The average customer who signs up for one of their credit cards will likely keep it and pay the annual fees for a long time, pay a late fee, transfer a balance, or carry a balance. Thatâ€™s why they offer these huge sign-up bonuses; they want you to become a customer for life. Just because they come out ahead most of the time doesnâ€™t mean a person canâ€™t tactically apply for cards to benefit from the sign-up offers.Â Itâ€™s not a scam, but you do need to be disciplined and organized to come out ahead.
- It will hurt my credit score. My response: Without a doubt, it will affect your credit score. If someone is going to make a large purchase and plans to borrow money in the next couple of years, they might want to avoid signing up for credit cards just for the bonus. For most of us, however, the credit score impact will be incremental and won’t have a significant effect on our ability to borrow money. Think of it this way: You attend a school that uses a grading system that gives an A for a 91 and above, so a student with a 99 gets an A and a student with a 91 does, too. Interest rates are based on “ranges”.Â A score above 700 might yield one interest rate and a score below 700 another. If you have a 750 credit score, then those few point drops wonâ€™t even bring you close to dropping below the 700 mark. You can still have a strong credit score and use credit cards to get free travel. Also read how to get your free credit report and take care of your credit score.
- There are too many rules and restrictions that make the points or miles hard to use. My response: This is partially true. Most airlines only allow a certain number of seats to be booked with reward points. As a result, you need to book mileage flights differently than cash flights: Youâ€™ll need to be flexible, and youâ€™ll need to book months in advance â€” sometimes as early as 10-11 months, depending on how competitive the destination is.Â Youâ€™ll need to be educated about fuel surcharges imposed by certain airlines and member airlines partnerships. Youâ€™ll even need to learn a little bit about each program to know where you should be focusing your time. Iâ€™ll show you how to do that later in the article.
- The temptation to have a credit card is too much, and I always overspend. My response: Thanks for being self-aware. Nothing I say in this post could or should make you change your mind. Avoid this strategy. Youâ€™re a wise person if you recognize how dangerous credit cards can be when you aren’t able to set some reasonable limitations.
- Itâ€™s not worth the time. My response: That may be true. It takes a small investment of time to track, apply, monitor, and cancel your credit cards. If you donâ€™t have the time to apply for a credit card with a $600 sign-up value, then you probably donâ€™t have time to read this post either.
In my case, Iâ€™d gladly trade a few hours a month for several thousand dollars worth of (free or very cheap) travel a year.
How many miles can you get by signing up for mileage-based credit cards?
The best way to answer that is by highlighting some of the blockbuster mileage and travel credit card offers that have been available in the last year or so.Â Most of these offers are no longer valid, so this list simply serves as an example of what could have been. If I could predict the future, Iâ€™d let you know what offers are going to come up. But I canâ€™t.
None of the offers listed below were targeted, so every US resident would have been eligible to apply.
|Card Company||Card Brand/ Airline||Offer||Spending
|Chase||British Airways||50,000 bonus Avios||after you make $1,000 in purchases in the first 3 months of account opening||$95||DomesticÂ International travel|
|Chase||Southwest||50,000 bonus points||after you make $2,000 in purchases in the first 3 months of account opening||$69 for the Plus card and $99 for the Premier card||Wanna Get Away? Fare that can be redeemed for 2 round-trip flights|
|Chase||Sapphire Preferred||40,000 bonus points||after you make $3,000 in purchases in the first 3 months of account opening||Introductory Annual Fee of $0 the first year, then $95||$500 worth of travel, get a 20% discount if points redeemed through Ultimate Rewards|
|Capital OneÂ®||VentureÂ® Rewards||Enjoy a one-time bonus of 40,000 miles||once you spend $3,000 on purchases within the first 3 months, equal to $400 in travel||$0 intro annual fee for the first year; $59 after that||No foreign transaction fees|
So does it really work? My trip report
Hereâ€™s a quick roundup of how I used some of my miles and points in the last year to save money on travel:
- In May 2011, our family of five spent eight days in Auckland and Rotorura, New Zealand. We didnâ€™t have to pay for airfare as it was part of a regularly scheduled furlough back to the USA. However, we used Thank You Rewards points to get our first four nights free â€” a $475 value. Beyond that, we paid another $500 for hotels and rented a car for $250. Those expenses were reimbursed because we had Venture Rewards points from the 100,000 mile-match offer. Total 8 day cost for our family of five (including all accommodations, vehicle rental, meals and activities) was $325.
- In July 2011, I booked two tickets from Phuket, Thailand to Toronto, Canada. We purchased three tickets with cash and used points for two of the flights. The tickets cost 70,000 miles, and we paid $125 each in taxes and fees.Â That saves us more than $2,000 worth of airfare.
- In August 2011, I flew from Houston to St. Sault Marie. It was a last-minute flight that I was trying to buy five days in advance. The best fare I could find on Delta (the only airline that services the airport) was $900. Instead, I chose to use 25,000 Delta miles and pay $10 for the trip.
In my opinion, the results speak for themselves.
How to get started collecting your miles and jetting around the world
Yes, you do need to be willing to do a little research. Yes, you do need a little background knowledge. But within an hour or two, you should be ready to start mastering the art of nearly free travel. There are a ton of free resources that will help you to get started. If you prefer, there are also some paid options available to individuals.
To help you get started, here are a few resources:
- How to Earn Frequent Flyer Miles from the Comfort of Your Living Room. This is a free ebook I wrote for newbies to help answer all their basic questions. The goal of this book is to help you move from knowing nothing to having a firm grasp on how frequent flyer programs operate and how to start building your own frequent flyer mileage balances.
- Travel Hacking Cartel. Chris Guillebeau has a membership-based program where he notifies participants of the latest deals and offers associated to miles and points. Plans start at $27 per month. It may be worth it, depending on your time availability and temperament. Personally, Iâ€™ve developed my own DIY Travel Hacking Cartel.
- Online forums. Flyer Talk is one of the largest forums that discusses all things related to frequent flyer programs, activities, and promotions. It is an ocean of information, so you may feel overwhelmed if youâ€™ve never been to the site before. Another valuable forum is Mile Point.
- Travel points and miles blogs. There are a lot of blogs in this niche, but Iâ€™ll introduce you to some of the blogs that I think will really help you get started. As you start reading these blogs, youâ€™ll be able to find others and quickly develop your list of favorites:
- Help Me Travel Cheap and Travel Free Coach (my travel blogs). Help Me Travel Cheap focuses on helping people find and identify the best credit card sign up bonuses. This site is ideal for newbies who want to get the most return for the smallest time investment. Travel Free Coach is where I do free personalized travel assistance. You can fill out any one of several forms on the site, and Iâ€™ll personally help answer all of your questions free of charge.
- The Points Guy. This is one of the most comprehensive miles and points blogs on the web. In an easy-to-understand way, Brian reports the deals that will help you earn extra miles. He often has educational posts that help you understand different airline award redemption policies.
- Frugal Travel Guy. This blog focuses on credit card rewards and highlights Rickâ€™s credit card churning strategies.Â Rick has been a long time credit card churner and provides valuable insight.
- Million Mile Secrets. Million Mile Secrets is a relatively new, but easy-to-understand blog that posts frequent step-by-step instructions on how to execute or capitalize on certain offers. It’s another great site for people who are just getting started.
- View from the Wing and the other Boarding Area Blogs. This blog network may not be ideal as you get started, but as you start reading more travel related articles, youâ€™ll want to subscribe to the Boarding Area family of blogs.Â These blogs provide detailed analyses of program benefits.
Final addiction warning: Iâ€™ve had a lot of friends that Iâ€™ve convinced to start collecting miles and points, and they love it. If youâ€™re going to using this strategy to get free travel, youâ€™d better be prepared for a new obsession: Itâ€™s a fun and profitable hobby. You may want to start packing your bags because youâ€™ll be surprised at how quickly your points will add up.