Birth of a travel hacker

Historically, I haven't been a big fan of credit cards. That's probably due to the fact that they led me deep into debt at an early age. I discovered credit cards in college, and used them to leverage myself to a lifestyle that I couldn't actually afford. I abused credit cards for almost a decade, then abandoned them completely for nearly as long.

In June 2007, after almost ten years away, I re-entered the world of credit cards. At the urging of Get Rich Slowly readers (who believed I was mature enough to give it another go), I picked up a Capital One No-Hassle Cash Rewards Visa. It's been my primary card ever since — and I haven't had a single problem with it.

I think the difference between the old me and the new me is that I treat my credit card as a tool instead of a way to cheat the system by spending money I don't have. Because I'm the CFO of JD Inc, because I'm the boss of my money, my credit cards are conveniences that can help me make better use of my money. But I treat them with respect, and I have rules.

  • For one, I never use credit unless I have cash in the bank to cover the expense. Never.
  • Similarly, I always pay my bill in full when it comes due. Always.
  • Finally, I do my best to make my purchase decision before I decide how to pay. I've read plenty of studies that show folks who use credit spend more, so I try not to let my method of purchase influence my decisions.

So, I've become a happy, responsible credit card customer. But I've never tried to do more than that. I have lots of friends who are into travel hacking and credit card “churning”, two hobbies that allow smart folks to essentially make money off the banks. With one exception — a British Airways card I picked up in 2011 so that I could get 100,000 bonus miles — I've thought these activities were too “fussy” for me. Plus, I thought maybe they were risky.

Recently, I've changed my mind.

Beginning to See the Light

Last month, I made a trip to Florida for Camp Mustache Southeast. On the flight from Denver to Orlando, I sat next to my friend Marla, whom I first met at the chautauqua in Ecuador then at the very first Camp Mustache in Washington state. We talked about travel.

“I'm going to Spain with my cousin this autumn,” I said. “I also have an invitation to go to Spain in April with another group, but I can't justify the expense.”

“Why don't you use miles?” asked Marla. Marla's a big travel hacker, by which I mean she knows how to accumulate miles and points to get free flights, hotels, car rentals, and more. (I have lots of other other friends who love travel hacking too, including Chris Guillebeau and Matt Kepnes.)

“Well, I'd like to use miles,” I said, “but I can't. I used all of my United miles last winter to book two nights in Key West. I do have more than 130,000 British Airways miles but I can't figure out how to use them.” Most of those miles — 100,000 of them — came from signing up for that credit card back in 2011! I still have them because I've never discovered how to redeem them for flights out of Portland.

Note: For those who are new to this stuff, one mile is roughly equal to one cent. Thus, 100 miles equals one buck. And 100,000 miles is about $1000 in value.

J.D.!” Marla said, exasperated. “Why don't you let me help you? You've heard me talk about travel hacking before. You know I'm happy to help you learn.” She shook her head. “Man, I can't believe you.”

“Where would you start?” I asked.

“The first thing you should do is sign up for the Chase Sapphire Reserve credit card,” she said.

“Do you mean the Sapphire Preferred card?” I asked.

“No, I mean the Sapphire Reserve. It'll give you 100,000 bonus miles plus lots of other stuff, such as free TSA Pre-Check, access to airport lounges, and more. But there's one catch.”

“What's that?” I asked.

“You can't apply online. Online, you only get 50,000 miles. You have to apply in branch for 100,000 miles. Oh, and there's a $450 annual fee. But the card also has a $300 annual travel credit, so the fee is really only $150. It's a good deal.”

“Hm,” I said. “Maybe I should sign up.”

So I did.

90% of the Population Sucks with Money

Last Thursday, I stopped at a nearby Chase branch to speak with a banker. I told him I wanted to sign up for the Chase Sapphire Reserve. “The one with 100,000 bonus miles,” I said.

He gave me a funny look. “You're not one of those travel hackers are you?” he asked. I played dumb.

“Travel what?” I said.

“Travel hackers. There's a bunch of people who go around signing up for cards with big bonuses but then canceling them after they get their miles. We banks don't like people like them,” he said with a wry smile.

“Well, that's not me,” I said. Not yet anyhow, I thought.

The banker punched up the application on his computer. During the half hour process, we exchanged lots of witty banter. He was truly a funny fellow. He became even funnier when he found out I make my living by writing about money.

“We banks don't like people like you either,” he said. “I'm sure you're a nice guy, but you pay off your bill every month. We don't make any money on you. Fortunately, 90% of the people who use credit cards suck with money.”

“Wow. Are you serious?” I asked.

“Absolutely,” he said. “Look, your credit score is 804. That's unusual. The average credit score is below 700. You pay off your bill every month. Like I said, 90% of people carry a balance. We're probably not going to make any money off of you with this card, but that's okay. You can't win them all!”

Sidenote: Later that day, I had lunch with a friend. He told me about a colleague who hopes to open a microgym. “It's one of those tiny places that only charges about twenty bucks per month,” he says. “It doesn't seem like much, but he says they make tons of money. Lots of people sign one-year contracts but 90% of them never show up.” It sounded just like what my banker had said about credit cards.

Birth of a Travel Hacker

My Chase Sapphire Reserve came in the mail this morning. I immediately got online and began going through the benefits. I applied for the Global Entry program (which includes TSA Pre-Check), which the card reimburses whether I'm accepted or not. I sign up for free airport lounge access. I moved all of my recurring expenses away from my Capital One card to the Sapphire Reserve card. Lastly, I set up a spreadsheet to track my progress and to remind me when to cancel the card.

Meanwhile, I've begun reading the /r/churning subreddit, which documents the latest credit card offers and shares tips for making use of travel miles. (Here's a great guide to a cheap vacation for newbies from that subreddit. Be warned, however: It's full of jargon.)

Now that I've acquired my first mileage card, I'm ready for my second — but not just yet. Like most of these cards, the Chase Sapphire Reserve comes with a minimum spend. Over the first three months, I have to charge $4000 to the card in order to earn those 100,000 travel miles. This won't be an issue, but at the same time I can't spread my spending to other cards. I have to wait until I meet the requirement with this card, then I can look for my next one.

Meanwhile, the biggest challenge is going to be spending the points. Like I told Marla on the flight to Orlando, I haven't figured out how to do this. I managed to convert United miles into a hotel room last winter, but I don't know how to use my 130,000 British Airways miles for anything useful. That's okay, though. I'm ready to learn!

Do you participate in travel hacking or credit-card churning? What advice do you have for me? What pitfalls should I avoid? What steps should I take proactively? What tips and tricks can you experienced folks offer to newbies like me?

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Revanche @ A Gai Shan Life
Revanche @ A Gai Shan Life
3 years ago

BA miles are pretty fantastically sucky to redeem but you can use them if you get creative. Have you looked at partner airlines? I used my bonus BA miles to book a friend a first class ticket to visit me from Maryland, flying on US Airways. It was my first time booking first class and I didn’t even get to fly it myself so I suck at some of this travel hacking stuff but I’m a good friend! 😉

Revanche @ A Gai Shan Life
Revanche @ A Gai Shan Life
3 years ago
Reply to  J.D. Roth

No Key West in Feb, got it!

Agree with most everyone that miles for hotel is a really poor redemption value. Maybe we have to do a booking tutorial for you to use those BA miles? If I can figure it out, I’m positive you can! 🙂

Brandon Cronan
Brandon Cronan
3 years ago

Amigo, BA miles are awesome. Especially for short haul flights within the U.S. I recently got two round trip tickets to Hawaii on Alaska Airlines, booked through American Airlines, using BA miles. Each round trip ticket was 25,000 miles out of Portland direct to Maui. This is possible since American Airlines and British Airways are part of the OneWorld alliance. So if you’re looking to use those BA miles I’d recommend searching for flights through American Airlines, and checking the “use award miles” box when you search. In a strange turn of events BA points are less awesome if you’re… Read more »

Joe
Joe
3 years ago
Reply to  Brandon Cronan

Brandon is spot on about using the British Airways miles to fly on American Airlines or Alaska within the USA. Here is a handy map with all the options (and Avios costs) from Portland: http://wandr.me/Award-Search/Avios-Map/PDX

Just keep in mind that every time you add an extra segment it is going to cost more Avios. British Airways flights are calculated per flight segment. Direct flights are best.

Jason
Jason
3 years ago

Please don’t use airline miles for hotels. You can do much better than redeeming for a penny/mile. Find a route where you can use them for international business class. Finding availability can be tricky, so it helps to be flexible in your destination. Chase points can transfer to United, which is pretty good for getting to Europe, but can also transfer to Korean or Singapore to travel to Asia.

IKC
IKC
3 years ago
Reply to  Jason

Except that you can transfer URs to Hyatt and redeem for great value (of course not always). Park Hyatt Maldives is only 25K points per night for example (cash rate can be around $1K per night), or Hyatt Regency Kathmandu (my recent redemption) is 5K points per night (cash rate for the night I booked was $150 + tax)

Steve Boyko
Steve Boyko
3 years ago

I agree with Jason, don’t use airline miles for hotels… or hotel points for airlines. Keep them in their own box.

The exception: AMEX Gold Rewards.. easily transferable to many other programs.

My best advice is not to hold on to your points. Earn and burn. Every program devalues their points every year or two, so you lose out by holding them. Accumulate enough to redeem for a trip then use them. Good luck and have fun!

The Green Swan
The Green Swan
3 years ago

My wife and I have been churning cards for almost two years and we saved close to $4K last year alone. Just wrote a post about it actually if you’re interested. We recently went through both the Chase Reserve and Preferred cards and were excited to get our Global Entry / TSA Pre-Check for free on top of it all! We live in Charlotte which is a hub for American (since they bought US Airways) so we’ve also churned through some American mile cards. One bit of advice when you start going with multiple cards, always keep track of when… Read more »

Pat Tramma
Pat Tramma
3 years ago

One neat thing about the Chase Reserve and the $300 travel credit is that it is based on calendar year. You get a new $300 after the close of your December statement. I got mine back in October, and didn’t have any travel expenses, so I went on to Southwest’s web site and bought a $300 gift card for free. I’ll use it some time this year, and I have another $300 credit to use now. For you, when you want to cancel the card, the window will be mid-December to mid-January so that you get it in before you… Read more »

Full Time Finance
Full Time Finance
3 years ago

We’re in our 4th year of card hacking. I’d estimate we average about 3K a year in signup bonuses we use towards travel. I don’t try as hard as I could, I suspect I could make this 4K with a bit more effort. The key is to pick the right card and maximize the payout. For your AVOS I’d do as others say and use them for a domestic flight. Perhaps even use them to get to a cheaper airport to fly to spain from using the chase points. Just don’t let them expire. Point worth depends a lot on… Read more »

Mr Crazy Kicks
Mr Crazy Kicks
3 years ago

Nice score on the reserve card! You can do a lot with 100K ultimate reward points 🙂 We just booked an all inclusive trip to Jamaica at the Hyatt Zilara for free. It would have been over $6,000 in hotel and flights, but we didn’t pay a penny. I wrote about some of the point transfer details. Travel hacking has been easier than I expected as well, we meet all the spending requirements with just our regular spending. And my credit score is still over 800 after churning through half a dozen cards. We are also going to Spain, but… Read more »

Adam
Adam
3 years ago

I did the credit card sign-up game for a couple of years and accumulated around $10k of value from the points earned through sign-up bonuses. Before I started, I opened a bunch of no-fee cards so I could keep them around forever and accumulate a good average age of credit number. With my wife now staying at home, the points have really allowed us to continue to take vacations, even as our income decreased. I’m taking a little break from it now as we may have a house purchase looming, and we don’t have any plans for big trips in… Read more »

Hours
Hours
3 years ago

Best advice is to read Doctor of Credit’s blog! He gives an unbiased review of the latest credit card offerings and doesn’t use affiliate links. He is a well respected voice in the churner community. If you’ve poked around r/Churning I’m sure you encountered the Chase 5/24 rule. For those that aren’t familiar, it means Chase will automatically deny you if you’ve opened up 5+ credit cards in the past 24 months. This includes any non-Chase cards you’ve opened. So my advice is to focus on Chase first as they tend to have some of the more lucrative sign-up bonuses.… Read more »

Marla
Marla
3 years ago

Hi JD – so glad to hear our conversation inspired you to dip your toes into travel hacking! I love the story of your trip to the Chase branch. Now that you have the Reserve, you’ll be the one getting me into the lounge! Next step – email me and I’ll help you use your points to get to Spain. There’s still hope to use those Avios points and if not, your shiny new UR points will get you there.

Dale
Dale
3 years ago

I sometimes feel a little bad for the credit card companies. How warped am I! My wife and I aren’t even trying very hard – just a couple of cards/person/year – but we still earn enough points to get our family of four on flights for a couple of vacations a year. Part of the game for us is to make sure we’re smart about how we spend the points. Lots of travel hackers blow through mountains of points on first class upgrades or on redemption values that don’t make sense. That’s their prerogative, but I would never spend real… Read more »

Bob Reisner
Bob Reisner
3 years ago

Just an FYI. I got the Chase Sapphire card in January, my version (and probably yours) says that the 100,000 miles becomes 150,000 when you use the Chase travel services for ticket purchases. This 50% bonus is ongoing.

Bob Reisner
Bob Reisner
3 years ago
Reply to  Bob Reisner

PS: I believe the Chase 100k miles offer has been withdrawn.

Henry L
Henry L
3 years ago
Reply to  Bob Reisner
Adam
Adam
3 years ago
Reply to  Bob Reisner

To clarify, 100k miles doesn’t become 150k miles when booking through Chase. Those 100k miles would instead be worth $1,500 in travel purchases booked through Chase (1.5 cents of value per point). Much higher redemption values are possible when transferring to other programs (Hyatt, United), so most people do not recommend booking through Chase. Also, points are often more valuable to have because you often see rates that go up as you get closer to booking a hotel, flight, etc., but the points may stay the same. For instance, I transferred Chase points to a hotel program and booked a… Read more »

Bob Reisner
Bob Reisner
3 years ago
Reply to  Adam

Totally agree.

Ben Linowitz
Ben Linowitz
3 years ago

A few tips that haven’t been mentioned yet: 1. I’ve gotten the most value from British Airways miles by using them for relatively short flights while traveling. For instance, if you are in Singapore and want to fly to Kuala Lumpur for a few days it is only 4500 BA Avios each way. Ditto for a flight from Paris to Berlin. 2. Spend some time learning about the different airline alliances (SkyTeam, OneWorld and Star Alliance) and which airlines are in which alliance. For instance, if you want to fly from Detroit to Atlanta then you are probably going to… Read more »

Go Finance Yourself!
Go Finance Yourself!
3 years ago

Wait, so you can still get 100,000 bonus miles with Saphire Reserve? I thought they did away with that at the end of last year since the online promotion is only 50,000. I may have to look back into this.

I’m not a hard core travel hacker. My main card is the Capital One Venture card. That sucker is paying for a trip to Hawaii this year. I’ve opened the Saphire Reserve, Citi American Airlines, and others just for the bonus points. My next goal is to get the companion pass through Southwest.

Gorden Lopes
Gorden Lopes
3 years ago

Yes, you can still get 100K bonus miles if you go to a chase branch and sign up for the card through the branch. I think this offer is valid till Mar 15th.

wishicouldsurf
wishicouldsurf
3 years ago

Funny…. I’m just seeing this article now, though it’s May, however, I embarked on a travel hacking experiment last October, with the goal of accumulating 1 million miles by June 30, 2017. It’s surprisingly easy and I now have a crap ton of points to play with and I haven’t really maximized the process yet either. I’d always been an amateur travel hacker putting all my expenses on cards but never took advantage of the churn. I’m well past a million miles now (note: I did not start at zero). I love a lot of things about the miles, but… Read more »

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