Miles & Points 101
Hi! We're super excited you decided to check out this beginner’s guide to travel hacking!
Our goal with this guide is to empower you to go from 0 frequent flyer miles to your first free flight.
We hope you’ll invest the time to read through this entire guide because it could change your life, as corny as it sounds. We discovered travel hacking at different points over the last 10 years, and it completely shifted the course of our lives when we realized we could afford to travel to many of the places we had always dreamed of visiting.
• Who Shouldn’t Become a Travel Hacker
• How Travel Hacking Affects Your Credit Score
• Other Things That Hold People Back?
• What About Credit Card Interest Fees?
• Earning & Redeeming Miles and Points
• Signing Up For Loyalty Programs
• Nate’s Points-Earning Philosophy
If you make it through this guide (and I hope you will), you’ll spend a lot of time listening to our advice. So, before we dive in, we want to introduce ourselves.
Meet the AuthorsReturn to Top
Some of you reading this guide may already know me from me and my wife’s YouTube channel Kara and Nate. We’ve been documenting our travels there for the past three years. We recently completed our mission to visit 100 countries by 2020. Even if you’ve watched all of our YouTube videos, you’ll still learn something new in this introduction because I want to back up to several years before we started our YouTube channel.
Let’s jump all the way back to early 2013. Kara and I had been dating for over 6 years. I had recently graduated from the MBA program at the University of Tennessee. Kara was graduating in May, and we were getting married in June.
My contribution to the wedding preparation was planning our honeymoon. Unfortunately, we were both recent college graduates and didn’t have much money to blow on a honeymoon. But like any good soon-to-be husband, I wanted this once-in-a-lifetime opportunity to be really special. So I started poking around the internet to learn how we could make the most of our small budget, and that’s when I first discovered this concept known as “travel hacking.”
Honestly, I was initially skeptical and didn’t dive in immediately. It took me weeks (maybe months) of online research before I finally convinced myself to sign up for my first travel credit card. Unfortunately, when I met the minimum spend and received my points, it was too late to put them to use for our honeymoon.
Don’t worry; we still had an incredible honeymoon. I found a great deal for a week at a villa on a small private island in Belize (and thankfully, my camera skills have improved over the years).
Shortly after returning from our honeymoon, I started researching how to use the new points I earned by signing up for my first travel credit card. I ended up using the points to book 2 round trip flights from Nashville, TN to Fort Lauderdale, FL for $12.
I still remember sitting on that flight thinking, “Wow! This is incredible! Everyone around me probably paid hundreds of dollars to be on this flight, and I paid $6.” I remember this moment very vividly. This was the moment I became obsessed with travel hacking.
As soon as we got back from the trip, I set out to learn everything I could about earning and redeeming miles and points for crazy cheap flights. During our first 2 years of marriage (while both working full-time jobs), I tested all kinds of new travel hacking strategies, enabling us to visit 13 new countries together.
The more we traveled, the more we wanted to see new places. To put it in the most cliche terms possible, we had been bit hard by the travel bug. Fast forward to January 2015, it was that time of the year when everyone is setting their new year's resolutions, and you have an opportunity to step back and think about what you want from your life, and more specifically, what you want to accomplish in the coming year.
For us, long-term travel was something we had been talking about for the past 2 years. Then one night in early January over blizzards at Dairy Queen, we had an epiphany. If we really want to travel long term, now’s the time. There is never going to be an easier time than now. Life will continue piling responsibility on top of us; if we don’t do it now, we may never do it.
So that night, we bought a one-way flight to Japan, packed our bags, and left the next day…
Just kidding. We aren’t quite that crazy. But that night, we decided that we would spend the next year saving up and planning a one-year trip around the world. To prove that we were serious about it and to keep ourselves accountable, we started telling all of our friends and family that we were leaving to travel in January 2016. We figured if we told everyone, there would be enough social pressure to keep us from backing out.
We spent all of 2015 putting the pieces into place to leave for a year of travel. This included putting all of our belongings in storage, moving out of our apartment, selling our cars, saving up every penny possible, quitting our jobs, and most importantly, saving up a ton of FREQUENT FLYER MILES that we would redeem for heavily discounted flights during our year of travel around the world.
This was when I got REALLY serious about learning everything I could about earning and redeeming miles and points. It became a serious hobby, and we saved up over 1.8 million frequent flyer miles before we left to start traveling full-time.
This might not mean much to you if you aren’t familiar with frequent flyer miles. But 1.8 million frequent flyer miles is worth between $15,000 - $30,000 in free flights!!
At this point (3 years later), we have earned well over 2 million miles and points and redeemed them for over $25,000 worth of free travel. [some of them in business]
And we still have points left over that we’ll redeem for more free flights in the future. Okay, that was a long story about me, but hopefully, I’ve built some credibility with you. I hope it’s encouraged you to finish reading this guide so you can start earning deeply discounted flights using the strategies I will teach you in this guide.
Unlike our friend Nate, you’ve probably never heard of me before - unless you’re one of my 213 followers on Instagram (more like 175 if you don’t count my mom and her knitting circle).
My name is Mike, and I’m just a guy who loves to travel. When I say that I love to travel, I mean to say that I’m obsessed with travel. So first, I’ll give you a quick rundown of my story.
I grew up in a small town called Nottingham, New Hampshire. I never really left my hometown until high school and never left the country until after graduating college. My goal in life was to become an opera singer (to this day, I’m not quite sure how that happened), so I spent eight years in college earning three degrees in classical music before starting my career as a freelance opera singer.
My first two times ever leaving the country were to sing on tour through Chile and in an opera production in Salzburg, Austria, after graduating from college. Immediately after touching down abroad for the first time, my eyes were opened to the many possibilities and experiences I could have by traveling around the world. From that moment, I knew I needed to do whatever it took to make travel a more significant part of my life.
There was one big problem - I was a freelance musician… Not exactly the most lucrative industry to be in to afford rent, let alone a trip abroad. That’s where travel-hacking came into play.
My first foray into travel hacking didn’t come in the form of credit cards, miles, and points, but rather in budget travel (I consider this a form of travel hacking). I would spend hours finding the cheapest flights, hostels, and best deals to piece together fantastic trips around the world for meager prices. The next puzzle piece was finding ways to make money while traveling. For Kara and Nate, this was their Youtube channel. For me, it was whatever remote job I could find.
Once I started to realize how easy it was to work abroad, travel for cheap, and actually make money while traveling, I began to take my travel hacking to the next level by getting into miles & points.
Within a year, I racked up over 2 million points (using many of the creative strategies outlined in this guide) and traveled on about a dozen flights over a few trips, all for free.
Hundreds of flights, 60 countries, and thousands of nights in hotel rooms later, I’m basically a full-time traveler with a steady stream of miles and points that allow me to travel wherever I want, whenever I want. Miles and points have even allowed me to go from budget airlines and hostels to luxury resorts, business class flights, and comfy airport lounges, spending less money than when I started my budget travel journey.
These days I live in beautiful Toronto, Canada, and travel as much as possible. I love everything from exploring the Canadian wilderness in my backyard to exotic and exciting places on continents near and far.
In the past, I’ve mostly kept my travel-hacking experience to myself. But now, I’m excited that Kara & Nate brought me on board to share them with you through this guide and The Daily Drop - our 5x weekly newsletter geared explicitly toward travel hacking.
What is travel hacking?Return to Top
For those of you who are just getting started, we’re going to begin simply by answering the question, “what is travel hacking?” When you start traveling more than usual, your friends will take notice. They’re going to start asking questions. So, here’s a simple way to explain your new travel hacking hobby.
“Travel hacking is simply earning and redeeming miles and points for heavily discounted travel.”
At its core, travel hacking is actually straightforward.
Step 1: Earn miles and points
Step 2: Redeem miles and points
Step 3: Travel for pennies on the dollar
When you dive into the details, it gets a little more complicated. Otherwise, you wouldn’t need this guide. But I think many people overcomplicate things, so I wanted to show you that it’s actually really simple.
While travel hacking can be much more than just miles and points, this guide will focus on that specific element.
Is Travel Hacking For You?Return to Top
At this point, you may be thinking, “I have a full-time job. I can’t just take a year off and travel worldwide. Should I continue reading this guide? Even though I only (insert personal situation), can I still get value from travel hacking? Is it right for me?”
Well, I’m glad you asked. There is a common misconception that you must travel a lot to get value out of travel hacking, which is simply not true. No matter your situation, you can probably squeeze out hundreds of dollars of free travel from the strategies in this guide. Let’s look at a few common situations and how each one could gain value. We’ll start with obvious:
The “I want to travel full-time” traveler - I’ve already told you that Kara and I have saved over $25,000 on flights using these strategies. If you’re going to embark on the beautiful journey of long term travel, PLEASE do yourself a favor, read this guide, and take action on what you’ve learned.
The “business” traveler - If you spend a lot of time in the air, travel hacking can help you maximize the miles you earn by flying. The perks that you can get for free with travel credit cards will make the time you spend in airports and on airplanes much more comfortable. Plus, you might think you’re earning a lot of miles with all of the flying that you’re doing, but later in this guide I’m going to show you how you can earn way more miles on the ground than you can in the air.
The “one vacation per year” traveler - If you’re like most Americans, you only get a week or two of vacation time. This means you may only be able to take one trip per year. Even if you only take one trip, travel hacking can still save you thousands of dollars. How awesome would it be if your one vacation per year was practically free? This is a really likely scenario. If you put these strategies into place, and you focus all your efforts on saving up for one big trip every year, you could pay for it just using miles and points.
The “I have champagne taste but a beer budget” traveler - Maybe you’re in a good financial position, and you can afford all of the travels you have time for. Even if this is you, I bet you still wouldn’t mind traveling a bit nicer. How does a lie-flat business class seat sound on your next 10 hour flight to Europe? Or how does upgrading to the Ritz Carlton instead of the Hilton sound? Even if you can already afford to travel a lot, miles and points will help you upgrade your experience!
The “I don’t like traveling, but I have to do it once a year” traveler - Even if you hate traveling, these strategies can still help you. Most people end up taking one flight per year for one reason or another, whether it be for business or visiting family for the holidays. The only thing worse than doing something you hate is paying to do something you hate. At least if you use these strategies, you won’t have to pay full price for your next miserable airport experience.
I truly believe that the strategies in this guide can benefit 90% of the people who are reading this sentence. However, before I get you too excited, I have to tell you that there are a few people who are not a good fit for travel hacking.
Who Shouldn’t Become a Travel HackerReturn to Top
Bad credit score - Signing up for travel credit cards is one of the fastest ways you can earn miles and points. If you have a low credit score, you’re going to need to work on bringing it up before you’re ready to become a travel hacker. If your credit score is below 700, there’s a good chance you won’t be able to get approved for many of the best travel credit cards. Go work on improving your score, and come back to this guide when you’ve got it above 700.
If you don’t live in the U.S.* - Our YouTube channel has a very international audience (that’s what happens when making videos in 70+ countries), and I’m sure some of you who have made it this far don’t live in the U.S. (although I’ve tried to make it clear that this guide is only for U.S. residents). I wish this guide could be for everyone, but because these strategies rely heavily on signing up for U.S. credit cards (which you can’t get approved for if you’re not a U.S. citizen*), you probably won’t get very much value from this guide if you don’t live in the U.S.*
*Note from Mike: As an American-Canadian, I have to mention that Canadians can participate in the U.S. credit card and points world. In fact, Canadians can even apply for U.S. credit cards using their Canadian credit history! If you don’t want to go down that road, there are plenty of Canadian points programs that these same principles apply to, and even some Canadian-issued credit cards for U.S. hotel and airline programs - so stay with us, Canadians!
Can’t keep spending under control - It would be very irresponsible for me to encourage you to sign up for new credit cards if you can’t keep your spending in check. Please stop for a minute and take a really honest look deep inside yourself. Will signing up for a new credit card tempt you to spend money you don’t have? If so, please close this guide now, and don’t tempt yourself any further.
If you took the time to read through each of the scenarios above, you probably noticed that each one has something to do with credit cards. Now you’re probably wondering why credit cards play such a vital role in the strategies detailed in the guide.
I know the idea of signing up for credit cards really scares some people. Please keep reading, and don’t give up on this guide. I’m going to explain why credit cards are so important to the process and hopefully tackle the biggest questions you have about signing up for new credit cards to remove any hesitation you may have about moving forward.
What Are Miles and Points?Return to Top
Miles and points are basically a form of currency that airlines, hotels, and banks offer in return for loyalty. The first true frequent flyer program was created by American Airlines in 1981 in an attempt to reward their most loyal customers and steal customers away from other airlines. The plan worked, and soon other airlines followed suit.
Today, loyalty programs can be found almost everywhere you look from your local ice cream shop to the gas station just down the road from your house. As travel hackers, we’ll focus on maximizing the value of three types of loyalty programs: frequent flyer miles, hotel points, and bank points. When I say “miles and points,” I’m referring to these three categories as a whole.
Frequent Flyer Miles
These are points (aka miles) earned with an airline that can be redeemed for free flights. An example of a frequent flyer program is United Airlines’ MileagePlus Explorer Club. If you are a member of the club (which you can sign-up for online for free) you’ll earn points every time you fly with United. Then, once you’ve earned enough points, you can redeem them for free flights on United Airlines.
One important thing to understand about frequent flyer miles is: if you earn miles with a specific airline, you must redeem those miles with that specific airline program. So if you earn miles with United, you must redeem them through United. You cannot earn miles with United and then redeem them for a free flight on American Airlines.
What is also important to understand is that just because you’re redeeming miles through an airline program doesn’t mean you need to redeem them on that airline. I know, I know - that’s super confusing. Let me explain.
Most major airlines belong to a series of “alliances” and also have various “partnerships.” This means that certain airlines team together (usually they all operate in different markets) and let each other book flights on one another’s airlines and even redeem points on their airlines.
The most prominent examples of airline alliances are Star Alliance, SkyTeam, and OneWorld.
Star Alliance is the largest of these and consists of airlines like United, Lufthansa, Air Canada, Turkish Airlines, and many more.
SkyTeam is primarily focused on Delta, KLM and Air France but includes airlines like Aeromexico, Korean Air, and more.
Finally, the OneWorld alliance includes American Airlines, British Airways, Qatar Airways, Ibera, and a number of others.
This means that if you have United miles, you could also use those miles to book flights on Air Canada or Lufthansa. The only catch is that you’re booking flights on these airlines through United’s website and loyalty program. This makes the world of points and miles very interesting because you can use U.S. points programs to book travel that never even passes through the U.S.
A fun example of this is using Delta SkyMiles to book a trip from Amsterdam to Dar Es Salaam, Tanzania on KLM Royal Dutch Airlines. This is an actual booking I made a few years back. I used U.S. points that I earned from a U.S. credit card to book a trip between Europe and Africa. The possibilities are endless, so start memorizing those airline alliances.
A few of the most popular U.S. frequent flyer programs include:
These are points earned with hotels that you can redeem for free stays.
An example of a hotel points currency is Marriott Bonvoy If you are a member of their rewards program (which is free to sign up for online), you’ll earn points every time you stay at any one of Marriott’s 30 hotel brands. Once you’ve saved up enough points, you can redeem them for a free stay.
Similar to frequent flyer miles, if you earn points with a a specific hotel chain, you must redeem your points through that specific chain. So, if you earn Marriott Bonvoy points, you must redeem those rewards at a Marriott Bonvoy property. The one exception to this rule is the fact that every major hotel loyalty program allows you to transfer points to airlines, typically at a suboptimal rate. We’ll cover that later on.
A few of the most popular hotel programs include:
Usually, you earn bank points by signing up for credit cards and spending money on those cards. Depending on which bank you’re earning points with, the points can be redeemed in different ways.
Fixed Value Points - These are points that have a specific value. For example, if you were to sign up for the Capital One Venture card, you would earn “Venture Miles” which are fixed value points. These points are worth $.01 cent each. So if you wanted to redeem these points for a $500 flight, you’d need 50,000 points (50,000 x $.01 = $500). Fixed value points are usually more flexible than frequent flyer miles and hotel points because they can usually be redeemed with any airline or hotel chain. Sometimes they can even be redeemed for things like taxi fees and parking - or pretty much anything that could be considered a “travel expense.”
A couple of the most popular banks offering fixed value points include:
Transferable Points - These are points that can be transferred to different airline and hotel programs. For example, if you were to sign up for the Chase Sapphire Preferred credit card, you would earn Ultimate Reward Points. You have the option of redeeming these as fixed value points (as explained above) or you can transfer them to different partners.
Specifically with Ultimate Reward points, you can transfer them to 11 different airlines and 3 different hotel chains. After you transfer the points, you can redeem them just like you would frequent flyer miles or hotel points that you earned directly with the airline or hotel. Transferable points are great because they offer a ton of flexibility, and you can usually get the maximum amount of value out of transferable points.
A few of the most popular transferable points include:
How Most People Earn Miles & Points
Now that you have a better understanding of these mysterious “miles and points,” let's look at a few specific examples of the most common ways people go about earning them.
Frequent Flyer Miles
All three of the major U.S. airlines’ frequent flyer programs work pretty much the same way. After signing up for their frequent flyer program, you earn points based on how much you pay for the flight. If you have status with the airline, you can earn additional bonus points. But in order to keep this example as easy to understand as possible, we’ll assume that you’re a standard member of the airline’s frequent flyer program.
In my examples, I like to be as specific as possible. So we’ll use United’s MileagePlus again as an example. Below is a chart that tells you how many United miles you’ll earn per dollar spent on a flight based on your membership level. Remember, we’re focusing on the standard member. So in this case, you’d earn 5 miles for every dollar spent (technically, you only earn points for every dollar spent on the “base fare” which doesn’t include the taxes and fees on the airline ticket, but let’s not overcomplicate things at the moment).
Let’s say you book a round-trip flight from New York to Paris for $1,000. You’d earn 5 points for every dollar spent on that flight. So, you’d earn 5,000 United miles for traveling on that flight.
[$1,000 x 5 = 5,000]
You earn hotel points pretty much the same way you earn airline points. You earn a specific amount of points for every dollar that you spend with the hotel. We’ll use the Hilton Honors program as an example. When you’re a part of their loyalty program, you’ll earn 10 points for every dollar spend on your Hilton hotel stay.
Let’s say you book a 5 night stay in a Hilton Hotel in New York city, and your room costs $300 per night. Your total bill would be $1,500. You’d earn 10x points for every dollar spent. So you’d earn 15,000 Hilton points in total for your stay.
[1,500 x 10 = 15,000]
The two most common ways to earn bank points are by signing up for a credit card and spending money on that credit card. For example, if you sign up for the Chase Sapphire Preferred credit card, you’ll earn 50,000 Ultimate Reward points if you spend $3,000 in the first 90 days after signing up for the card.
Then, moving forward, you’ll earn 1 point for every dollar you spend on the card. Unless you’re spending money at a restaurant or on travel, then you’ll earn 2 points for every dollar you spend (this is called a category spending bonus).
So let’s say you signed up for the Chase Sapphire Preferred card, and in the first three months you spent $3,000 on the card in order to meet the minimum spend. You spent $1,000 on flights, you spent $500 at restaurants, and you spent the remaining $1,500 on miscellaneous that didn’t fall into the restaurant or travel category. At the end of the three months, you’d have 54,500 Ultimate Reward points.
50,000 point sign up bonus + ($1,000 x 2 = 2,000) + ($500 x 2 = 1,000) + 1,500 = 54,500
The Fastest Way to Earn Miles and Points
Now that you have a better understanding of the most common ways to earn frequent flyer miles and hotel points, I want to illustrate why signing up for credit cards is the fastest way to earn miles and points. If you’ve been skimming through this guide, I don’t want you to miss this important point!
It’s easier to earn miles on the ground than it is in the air!
As backwards as it sounds, it’s actually much faster and easier to earn miles and points by signing up for credit cards than it is to earn them by actually traveling. Let me show why.
Remember the United Airlines example we used above? In that example, you paid $1,000 for a flight from New York to Paris. As a United MileagePlus explorer member, you earned 5 points for every dollar spent on your flight. This means that your round trip flight to Paris earned you 5,000 United Miles.
Now, let’s look at how easy it is to earn 8x the points just by signing up for one credit card. Chase bank has a credit card called the MileagePlus Explorer credit card. When you sign up for this card and spend $3,000 in the first 90 days, you’ll earn 40,000 United miles. Plus, you’ll earn 1 point for every dollar spent on the card.
If you were to sign up for the card and spend $5,000 in the first 3 months, in just 90 days you would have 45,000 United miles.
40,000 point sign up bonus + ($5,000 x 1) = 45,000
This is a super easy way to earn 45,000 United miles. All you’d need to do is sign up for the card, and start putting all of your everyday spending on this credit card instead of using cash or a debit card.
To earn this same amount of points by flying, you’d have to spend $9,000 on flights with United Airlines. In the example we used above, that would require flying back and forth from New York to Paris 9 times!
Hopefully by now, you’re starting to see why we travel hackers get so excited about travel credit cards. But before we move on, let’s look at an example in the hotel space.
Remember our Hilton example from above? In this example, you paid $1,500 for a 5 night hotel stay in New York city, and you earned 10 points for every dollar you spent which resulted in 15,000 points.
If you were to sign up for the Hilton Honors American Express credit card, you would earn 75,000 bonus points after spending $3,000 in the first 90 days after signing up for the card. Plus, you’d earn 3 points for every dollar you spent on the card.
So, if you were to sign up for the card and spend $5,000 in the first 3 months, in 90 days you would have 90,000 Hilton Honor points.
75,000 point sign up bonus + ($5,000 x 3) = 90,000
In order to earn 90,000 points with Hilton by staying at their hotels, you’d need to spend $9,000 on hotel rooms. Or you could just sign up for this credit card offered by American Express.
I think you get the point.
How Travel Hacking Affects Your Credit ScoreReturn to Top
This is the part of the process where most people get hung up. Please don’t be one of those people. I don’t want you to miss out on all of the free travel you can earn with these strategies just because you have a negative view of credit cards.
I have explained this strategy to enough people to know that, at this point, you have a lot of questions and concerns about signing up for multiple credit cards. And that’s totally understandable!
So in this section, I want to tackle the biggest objections I hear when I explain these travel hacking strategies to my friends and family (these are the same questions I had when I was first starting out too!)
Won’t signing up for multiple credit cards hurt my credit score?
I’m diving straight into everyone’s #1 concern first! The short answer is no. I’m assuming that the majority of people reading this guide understand what a credit score is, but just in case…
According to the Merriam Webster Dictionary, a credit score (or credit rating) is:
In the U.S. there are three major credit bureaus who track your credit score. They include: Experian, Transunion, and Equifax. They rate your credit on a scale between 300 - 850 (the higher the better). Anything above a 750 would be considered an excellent credit score.
When I first started travel hacking back in 2013, I had just graduated, I had one student credit card, and I hadn’t built much of a credit history. For that reason, my credit score was somewhere around 720.
Five years after signing up for many travel credit cards and implementing all of the strategies (and more) that you’ll read in this guide, my credit score has increased to 801. There is a free service that you can use to check your credit score called Credit Karma, and below is a screenshot from my Credit Karma account for proof.
But I don’t want you to just take my word for it. I want you to personally understand how signing up for credit cards affects your credit score so you can mentally get yourself past this fear. This part is going to be a bit long and probably a little boring but stick with me, because it’s really important.
Let’s start by looking at what factors make up your credit score. Below is a chart that shows the 5 major components:
I want to help you understand each one of these components so you can get a better idea of how applying for multiple credit cards will affect your overall score.
Payment History - This section is the most important because it is weighted heavier than any other factor in your credit score. This section measures whether or not you pay your bills on time. The fastest way to damage your credit score is to miss a payment!
Credit Usage - This portion of your credit score is determined by your debt to limit ratio, otherwise defined as the available credit that you're using. For example, if you have five credit cards and your credit limit is $10,000 on each credit card, your total amount of available credit would be $50,000.
If you've racked up $5,000 worth of charges across your different credit cards, your debt to limit ratio would be 10%. The lower your debt to limit ratio the better. According to Credit Sesame, you should keep it below 10% to keep your credit score in good standing.
[$5,000 / $50,000 = 10%]
Length of Credit History - This section should be renamed "average length of credit history." All of your open lines of credit are averaged together to make up your length of credit history. The longer your average is, the better. This is why you shouldn't cancel old credit cards even if you aren't using them anymore (as long as you're not paying an annual fee).
Account Mix - It's good to have a mix of different types of credit on your credit report. Credit reporting agencies like to see that you can responsibly manage multiple different types of credit. For example, if you have a home mortgage, an auto loan, and a few credit cards that you've paid off on time, this is proof that you're capable of managing multiple different types of credit.
Credit Inquiries - This is the section of your credit score that gets damaged if you're applying for new lines of credit (credit cards). Every time you apply for a new line of credit, the bank will check your credit score (a hard credit inquiry). If there are multiple recent hard credit inquiries on your credit report, this signifies to banks and credit reporting agencies that you're in need of more credit (not a good look). This section of your credit score will be best when you have less hard credit inquiries.
Before we move forward, I want to make one important distinction that confuses a lot of people. There are actually 2 different types of credit inquiries. You have “hard inquiries” and “soft inquiries”. Many people have the misconception that checking your credit score will damage your credit score. This isn't true. When you personally check your credit score, it's considered a soft credit inquiry. A soft inquiry doesn't get reported on your credit report, and it doesn't damage your credit score. However, when a bank or potential lender checks your credit score, this is considered a hard credit inquiry. Hard inquiries can have damaging effects on your credit score, but it's usually very minimal.
You SHOULD be checking your credit score on a regular basis! Your credit score WILL NOT be damaged if you check it.
How Is Your Credit Score Affected When You Apply for Multiple Credit Cards?
Now we're getting to the good stuff! Let's look at how travel hacking (i.e. applying for multiple credit cards) affects your credit score.
Payment History - Opening multiple credit cards can actually benefit this section of your credit score. It seems illogical that signing up for multiple credit cards could increase your credit score, but each credit card is considered a separate line of credit. If you're responsibly managing multiple lines of credit (i.e. paying multiple credit cards off on time), banks view this as more proof that you can responsibly manage credit.
Credit Usage - This is another section of your credit score that can benefit from applying for multiple credit cards. Opening a new credit card increases your overall amount of available credit. If you increase your overall amount of available credit without increasing your debt, your debt to limit ratio will drop. Let’s look at the math below.
Example: You have $50,000 worth of available credit. Your new credit card gives you a credit line of $10,000. Your debt stays the same at $5,000.
Old Credit Utilization - [$5,000 / $50,000 = 10%]
New Credit Utilization - [$5,000 / $60,000 = 8.33%]
The lower the better!
PRO TIP: Many people don’t realize that you can spend above your credit limit every month while still keeping your utilization down.
Your credit utilization is determined by your balance at the time of statement closing, not how much you spent during the month. Let’s say you have a $1,000 credit limit. You could spend $999 during the month, but make a payment of $899 the day before your statement closes. Despite the fact that you spent your entire credit limit, your utilization for the month will only be 10% instead of 99.9%.
Some people call this credit cycling, and it is completely legal and allowed by banks. This is a great way to get spend on your cards even when you have a low limit. I personally have notifications set up on my phone to remind me to make a payment on every card a couple days before the statement closes so I have a controlled, steady 5% utilization on every card, every month - which does wonders for my credit score.
Length of Credit History - This is one section which will be hurt (a little) by applying for new credit cards. If you're consistently getting new credit cards, your average length of credit history will be younger. Older is better in the eyes of the credit reporting agencies. However, this section only makes up 15% of your overall credit score. So, it's not a huge deal to decrease your average length of credit history.
Account Mix - Unless you've never had a credit card, this section shouldn't be affected by applying for new credit cards. If you've never had a credit card, it would actually be a good thing to add one to your credit report.
Credit Inquiries - This is another section of your credit score that could be damaged by applying for multiple new credit cards, but again, it only makes up 10% of your credit score, so it's not a big deal.
Every time you apply for a new credit card, the credit card company will check your credit score, which means that a hard credit inquiry will show up on your credit report. Hard credit inquiries normally only damage your credit score a few points. After a few months, they won't be considered "recent," and your credit score will bounce back to where it was.
Summary of How Travel Hacking Affects Your Credit Score
As you can see from the examples above, applying for multiple credit cards can benefit some sections of your credit score and damage other sections. The good news is that the sections that benefit are weighed heavier than the sections that get damaged.
Once you apply for a new credit card, the bank will check your credit score. This will result in a hard credit inquiry on your credit report that will slightly damage your score for a few months. If you are approved for the card, your new line of credit will decrease your average length of credit history which will also slightly hurt your credit score.
So that's the bad news. The good news is that (if used responsibly) the new credit card will help to increase your credit score because banks view it as more proof that you can responsibly manage credit. Additionally, the new line of credit will decrease our debt to limit ratio, which can also increase your credit score.
I think it's important that you understand the "WHY" behind the effects travel hacking has on your credit score. However, all you really need to know is that applying for new credit cards may immediately lower your credit score a few points, but after a few months, your credit score should rebound back around where it started and maybe even increase in the long run.
Other Things That Hold People Back?Return to Top
What About Annual Fees?
If you start looking into applying for new travel credit cards, you’ll realize that most of these cards require you to pay an “annual fee.” In this section, I want to explain to you why you shouldn’t let these fees hold you back from applying for new cards.
Let’s look at the United MileagePlus Explorer credit card from Chase as an example. This card has a $95 annual fee. This means that every year you keep the card, you’ll pay Chase $95 for the privilege of using the card.
The good news about this specific card is that the annual fee is actually waived the first year. This means you only have to pay the annual if you decide to keep the card for a second year.
This is actually the case with a lot of travel credit cards. Many of them will waive the annual fee for the first year to entice you to sign up for the card!
Believe it or not, even if it wasn’t waived, the value you get from the card far outweighs the annual fee.
When you sign up for the card, you’ll earn a 40,000 point welcome bonus. The value of United Miles varies depending on how you use them, but I value them at around 1.75 cents each. So, 40,000 points would be worth $700.
[40,000 x $.0175 = $700]
If I offered you this deal: If you give me $95, I’ll give you $700 in return. Would you do it? Of course you would! It’s an incredible deal, and that’s pretty much the exact same deal you’re being offered by many travel credit cards.
But I know what you’re thinking. What about year 2 when I don’t get a sign-up bonus and the annual fee isn’t waived. Then, I’m paying $95 and not getting anything in return.
Most travel credit cards offer some great benefits beyond the orginal sign-up bonus. For example, the United card that we’ve been discussing offers a free checked bag anytime you use your card to purchase a United flight. It also offers member-only award flight availability and priority boarding on United flights.
If you fly United at least a couple times per year, these benefits will more than make up for the $95 annual fee, but what happens if you don’t plan on flying United? I want to teach you the strategy I use each time I have an annual fee.
Keep. Cancel. Downgrade.
When an annual fee is due after your first year of card membership, you have three options.
- Keep the card and pay the annual fee
- Cancel the card
- Downgrade the card to another credit card with no annual fee
Numbers 1 & 2 are obvious options, but I bet most of you reading this didn’t know that downgrading your credit card was an option. Downgrading a credit card is simply moving your line of credit from one credit card to another. Normally, when I’m downgrading a credit card, I’m moving my line of credit from a card that has an annual fee to a card that has no annual fee. This way I can keep my line of credit open indefinitely without having to pay an annual fee.
Let’s look at the pros and cons of each of these three options
When you choose to keep a card, you will still have access to all of the benefits the card offers. Some examples of perks that might entice you to keep a credit card include increased spending bonuses, free airport lounge access, car rental insurance, free hotel night certificates, travel reimbursement credits, and more.
A specific example of a card I choose to keep every year is the Chase Sapphire Reserve credit card. The annual fee on this card is $550, but it offers a $300 travel credit every year. Plus, it gives a free Priority Pass membership that allows Kara and I unlimited free access to over 1,000 airport lounges around the world.
Another example of a card I choose to keep is the IHG Rewards Credit card. Every year when I pay the annual fee of $89, I get a free night certificate that can be used at many IHG hotels around the world. Some of these hotel rooms cost over $300 per night, so it’s a no-brainer to keep this card every year.
What about when it’s not so obvious?
This is something that I really enjoy about travel hacking - micro-managing my credit cards, points, statement credits, etc. to see, in detail, how much value I’m getting from a given card. I take this to the next level, but you can easily do a more toned-down version of this. Let’s take my American Express Platinum Card as an example. I have mini databases that I’ve built to manage each of my cards in a program called Notion, but you could do something similar in a simple spreadsheet.
Let me break down what you’re looking at. Every month when I receive my credit card statement, I take 2 minutes and input a few pieces of data:
- How much I spent on the card
- How many points I earned
- Value of statement credits for the month
- How many times I visited an airport lounge (a perk of this specific card)
I value the points at 2 cents each - your personal value may vary, but I won’t redeem my points unless I’m getting at least that much value, so this number is accurate for me.
The lounges are valued at $20 each. Normally it would cost $32 to enter these lounges if you were paying cash, but I would not pay that much to enter a lounge. I would probably never pay more than $20 if I didn’t have this credit card, so I consider that to be the value I get. Again, maybe you would only pay $10, or nothing at all! Everything can be valued differently, just determine how you value these perks.
Then I take the statement credits (which I value as the dollar amount, given they are just subtracted straight from my bill), and add it all up.
This exact database has a formula in the background that will actually take the annual fee and divide it by 12, which is then subtracted from the previous number we added up. This results in the final column - the NET value gained each month. The key word here is NET, because this number is the overall value gained minus the annual fee, meaning this is pure value on top of what you pay to hold the card.
As you can see, in just 8 months I’ve gained almost $4,000 worth of value from this card. When the $695 annual fee comes in four months from now, I’ll have no problem paying it because I can see, very clearly and specifically, how much value I’m getting out of this card.
If I was only getting around $700 of value, I’d consider one of the next options.
If the benefits you receive from the card don’t outweigh the annual fee, it doesn’t make sense to keep the card and pay the annual fee. So at this point, you either need to cancel or downgrade the card.
Downgrading a credit card can actually help to increase your credit score. So I usually make that my first option. However, it’s not always possible to downgrade a credit card. If that’s the case, you’ll need to cancel it.
There is a possibility that canceling a credit card will hurt your credit score, but if it does, it probably won’t be by much. The reason it can hurt your score is that it will decrease credit usage. Going back to the math I showed you earlier, you’ll have less available credit if you cancel a card which will increase your credit usage ratio.
Example: You have $50,000 worth of available credit. The credit card that you canceled had a credit line of $10,000. You have $5,000 worth of debt on all of your cards combined.
Old Credit Utilization - [$5,000 / $50,000 = 10%]
New Credit Utilization - [$5,000 / $40,000 = 12.5%]
I really wouldn’t worry too much about this hurting your credit score unless the card that you’re going to cancel makes up over 30% of your total available credit. A small 2.5% increase like the one shown in this example wouldn’t hurt your credit score by much if at all.
Canceling a credit card is also going to affect your length of credit history. Remember, your length of credit history is the average length of time your credit lines have been open. The higher your average the better.
So let’s say you have 5 credit cards:
Credit card #1: Opened 10 years ago
Credit card #2: Opened 7 years ago
Credit card #3: Opened 4 years ago
Credit card #4: Opened 1 year ago
Credit card #5: Opened 1 year ago
In this example your average length of credit history would be:
(10+7+4+1+1)/5 = 4.6 years
So if you canceled one of those cards you signed up for last year:
(10+7+4+1)/4 = 5.5 years
Your average length of credit history would increase to 5.5 years. In this case, your average length of credit history would actually increase which would be good for your credit score. The only time you can really get yourself in trouble by canceling a credit card is if you cancel a really old credit card.
For example, if you cancel your oldest credit card:
(7+4+1+1)/4 = 3.25 years
It would decrease your average length of credit history to 3.25 years which would negatively affect your credit score. Hopefully, now you can see that, in most cases, canceling a credit card really isn’t as big of a deal as people make it out to be unless that card makes up a major portion of available credit, or if it’s one of your oldest cards.
If the benefits of a credit card do not outweigh the annual fee, your best option is to downgrade the card. This will keep your original line of credit open which will increase both your average length of credit history and your credit score.
Let me explain that in plain English. When you downgrade a credit card, your line of credit moves from one card to another. The bank doesn’t consider this a new line of credit. Instead, they consider it a continuation of your original line of credit.
If you move your line of credit to a card with no annual fee, there’s no reason you shouldn't keep that card forever. You aren’t paying anything to keep the card open, and it’s increasing your average length of credit history the longer you keep the card which ultimately increases your credit score. You don’t even have to use the card once you downgrade it. You can throw the downgraded card in the drawer,never use it again, and it will still increase your average length of credit history.
In order to downgrade a credit card, all you have to do is call the bank, and tell them you don’t want to keep your current card because you’re not getting enough value from the benefits to justify the annual fee. However, you would like to keep your line of credit open with the bank if there is a card you can downgrade to with no annual fee.
In most cases, the banks want to keep you as a customer, and they will gladly downgrade your line of credit to a card with no annual fee.
There are many credit cards that offer enough ongoing value to justify paying the annual fee. In this case, you should pay the annual fee and keep the card. If a credit card does not offer enough ongoing value to justify paying the annual fee, you should first attempt to downgrade the card to a card with no annual fee. If you can’t do that, you should cancel the card unless you’ve had the card for a really long time, or if it makes up a large percentage of your available credit. In this case, it may be worth paying the annual fee to keep your credit score in good standing.
What About the Interest Fees You Have to Pay When You Use a Credit Card?Return to Top
Did someone say interest fee?
This concern usually comes from people who aren’t super familiar with how credit cards actually work. When you spend money on a credit card, that doesn’t mean you’ll immediately have to pay interest on the money you spend on the card.
The only time you have to pay interest on your credit card purchases is when you don’t pay off your bill in full every month. If you choose not to pay your bill in full at the end of the month, it’s called carrying a balance. At this point, you’re indebted to the credit card company because they have essentially extended you a loan that you haven’t paid back. Since you haven’t paid back their money, they are going to start charging you interest.
Kara and I have never paid a single penny of interest on any of our credit cards because we always pay them off in full each month, so we never carry a balance. Credit card companies actually make this super easy.
I have a really bad memory because I’m usually thinking about 1,000+ things at once. If I had to remember to pay my credit card bills at the end of each month, it would be a mess. I would forget to pay and end up paying interest fees due to absent mindedness.
Thankfully, all credit card companies offer automatic bill payments. This allows you to go into your online account and set up your bills to be automatically paid online from your bank account every single month.
This means, as long as you set up auto pay and have enough money in your bank account every month, you won’t have to pay a single penny of interest. The first thing we do when we get a new credit card is login to our account and turn on auto pay. That way we never have to worry about remembering to pay a bill. Paying our bills automatically each month helps us to build an even better credit score, and it keeps us from paying any fees.
Is this legal?Return to Top
The word “hacking” has a negative connotation. Most people associate it with internet hackers who are operating on the dark web sending viruses to people’s computers and stealing their money. This isn’t the case at all with travel hacking. Whoever coined the term travel hacking really did us all a disfavor. Travel Maximizing probably would have been a better term, but they didn’t ask me.
As travel hackers, our goal is to exploit different loyalty programs to earn the maximum amount of free travel. Now “exploit” may sound like a negative word, but it depends on which definition you choose to use, and I choose #1.
We are making productive use of the opportunities that are presented to us by these loyalty programs. There are some people who may argue that we’re taking advantage of these loyalty programs and using them unfairly to our advantage, but before you jump to that conclusion, I think it’s important to step back and understand how and why these loyal programs operate.
The first loyalty programs were actually started by banks back in the 1970’s. They started giving away cheesy gifts like toasters and blankets to their best customers and new customers. According to Randy Peterson, the success the banks were seeing with this strategy encouraged the airlines to start thinking about what it would look like to reward their most loyal customers.
An airline which doesn’t exist anymore called Western Airline was technically the first airline to launch a frequent flyer program, and it was super simple: fly 5 trips and receive a $50 travel voucher.
Shortly after the launch of Western Airlines’ frequent flyer program, American Airlines followed suit and created the first true frequent flyer program that we know today back in 1981.
The program was dreamed up by a bunch of marketing executives as a way to get passengers to book more flights with American Airlines instead of their competitors. Their goal by introducing the loyalty program was to get passengers to fly an extra ¼ of a flight with American Airlines per year. If they could accomplish this goal, the extra ¼ of a flight would pay for the benefits they were offering through the loyalty program.
American Airlines' first loyalty program turned out to be more successful than they ever imagined. Instead of customers booking an extra ¼ of a flight with them per year, they booked an EXTRA 6 flights per year, making the loyalty program wildly profitable!
To this day, loyalty programs continue to be profitable for airlines, which is why every airline has a loyalty program. Plus, when you take into consideration that a large chunk of these miles go unused every year, airlines and hotels are getting a ton of value from these loyalty programs, while most “normal people” rarely see any real benefits.
The average person only earns 11,000 frequent flyer miles per year which isn’t even enough for a free flight in the U.S. with most frequent flyer programs. Plus, most airlines don’t make it easy to understand their loyalty programs, and they make it even more challenging to redeem your miles. For these reasons, it’s estimated that there are over 10 TRILLION unused miles in circulation today.
All this to say, airlines count on most people not using their miles to their full potential. American Airlines as a company receives value for the customer loyalty they build through their frequent flyer programs, but the average person rarely receives any value due to the confusing nature of these programs.
That’s why a huge opportunity exists for those of us who take the time to learn how to maximize these programs! American Airlines isn’t concerned about the few people who actually take the time to figure out how to maximize their loyalty program because they are making plenty of money off all of the people who are letting their points go to waste.
Wondering Why Banks Make This So Easy?
You’ve probably heard the quote, when something sounds too good to be true, it probably is. That’s a quote that I’ve found to be very true in the majority of my life experiences. If something sounds too good to be true, you should definitely be wary of it.
I realize that everything I’ve told you so far in this guide borders the line of too good to be true. This is actually one of the things that held me back from getting started in the beginning. I thought there had to be some kind of a catch. That’s why I spent over a month researching everything I could read online, and I started out really slowly by signing up for one travel credit card.
It wasn’t until I was on my first free flight to Florida (the one I was telling you about at the beginning of this guide) that I really believed this travel hacking stuff actually worked. I realize you might be feeling like this too, which is why I think it’s important to look at why credit card companies would just “give away” thousands of miles and points.
Credit card companies offer big sign-up bonuses to encourage new users to sign up for their credit cards because they know they have the potential to make a lot of money from the average credit card user.
Don’t worry, you’re not going to be average, but you should be grateful for the average people that allow credit card companies to offer such lucrative rewards. :)
Credit card companies have many different ways of making money off of their customers. To start, every time you use your credit card at a store, the credit company charges that merchant an interchange fee of 1.5% - 2%. This means if you spend $10,000 on your credit card, the credit card company will make between $150 and $200 in interchange fees.
That’s just the start of where banks make their money with credit cards. The majority of their profit comes at the user’s expense.
According to CNBC, the average interest rate on a credit card is ~17% (this is the interest rate that you’ll pay if you carry a balance on your credit card), and it’s estimated that over 50% of consumers will carry a balance on their credit card in a 12 month period.
This puts the U.S. combined credit card debt at over 1 TRILLION dollars. So, if you combine annual credit card fees and the interest consumers pay on their credit cards, credit card companies make over 100 BILLION dollars from these fees.
The reason I wanted to share these statistics with you is so that you would have a better understanding of why credit card companies are able to offer such lucrative rewards. Plus, I want to make sure you don’t feel any guilt when maximizing your rewards.
Have I Missed Anything?
Hopefully at this point, I’ve tackled all of your objections. You should be excited to start learning how you can implement these travel hacking strategies to maximize the amount of free travel you can earn, but if you still have questions, I’m here to help!
I want everyone to be able to break down the financial barriers of travel so that they can experience more of the world. So, if you still have questions that are holding you back from getting started, please send us an email at firstname.lastname@example.org.
This Isn’t Right for You?
At this point, I’ve done my best to convince you to dive into the world of miles and points, but I’ve been doing this long enough to know that travel hacking isn’t for everyone. There tend to be two types of people who just aren’t destined to become travel hackers, and that’s okay. It still doesn’t mean you should miss out on all of the value. Do you fall into one of the two categories below?
- There are some people who will never be comfortable with the idea of signing up for multiple credit cards.
- There are some people who are simply too busy to invest their time in learning these travel hacking strategies.
If you fall into one of the two categories listed above, please don’t leave here empty-handed! Our main goal is to educate and inform people about travel hacking. If this guide hasn’t convinced you yet, we offer a 5-minute, 5-day-a-week newsletter called The Daily Drop. This newsletter brings information like this to you in bite-size portions using up-to-date, real-world examples. Give it a try if you think we might be able to get you over the fence.
Okay, now onto the fun stuff 😏
Part 2: Earning & Redeeming Miles and PointsReturn to Top
Now it’s time to get to the good stuff! These next few sections are going to be devoted to teaching you the specific strategies behind earning and redeeming miles and points for free travel.
You’ll have to earn the points before you can start redeeming them, but I think these strategies are easiest to understand when we look at the situation backward. So I want to start by explaining how you can redeem the different types of points. After you understand that, the last thing we’ll cover is how to earn points.
Redeeming Miles & Points (and how much they’re worth)
As we established earlier, there are four different types of miles and points (fixed value points, frequent flyer miles, hotel points, and transferable points). Each type of point requires a different strategy for redemption, so we’ll look at the strategy for each type below.
Fixed Value Points
These are the most straightforward to redeem because, as the name implies, they have a fixed value. As you may remember, you’ll earn fixed value points by signing up for bank credit cards. Each bank requires you to redeem them in slightly different ways, but more or less, each point is worth between 1 - 1.5 cents each, and you can redeem them for almost any travel expense.
One of the most popular travel credit cards on the market is the Capital One Venture Rewards card. You can get more value by signing up for other travel credit cards, but it’s the simplicity that draws people to this card. The Capital One Venture Rewards card earns fixed value points that are worth 1 cent each.
In order to redeem your Capital One miles, all you need to do is use your credit card to buy something travel-related, and your points can be used to cover that purchase. For example, if you purchase a $300 flight, you can redeem 30,000 points to remove that expense from your credit card statement.
Another popular fixed value program is American Express Membership Rewards, but it operates slightly differently (these points can also be transferred, but I’ll explain that later). Membership reward points are not quite as flexible as Venture miles when it comes to how you redeem them. You can’t use your Membership reward points to erase a purchase. Instead, you must shop through Amex Rewards Travel, and you can use your points to book the travel deals you find on their website.
You can normally find the same flight and hotel options that you would anywhere else online, but you won’t be able to use your points for other travel purchases like trains, taxis, or vacation rentals. However, they still make it super easy to redeem your points for flights, hotels, or vacation packages as long as you do it through their travel portal.
The biggest benefit of fixed value points is that they are really easy to redeem. You’ll see below that it’s a lot more complicated to redeem frequent flyer miles and hotel points. The drawback to fixed value points is that they aren’t as valuable as some of the other points you can earn. If you’re willing to put in the effort to learn how to maximize frequent flyer miles, you can usually get more value out of them. But for those who want to keep things simple (especially in the beginning), there’s nothing wrong with starting with a card with fixed value points.
If you feel like this is right for you, I’d highly recommend signing up for the Capital One Venture Card that you can find HERE.
If you want to learn how you can earn way more miles and squeeze the maximum amount of value out of them, keep reading!
How Much Are Fixed Value Points Worth?
These points have a fixed value that ranges between $.01 and $.015. There’s no math needed to determine the value of these points because, as the name suggests, it’s fixed.
Frequent Flyer Miles
Frequent flyer miles are the most complicated miles to redeem. The most popular U.S.-based frequent flyer programs include American Airlines AAdvantage, United MileagePlus, and Delta SkyMiles. All of these programs generally work the same way, with some notable differences.
Determining How Many Points You Need - Award Charts vs. Dynamic Pricing
In the past, the amount of miles you would need to fly from one place to another is determined by which “zones” you are flying between. This is commonly referred to as a “Zone-Based Award Chart.” An award chart is a fancy name for a chart that tells you how many miles you need to book a flight. Sometimes the flights you book with points are referred to as “award flights,” hence the name “award chart.”
Below is a portion of the American Airlines zone-based award chart.
As you can see, the world is broken up into zones, and it costs a certain amount of points to fly between each zone. For example, the contiguous 48 U.S. states are a zone, and Europe is a zone. It doesn’t matter where you fly to or from in each zone; it’s going to cost the same amount of points.
If you fly from New York to Lisbon, it’s going to cost 30,000 points. (highlighted in red above)
However, if you fly from Los Angeles to Berlin, it costs the same amount of points even though it’s a much longer flight.
In case you’re having trouble understanding the award chart above, below are a few more examples of how many American Airlines miles you’ll need to fly to different places around the world.
U.S.A. to Caribbean - 17,500
U.S.A. to Northern South America - 20,000
U.S.A to Southern South America - 30,000
U.S.A. to Europe - 30,000
U.S.A. to Central Asia - 35,000
U.S.A. to South East Asia - 35,000
U.S.A. to Australia/New Zealand - 40,000
The sad news is that American Airlines is the only major US airline that still offers an award chart like this. In recent years, most airlines in the US (and the rest of the world, for that matter) have shifted to a dynamic pricing model. Basically, this means that the points price is tied to the cash price, and can vary widely.
Unlike the award charts where a $2,000 ticket to London would cost the same number of points as the $1,000 flight to London, with dynamic pricing it will cost roughly double the points. In general, this move is considered to be a devaluation (points with these programs are less valuable than they used to be).
The current system of dynamic pricing applies to United Airlines, Delta Airlines, Southwest Airlines, and most other airlines around the world.
The points cost for the same route on the same day can now vary widely
What is an Award Flight?
In the next section we’re going to walk you through how to book an award flight, but first we need to explain what that even means. Award flights are essentially flights that are bookable with points. But here’s what you might not know - just because a flight exists doesn’t mean you can book it with points. You might find search results for a normal cash booking that won’t show up when you do the same search with points.
This is because airlines only dedicate a certain number of “award seats” per flight, and these seats are only available to book when airlines “release” them. Some airlines only open up award space a week or two before the flight while others will show award space months in advance. It’s important to keep this in mind as you begin your travel hacking journey, because flights that show up today might disappear tomorrow, and vice versa.
How to Find Award Flights
Now that you know how to determine how many points you’re going to need for an award flight, I’ll walk you through how to go about finding one of these flights on United’s website.
Step 1: Type in your departure city and destination, and make sure to click “book with miles.” This is what tells United that you want to search for a flight you can book with points instead of a paid flight.
Step 2: Expand the calendar so you can see all of your options
Step 3: Look for the flights that cost the least amount of points. These are the “Saver Awards.”
Step 4: Once you’ve found a departure date that offers Saver Awards, click on that date on the map. Below the map you’re going to see all of the Saver Award flights offered on that day. Find the flight option that looks best to you, and select it.
At this point, you’ve selected your outbound flight. If you’re only flying on a one-way flight, congratulations! You’ve found your award flight. Now all you need to do is book it using the points that are already in your account.
If you’re booking a round-trip flight, all you need to do is repeat the process to find your return flight.
Now I want you to try it for yourself. If you had enough points to fly anywhere in the world, where would you fly? Do a search between your home airport and your dream destination to see if you can find a Saver Award flight.
Taxes and Fees
You may be wondering why there are charges in addition to the points required to book your award flight. Unfortunately, some of these taxes and fees are unavoidable, so you’ll always have to pay at least a few dollars to book an award ticket. The good news is that some of the bigger fees are avoidable if you’re strategic. Let’s look at the different types of fees that can be tacked on to an award ticket. The other piece of good news is that every country has different laws regarding taxes and fees, and the U.S. has some of the cheapest airline taxes in the world.
There are several unavoidable fees that you may see when booking an award flight. The most common fee you’ll see is the 9/11 security. I’m actually not exactly sure what it’s for (I assume it has something to do with paying for additional airport security after 9/11), but it’s a fee that’s added to any flight that passes through a U.S. airport.
As you can see from the image above, there are other airports outside the U.S. that also tack on unavoidable fees. In the example above, the flight from New York to Singapore has a connection through a German airport, and they are assessing a “Germany Passenger Service Charge” fee of $24.20.
The amount you’ll pay in airport fees varies depending on the countries your flight travels through. Unfortunately, these fees are unavoidable, but thankfully these fees are usually relatively low compared to the avoidable fees I’m going to tell you about.
Fuel surcharges are sneaky fees that some airlines tack on to award flights for no apparent reason. These are the fees you really want to watch out for because some of them can be really expensive. For example, if you use your American Airlines miles to book a flight on British Airways, you’ll usually pay a high fuel surcharge when flying to Europe (especially if you’re flying through London).
The good news is that these fees are usually voidable just by changing which airline you’re flying with. In this specific example, you can avoid the majority of these fees by using your miles to fly on American Airlines instead of British Airways.
I won’t go through all of the strategies for avoiding fuel surcharges here because it’s not something I want you to get hung up on at this point in your travel hacking journey. You just need to be aware that they exist. If you run into them while using your points in the future, use Google to figure out how to avoid them (ex. How to avoid fuel surcharges when redeeming American Airlines miles). The internet is full of helpful people. :)
How Much Are Frequent Flyer Miles Worth?
Let’s say you want to redeem your frequent flyer miles for a round trip flight from Los Angeles to Bangkok, Thailand. In order to determine the true value per point, you first need to determine how much it would cost you to buy that flight without the points (the out of pocket cost).
An average price for this round trip flight might be $1,200.
Next, you should determine how many frequent flyer miles you need to redeem to get this flight for free. Let’s say for the sake of this example that the flight will cost 80,000 points and an additional $25 in taxes and fees.
So now we have all of the numbers, and we can do the math. It’s important to first subtract the taxes and fees from the cash cost, because you are still paying this fee and therefore not getting any value from your points toward it. This is important to remember when you’re looking at airlines with really high taxes and fees.
[$1,200-$25/80,000 = $.014]
This gives you a value per point of roughly $.014
This gives you an idea of the value you’d be getting by signing up for an airline credit card. If you sign up for an airline credit card that has a 50,000 point sign-up bonus, and you redeem those points at a value of $.014, the sign up bonus on that credit card would be worth $700!
[50,000 x .014 = $700]
However, the value per point can change depending on the cost of the flight. The miles needed to fly to the destination won’t change. So if the flight is more expensive, you can get even more value out of your points.
For example, if you are booking the flight from Los Angeles to Bangkok at the last minute, usually that’s when flights get more expensive. So this flight could cost as much as $2,000. You would still only need 80,000 points for the free flight. Therefore, your value per point would increase to $.025.
[$2,000/80.000 = $.025]
The reason you can’t determine a fixed value for frequent flyer miles is because the costs of flights are always changing, and as the costs of the flights change, so does the value of the point.
That covers the basics of using your frequent flyer miles to book award flights. It can seem a bit complicated at first, but with a little practice you’ll get the hang of it. It will eventually become easier to find the award flight you desire. Even if you’re still a bit confused, I don’t want you to get hung up on the details at this point in the process. You still need to go through the process of earning the points which will take you at least a couple of months. So you have plenty of time to practice!
Redeeming Hotel Points
Thankfully, redeeming hotel points is simple, and the process doesn’t vary much between hotels like it does for airlines. Before I dive into redeeming hotel points, I want to make sure you understand how hotel brands are structured.
In most cases, multiple hotel chains are grouped together under one major brand. There are really only four major hotel groups that you’ll be earning points with, and each one of these groups owns a bunch of different hotel properties.
Each group has its own loyalty program which means if you stay at any of the properties owned by that hotel group, you’ll earn the same type of points. For example, Hilton is a hotel group and they own 18 different brands. If you stay at any property from any of these brands, you’ll earn Hilton points. If you stay at a Hampton Inn, you’ll earn Hilton Honor points. If you stay at the Conrad, you’ll earn Hilton Honor points. If you stay at the DoubleTree, you’ll also earn Hilton Honor points. After you earn these points, you can also redeem them at any property that falls under the Hilton brand.
Similar to airlines, hotel chains used to have award charts. Like with these airlines, most have transitioned to a dynamic pricing model (points cost is tied to the cash cost). The only remaining holdout is World of Hyatt, which still uses its award chart (fingers crossed it stays that way!)
The only way to know how many points you’ll need for a trip is to search for the city you want to stay in and then see exactly how much different properties cost based on that search. Searching for hotel award nights is super simple, and they all work pretty much the same way. Just search for the city you want to stay in, the night you want to stay, then just find the button that changes your search from cash to points. I’ll show you where to find that button for each of the major hotel groups.
After you’ve searched for the city where you want to stay, you’ll see a results page with all of the hotels available in that city. At the top right of the results page, you’ll see the button that allows you to see the price in points.
On the Marriott homepage where you’re doing your initial search, you’ll see a check box in the lower right hand corner that says “Use Points.” Just check this box before hitting the search button to search for award nights.
World of Hyatt
Similar to Marriott, there is a check box located in the bottom right hand corner of the search bar on the home screen. Just check the box that says “Use Points” before clicking the button that says “Find Hotels”
IHG One Rewards
After you’ve searched for the city where you want to stay, you’ll see a results page with all of the hotels available in that city. At the top right of the results page, you’ll see the drop-down menu that allows you to change from money to points (or a combination of the two).
Once you find a room that you want to stay in, all you need to do is complete the checkout process by using the points in your account. The great thing about award nights is that you normally don’t have to pay taxes and fees when you use your points, so you can actually book a hotel room without spending a single penny.
How Much Are Hotel Points Worth?
This is going to give you a better idea of why all points aren’t created equal. For the most part, airline miles will always be more valuable than hotel points. You’ll see why in the example below.
For this example we’ll use a hotel stay at a Hilton Hotel in New York City. A Google search tells me that the out of pocket cost to stay at the Hilton Times Square is approximately $215.
You’d need 80,000 points for a one night stay here (I’ll show you how to determine the amount of points you’ll need in the “redeeming points” lesson below).
So now that we have both of our numbers, we can do the math:
[$215/80,000 = $.0026]
As you can see, our value per point in this example with hotel points is substantially lower than the value we got from our airline miles in the example above.
So when you see a hotel credit card has a sign-up bonus of 100,000 points, and an airline credit card has a sign-up bonus of 50,000 points, remember that not all points are created equal. Just because one sign-up bonus offers more points than another, it doesn’t mean you’ll get more value out of those points. In order to determine the value of a credit card sign-up bonus, you need to figure out the value per point. In most cases, the value you get from frequent flyer miles will be substantially more than the value you get from hotel points, which is why I mainly focus on earning frequent flyer miles.
Free Night Certificates
Another thing you’ll probably run into during your travel hacking journey is free night certificates. These are certificates that you can redeem for free nights at hotels, and you usually earn them by signing up for different credit cards. There are even credit cards that offer you a free night award every year just for keeping your card open. Check out our Top Credit Cards page, which usually includes at least a few cards in this category!
Transferable PointsReturn to Top
There are three main types of transferable points you can earn. These include:
Chase Ultimate Reward Points - Earned by signing up for and spending money on certain Chase credit cards.
American Express Membership Reward Points - Earned by signing up for and spending money on certain American Express credit cards.
Citi ThankYou Rewards - Earned by signing up for and spending money on certain Citi credit cards.
Transferable points are super valuable because of their flexibility. Since transferable points can be transferred to the loyalty program that will earn you the maximum amount of value, most people consider transferable points to be the most valuable points you can earn.
In order to redeem transferable points, you pretty much just add one extra step on top of the steps you take to redeem frequent flyer miles or hotel points. To redeem transferable points, you first have to transfer them to a hotel loyalty program or a frequent flyer program. Once the points transfer, you redeem them just like you would with any other hotel points or frequent flyer miles.
Let’s dive into the details of all three of these programs, starting with my favorite!
Ultimate Reward Points
The great thing about Ultimate Reward points is they can be transferred to all of their travel partners at a one-to-one ratio. This keeps transferring your points super simple.
Ultimate Rewards has 14 different transfer partners. You can transfer your points to 11 different airlines and 3 different hotel groups.
In order to transfer your points, all you have to do is:
Step 1: Login to your Ultimate Rewards account
Step 2: Select Transfer Points to Travel Partners
Step 3: Choose a travel partner
Step 4: Enter the loyalty number of the account where you want to transfer
Step 5: Choose how many points you want to transfer
Step 6: Confirm your transfer
Once you’ve confirmed the transfer, the points will show up in the loyalty account. Most of the time the points transfer will happen almost immediately, but some can take up to 2 days. Once the points are in your loyalty account they are stuck, and there’s no going back. So make sure you have a plan for the points before you transfer them. After the points appear in your loyalty account, you’ll redeem them just like you would any other hotel points or frequent flyer miles.
American Express Membership Rewards
American Express Membership Rewards points work the same as Chase Ultimate Reward points except for a few key differences.
- They have different transfer partners.
The points transfer to 17 different airlines and 3 different hotel partners.
- The transfer ratio is different.
Unlike Ultimate Rewards, not all of your points will transfer at a one to ratio. The transfer ratio is listed on the profile of each transfer partner.
- The time the points take to transfer is different.
The last main difference between Ultimate Reward points and Membership Reward points is the amount of time it takes the points to transfer. While most UR points transfer almost immediately, Membership Reward points can take anywhere from 3 - 10 days to transfer to the travel partner. This can be really annoying if you find an available award flight you want to book because it could vanish before your points have time to transfer. However, Membership Rewards do give you an estimate of how long the points will take to transfer. At least this way you have an idea of what to expect. (transfer times are highlighted in blue on the image above)
Citi ThankYou Points
Citi ThankYou Points can be transferred to 14 different airlines and 2 hotel programs:
The drawback is that none of the airlines are major U.S. airlines. This makes it more challenging to redeem your miles because you need to learn how the foreign airlines’ frequent flyer programs work. With that said, there is a lot of value to be had when transferring Citi ThankYou points to international airline loyalty programs, as long as you’re willing to put in the effort to learn something new.
All Citi ThankYou points transfer to airline partners at a 1 to 1 ratio except for Choice Hotels. You’ll get slightly less value when transferring your points here because the transfer ratio is 2 to 1.
In terms of transfer time, Citi ThankYou points vary dramatically. Points transfer to some partners immediately while others can take up to 7 days.
If you’re just getting started, I would focus my attention on earning Ultimate Reward points and Membership Reward points before moving on to earning Citi ThankYou points.
Capital One Miles
One of the newer players in the world of transferable points in Capital One. In the past they did not offer the ability to transfer miles to other programs, and didn’t have very exciting cards. However, in recent years they have really expanded their program to include new premium cards and amazing perks like the ability to cover travel purchases using your points directly toward your credit card statement.
Capital One is adding new transfer partners all the time and are building up quite the list.
It is important to know that while most transfer ratios are 1 to 1, some of them are different, so be sure to look carefully before transferring your points out of your account.
Of these many transfer partners, the only U.S. airline is Jetblue. As we covered earlier in this guide, that doesn’t mean you can’t use your points to book travel on any of the other U.S. airlines. You could transfer points to Air Canada or Avianca to book United flights, transfer points to British Airways to book flights on American Airlines, or transfer to KLM/Air France (which use the same points currency) to book Delta flights.
How Much Are Transferable Points Worth?
Transferable points are some of the most valuable points because they are very flexible. You have multiple different ways to redeem these points so you can make sure you’re getting the most value out of them.
An example of transferable points are Ultimate Reward points earned by signing up for Chase credit cards such as the Chase Sapphire Preferred credit card. One Ultimate Reward transfer partner is United Airlines. You can transfer your Ultimate Reward points to United airlines at a 1:1 ratio. This means that these transferable points are just as valuable as United miles.
In the example above, we determined that we could redeem our United miles for a flight from Los Angeles to Bangkok for a value of $.015 cents each.
I could go into 10 more examples of transferring your points to different loyalty programs, but I think you get the point. The important thing to understand is that transferable points are just as valuable as the program you transfer them to.
Try This Really Simple Exercise:
Don’t just lie there! It’s time to start taking action!
That wraps up the redemption portion of this guide. At this point, you should have a clear understanding of how to redeem the 4 major types of miles and points. If you’re still a bit confused, don’t worry, practice makes perfect. I highly recommend practicing finding award flights and award nights. Once you do a few of these searches on your own, you’ll gain a much clearer understanding of how it all works!
If you could travel to any city in the world, where would you go? Write it down.
Now, go to United.com and search for an award flight. See if you can find a lower-level award flight. Find it? Great!
Now, go to Marriott.com and search for hotels in that city that are bookable with points. Did you find one? How many points does it cost per night?
Write all of the information down, because in the next section, I’m going to teach you how to earn enough points to take your dream trip.
Signing Up For Loyalty ProgramsReturn to Top
Now it’s time for you to start taking action! The first step is signing up for loyalty programs. You have to be a member in order to earn points, and it’s completely free to sign up! So now I want you to stop reading this guide, and go sign up for the three most popular Frequent Flyer Programs and the two most popular Hotel Loyalty Programs. I’m making it as easy as possible for you. The links below will take you directly to the sign-up page of each program.
Make sure to keep track of the email you use to sign up, your new membership number, and your password. Write these down, and keep them in a safe place!
Now that you’re signed up for the programs, let’s start focusing on earning points!
Earning Miles and PointsReturn to Top
As we have already established, there are multiple ways to earn miles and points. The two ways we’ve focused on so far have been through traveling and credit cards, but you can also earn points through online shopping portals, dining programs, and you can even buy miles and points. In this section, I want to give you a quick overview of the three options we haven’t discussed yet.
Online Shopping Portals
Shopping portals are essentially online shopping malls. They have a list of different online stores, and they allow you to earn bonus points by starting at the shopping portal and clicking through to the online store to make your purchase.
For example, United Airlines has a shopping portal called the United MileagePlus Shopping Portal.
If you were to click on the Macy's logo in the shopping portal, you'd earn an extra 3 United miles on every dollar you spent on Macy's website. So if you spent $100 at Macy’s, you’d earn 300 frequent flyer miles. These shopping portals are a great way to earn a few extra points when you’re shopping online. The bonus points you get for shopping at specific stores vary by shopping portal, so make sure to use the site evreward to find the shopping portal that’s offering the highest bonus.
Most airlines offer dining programs. These are programs you can sign up for that will give you bonus miles when you dine at participating restaurants. All of these programs are run by the same company, so they operate the exact same way. We’ll use the MileagePlus dining program as an example.
As an "online member" you'll earn 3 points per $1 spent at participating restaurants. All you have to do is become an online member and agree to receive emails from the dining program. If you were to dine at one of the participating restaurants and spend $50, you’d earn 150 United miles.
Dining programs can be a great way to earn a few extra miles, but I’ve found the selection of participating restaurants to be very limiting. With that said, it’s still worth taking a few minutes to sign-up for the dining program offered by your favorite airline (you can only be a member of one at a time).
American Airlines Dining Program
My least favorite way of accruing miles and points is purchasing them. This is rarely ever a good deal because loyalty programs always charge a high price to purchase their points.
Take American Airlines, for example:
You can purchase 142,500 points for $2,950. With the best current bonus being offered, you’re still paying $.02 cents per point.
[$2,950/142,500 = $.02]
In order to justify buying these points, you’d need to make sure you were getting more than .02 cents worth of value each when redeeming them. Usually, the only time it makes sense to buy points is if you have a specific business class flight that you plan on using the points to book. Since business class tickets are much more expensive than economy tickets, you’ll get more value out of your points when redeeming them for business class.
Here are a couple of other examples of when it makes sense to buy points:
A great example of when it makes sense to buy points is if you’re booking travel with cash, but buying points and booking the same travel with those points end up being cheaper. This might sound silly, but it’s more common than you may think (usually with hotels).
Let’s look at an example that I recently used:
I recently booked a stay at a Hilton property in Kuala Lumpur. Because hotels are so cheap in Southeast Asia, it made sense to make a cash booking and save my points for something that offered better value.
However, because Hilton was offering a 100% bonus on purchased points (something that happens at least a few times every year), it actually made sense to BUY points, make the same booking, and save money in the process.
As you can see in the screenshots above, the 5-night stay in Kuala Lumpur only costs 24,000 points. You can also see that buying 24,000 points from Hilton only costs $120, or $24 per night. Given the cash price of the room was nearly $60 per night, I saved over 50% by BUYING points from Hilton and booking the room I was about to pay twice as much for.
The other reason you might want to buy points is if you need to top off your balance. Let’s say you’re trying to book a business class flight to Japan for 80,000 points, a flight that otherwise would’ve cost you thousands of dollars. If you only have 75,000 in your account, it would TOTALLY make sense to buy the 5,000 points to book your flight. If you need to spend $50 or $100 to get enough points to book a flight worth thousands of dollars, you’re still coming out way ahead.
Banks love new customers. They love them so much that they’ll pay YOU if you can send some their way. A great way to earn points is through Referral Bonuses.” Many of the big banks will give every customer a set of unique referral links which they can send to friends, family, colleagues or strangers (don’t send them to strangers, please). When someone uses your link to sign up for a card, the bank will give you a bonus, typically in the form of points.
Referral bonuses range from 5,000 points per successful referral to 20,000 or even higher. It depends on which card you’re referring someone to and whether or not the bank has any referral promotions going on.
As I said, banks love customers. They also hate losing customers, which is why they’ll incentivize them to stay in the form of, you guessed it, more free points. Let’s walk through what this looks like:
You open a new card, get amazing value out of it in the first year because of the excellent welcome bonus, but when the annual fee hits for year 2 you realize that the card doesn’t provide much value without that bonus. So you decide you want to cancel it. You call the bank, explain that you’re not getting value from the card and you want to close it.
As long as you’re in good standing with the bank and you’ve been putting regular spending on the card, there’s a good chance that before canceling your card, the bank will offer you something in exchange for keeping it open for another year. This could be points, statement credits, annual fee waivers, or other things. It differs for every customer and every card, so there’s no formula to determine exactly what to expect. There’s also no guarantee that you will get a retention offer at all.
I’ll give you an example: let’s say there are two customers with American Express. One of them has 10 cards open (yes, that’s a thing), pays their bills every month, keeps a low credit utilization, and puts a ton of spending on each card. The other person has one card open. They also pay their bill, keep a good utilization, but don’t put a ton of spending on their card - just a few hundred dollars a month.
Who do you think is more likely to get a retention offer?
If you said person one, you’d be wrong. Why? The bank doesn’t need to incentivize them to stay because they’re confident that the customer will stay anyway. After all, they have TEN cards - It’s highly unlikely they’ll be leaving anytime soon. Plus, they put so much spending on the other cards that even without the card in question, they are an extremely profitable customer.
Person number two, on the other hand, is much more likely to get a nice retention offer. If they follow through with closing their one card, the bank loses them as a customer and may not get them back. Therefore, the bank wants to do everything they can to retain them.
It’s important to know that you shouldn’t close any credit card or attempt to get a retention offer until you’ve held the card for at least one full year.
When you join the loyalty programs I suggested above, you’ll occasionally get emails with opportunities to earn a few hundred or a few thousand miles here and there. Airlines, hotels, and credit card companies are constantly running different promotions. For example, below is an email I recently received from United Airlines to earn an extra 2,250 miles when I book a rental car with Hertz.
It’s worth taking a look at these when they enter your inbox, but most of the time the points you earn won’t be worth the time you invest. Sticking with this example, I’m not going to go out and book a rental car. I don't need just to earn 2,250 points, but if I needed to book a rental car anyway, this could be a good promotion to take advantage of.
Another example is taking surveys. Several different loyalty programs allow you to earn points by taking surveys. In most cases, it’s not going to be worth going through the trouble to fill out these surveys for a few hundred points.
Just because you CAN earn a few extra points, doesn’t mean always SHOULD. I’ll explain more of my points-earning philosophy below.
Nate’s Points-Earning PhilosophyReturn to Top
I believe that the cost of flights is the major expense that holds most people back from international travel. Cheap accommodations are much easier to find than cheap flights. Airbnbs, cheap guest houses, and hostels are all great places to stay if you’re on a budget. However, it’s not always easy to find an affordable flight if you want to travel to a different continent. This is why I focus on earning and maximizing frequent flyer miles over hotel points.
If you’re like me, you’re a busy person which means that your time is very valuable. So, instead of getting caught up in all of the small ways I can earn points, I like to focus on the big wins!
As great as it is that the shopping portals and dining programs let you earn a few extra points, I don’t worry about squeezing every point out of these programs. If I’m going to make a big purchase like a new computer, I’ll make sure to maximize that purchase through a shopping portal. But for the most part, I just buy everything on Amazon because I’m a devoted Prime user, and it’s the most convenient.
I also never let dining programs dictate where I eat out. I’m signed up for the programs so if I happen to eat at one of the participating restaurants, I’ll earn the bonus points, but I’m not going to go out of my way to eat at a restaurant just because it’s on the list.
I also don’t waste my time taking surveys and chasing promotions for a few hundred points here and there.
Instead, I like to spend my time focused on big wins that will result in the maximum amount of value for the minimum amount of time required. As you may have already guessed, the biggest wins come through credit card sign-up bonuses and spending bonuses which is why the next section is going to be focused on maximizing credit card rewards.
Mike’s Points-Earning PhilosophyReturn to Top
Unlike Nate, I think there’s just as much value, or more, in focusing on hotels in addition to flights.
In my mind, flights are an extremely fleeting experience. It’s great to fly in business class, but the fact is that it’s over in a matter of hours. Hotels, on the other hand, account for amuch larger amount of your trip time. If I fly in business class for 8 hours then stay in a luxury hotel for 7 nights, the hotel stay is what I’m going to remember most about the trip (and I’m a huge aviation nerd - I go plane spotting for fun, so this is saying a lot).
Additionally, hotel benefits go a lot further than airline benefits. Hotel benefits for elite status members or co-branded credit card holders can include spacious room upgrades, discounted rates, free breakfast, lounge access (yes, hotels have lounges too!), late checkout, early check-in and more. As we’ll cover in a later section, hotels offer huge opportunities to earn points when you’re staying on cash bookings as well, which earn you free nights very quickly.
So yes, you could find a cheap hostel if you wanted to dedicate all of your points to airlines, but I’d much rather book a cheap economy flight, suffer for a few hours, and stay at the Ritz-Carlton in an Executive Suite with private butler service on the beach for 7 nights (yes, I did this recently too!).
Don’t get me wrong, I still stay in hostels and cheap hotels sometimes. I also fly in business class a lot of the time too. My philosophy boils down to this: Make my points last as long as possible while still enjoying memorable and luxurious experiences in moderation. If booking a 5-star resort will deplete my entire points balance, I’ll stay somewhere cheap. If booking a first-class flight halfway across the world will use points that took me a year to earn, I’ll book economy. It’s a balance that we all need to find!
Determine a Goal and Create a Plan
I hesitated to include the “goal setting” section below in this book, and it’s because there are so many variables to take into consideration that it can get a bit confusing. I did my best to lay it out in a simple and concise way (with examples). So hopefully it will click with you, but if it doesn’t, don’t let it get you down. We are here for you! If you’re still confused about which cards will help you accomplish your travel goal after reading the section below, we’re here for you. We publish daily content about travel hacking, points and miles, credit cards, and more in our Daily Drop newsletter (shameless plug, but trust me, it’s awesome).
Before we dive into this section, I need to caution you. A lot of people mess up when applying for their first credit card. They just apply for the card with the highest sign-up bonus, or they apply for several cards that they’ve heard are “the best.” However, it doesn’t matter how many points you earn if they can’t get you where you want to go.
Before you start applying for credit cards, it’s important to have a goal. Where do you want your points to take you?
Setting a goal will allow you to work backward to figure out which cards you can sign up for that will get you where you want to go. Let’s say you live in Chicago, and you want to fly to Italy next year. Now that you have a specific goal, you can come up with a plan to get there. Let me walk you through the process:
Step 1: Figure out which airline will get you there.
To do this, I recommend searching for award flights between your home airport and goal destination. You’ll conduct the searches on the airline’s website, just like I showed you in the section above.
You want to figure out which airline offers the best award availability to your destination during the time that you want to travel.
For example, if you live in Chicago and want to fly to Rome, Italy next summer, you’ll search the Delta, American, and United websites to see which airline offers the best award availability. Don’t worry about specific dates. Instead, check the overall award availability for the entire month you’re planning to travel. Award availability is always changing, so if you find an award flight now, it doesn’t exactly mean it will be available once you have earned the points you need to book the flight. The point of this search is to determine which airline will hopefully have the best availability in the future after you have the points in your account.
For this example, let’s say your search determines that United Airlines offers the best award availability.
[The solid blue lines show excellent award availability during the month of July]
Now that you know which airline offers the best availability, you need to determine how many points that airline charges for the trip, which takes us to the next step.
Step 2: Determine how many miles you need for your trip.
It should say how many miles the trip will cost when you search for award availability. So if you see this, be sure to make a note of it.
[This award ticket between Chicago, USA and Rome, Italy costs 60,000 points and $115.93 in taxes and fees]
Step 3: Determine which credit cards you can sign up for to earn the points you need.
Once you know how many points you need, you can now determine which cards you need to sign up for to earn the points.
We’ll continue with our example of flying from Chicago to Italy with United Airlines. As you saw above, we’ll need 60,000 United miles to book this trip.
At this point, we’ll want to search through the top travel credit cards to learn which ones we can sign up for that will help us earn at least 60,000 United miles.
Every month I put together a list of the Top 10 Credit Cards, which is a great place to start looking for your first (or second, or third) card.
A quick look at the list above will show you that a very obvious option for earning United Miles is the United MileagePlus Explorer Credit Card. This card normally has a sign-up bonus of around 40,000 points. So this would be a great start on your journey to earning 60,000 United points.
At this point you have a couple of options:
Option #1: Use strategic spending to earn the remaining 20,000 points.
If you don’t want to sign-up for any more credit cards, you can earn the remaining 20,000 points through strategic spending, and by strategic spending I mean putting as much of your regular spending as possible on the card (not more than you would normally spend, just your regular spending)
Let’s say you’re able to spend $3,000 per month on your credit. At this rate, after signing up for the card, it would take you 7 months of spending to earn the remaining 20,000 points you need for your round trip flight.
This definitely isn’t a bad option. Earn a free flight to Europe doing exactly what you normally do, just sign-up for the right credit card and move your spending to that card. Not bad, right?
Well if you’re impatient like me and want to speed up the process (assuming you’re comfortable signing up for a second card), you can move on to option #2.
Option #2. Sign up for a second card to earn the points even faster!
This is where the path forward gets a little less obvious, because if you look through my list of top travel credit cards, United Airlines doesn’t offer any more credit cards that you can sign-up for to earn points directly with the airline.
So, now we need to look at the credit cards that earn transferable points which can be transferred to United Airlines. In this case, a great card to earn more United miles would be the Chase Sapphire Preferred card. By signing up for this card you can earn 50,000 Ultimate Reward points which can be transferred to United at a 1 to 1 ratio. So after you earn the sign-up bonus, you will be able to transfer your 50,000 Ultimate Rewards to 50,000 United miles.
Just by signing up for both of these cards and earning the sign-up bonuses, you’ll have over 90,000 United miles which is more than enough to accomplish your goal of flying from Chicago to Rome.
Step 4: Apply for the Cards & Meet the Minimum Spending Requirements
Once you’ve determined the right credit cards to help you accomplish your goal, it’s a pretty straight forward process. You need to apply for the cards and meet the minimum spending requirements in order to earn the sign-up bonuses.
Step 5: Redeem Your Points
Now it’s time for the fun part. Once the points are in your frequent flyer account, it’s time to head to the airline’s website to find and book your award flight!
Step 6: Go Travel!
While you’re on the plane en route to your destination, be sure to take a moment and think about how awesome it is that everyone on your flight paid hundreds of dollars for their ticket, and yours was almost free. :)
How to Choose the Best Credit Card(s)
Now that you have a system for identifying which credit cards you should sign up for, let’s look at how you can evaluate each credit card offer individually. When you’re trying to determine which credit card will help you achieve your travel hacking goals, you want to pay attention to several factors including the sign-up bonus, spending bonus, annual fee, minimum spending requirement, and additional benefits. Let’s look at each of these in more detail.
The Sign-Up Bonus (sometimes called a welcome bonus)
Unless you spend a lot of money on your credit cards (like $100,000+ per year), you’ll probably earn the majority of your frequent flyer miles through sign-up bonuses. Credit card sign-up bonuses are a great way to earn a large chunk of points in a little amount of time.
A signup bonus is a bonus that banks offer to potential cardholders as a way to incentivize them to sign-up for a new credit card. We’ve already talked about how many billions of dollars banks make in fees from credit card users, so you should have a good understanding of why banks would offer these lucrative bonuses.
Almost all sign-up bonuses are structured the same way. They all require you to meet a minimum spending requirement (explained below) within a certain amount of time after signing up for the card. This is the bank's way of making sure you’re actually using the card instead of signing up for it just to get the points.
Once you’ve met the minimum spending requirement and paid off your bill, the points usually post to your account within 30 days.
I think you get the point. A sign-up bonus is a pretty simple concept, which is why I want to spend the rest of this section focused on how you can spot the best sign-up bonuses. The card offering the most points may not actually be the best deal. In order to determine which card has the best sign-up bonus, you’ll need to take into account the value of the points you’ll be earning.
You learned in the redemption section above that, in most cases, airline miles are much more valuable than hotel points. And transferable points can be just as valuable as airline miles because you can actually transfer them to frequent flyer programs, and they become airline miles.
So, if I were in your shoes and just getting started, I would look for the credit cards offering the sign-up bonuses with the largest amount of airline miles or transferable points.
This is where the “best” sign-up bonus starts to get subjective. The type of airline miles/transferable points you want to earn is going to depend on which airline you prefer to fly.
For example, if you live in Atlanta, GA (a major Delta hub), it’s probably going to make the most sense for you to focus on signing up for credit cards that will earn you Delta Skymiles. Whereas someone who lives in Dallas, TX (a major American Airlines hub), would probably want to focus on credit cards that earn American Airlines miles.
With that said, if you’re in doubt of which airline you should focus on earning miles with, I would highly recommend starting with United miles (as long as you don’t live near a major Delta or American Airlines hub).
United miles are easy to earn, you’ll get more value out of them than you would Delta Skymiles, and in my experience they offer much better award availability than American Airlines.
If you’re still feeling confused on which cards are the best, I highly recommend checking out a blog post I create every month where I rank the top 10 best travel credit cards. I heavily weigh the sign-up bonus in my rankings. So the cards that you see in my top 10 posts all have awesome sign-up bonuses!
The Spending Bonuses
Another important benefit to take into consideration when signing up for a travel credit card is the ongoing spending bonuses that you’ll receive when you make purchases with your card.
Before we go any further, I have a favor to ask you… Please stop paying for stuff using cash or your debit card! Almost any credit card you sign up for will reward you with some type of point for every dollar you spend on the card.
When you use cash or a debit card to pay for things, you don’t earn any points. So you are literally throwing away points any time you don’t use a credit card. I understand that you can’t pay for everything with a credit card, but anywhere a credit card is accepted (and they don’t charge an additional fee) please use your credit card so you're not throwing away free points. It pains me when I see people doing this! Okay, I digress.
Let me illustrate why spending bonuses are so valuable. Based on my internet research, the average American family will spend ~$60,000 each year. Let’s assume you can’t pay for everything using credit so, let’s subtract $10,000, and we’ll say that the average American has the opportunity to put $50,000 worth of spending on credit cards each year.
First let’s look at the difference between using a debit card (that doesn’t earn points) and using an airline credit card that earns 1 point per $1 spent.
Debit Card - $50,000 x 0 = 0
Airline Credit Card - $50,000 x 1 = 50,000
Just by switching to a credit card that earns 1 point for every dollar spent, you’d earn an extra 50,000 points per year. With most airlines, 50,000 points is enough for 2 round trip tickets inside the U.S.! Please don’t throw away two free flights. :)
The good news is credit card spending bonuses give you the opportunity to earn even more than one point for every dollar you spend. Depending on the card and what you’re buying, you could earn up to 10 points per $1 spent. By spending strategically on your cards, you have the opportunity to earn a lot of miles and points every year.
The way most spending bonuses work is you earn extra points when you use your card to make a purchase in certain spending categories.
You earn 2x points every time you use your Chase Sapphire Credit Card at restaurants or to pay for travel expenses.
You earn 4x points when you use your American Express Gold Card at U.S. supermarkets.
You earn 6x points when you use your Hiltons Honor card at gas stations.
There are also cards that choose to keep things simple and just offer extra points for every dollar you spend, and the category doesn’t matter.
For example, the Capital One Venture cards earn you 2 miles for every dollar you spend, and the Chase Freedom Unlimited earns 1.5 points for every dollar spent.
Make sure you crunch the numbers
Let’s say the points that matter to you most are Marriott Bonvoy points. Your instincts might tell you that the best way to do this is to use the Amex Marriott Bonvoy Brilliant credit card for all of your purchases, right? Nope. This is a great option for the elite benefits, free night award, and points for Marriott-specific purchases, but is otherwise not your best option. Since you can transfer Membership Rewards points to Marriott at a 1:1 ratio, you can actually earn far more points using something like the Amex Gold card or Platinum Card when spending in different categories. Here is my strategy for earning Marriott Bonvoy points:
Marriott Hotels: Marriott Bonvoy Brilliant Card (18.5x)
Dining: Amex Gold Card (4x)
Flights: Amex Platinum Card (5x)
General Purchases: Marriott Bonvoy Brilliant Card( 2x)
This is why having a multi-card strategy for earning points can be extremely effective, especially if you use our tips from earlier about justifying annual fees.
*The earning multiplier listed above for Marriott hotels is 18.5x. Technically the rate is actually 6x, but the card comes with automatic Gold Elite status which, on it’s own, earns you 12.5x. Do some simple math and it all adds up ;)
So, what’s the strategy?
With so many cards offering bonuses in different categories, it’s important to have multiple credit cards in order to maximize the bonus points you earn on purchases.
To decide which sign-up bonuses are most valuable for you, take a minute to think about where you spend money. If you spend a lot of money on groceries, make sure to sign up for a card that earns bonus points at grocery stores. If you spend a lot of money eating out, make sure to sign-up for a card that earns bonus points at restaurants. Better yet, sign up for multiple cards so that no matter where you are, you’ll have a card that earns the maximum amount of bonus points.
Then sign up for a card like the Capital One Venture or the Chase Freedom Unlimited that earns bonus miles on every purchase, and this will be your go-to card when you’re buying something that doesn’t fit into any bonus category on your other credit cards.
Most credit cards advertise a host of benefits that you’ll receive when signing up for the card, but in a lot of cases, these benefits aren’t very valuable. They’re just there to make the card sound better. This is why I normally focus my attention on the sign-up bonus and the spending bonuses offered by a card.
However, some travel credit cards offer additional benefits that can be extremely valuable. This is especially the case with credit cards that charge you a high annual fee. For example, some premium credit cards offer a free Priority Pass Membership that allows you to get into over 1,000 airport lounges around the world for free. This membership is worth $200+, and it’s included free with some credit cards.
Another big benefit offered by some of the most popular travel credit cards are travel credits. With this benefit, the bank will reimburse a certain amount of money you spend on travel every year. For example, the Chase Sapphire Reserve credit card offers a $300 travel credit every year which is essentially $300 in free travel that you can spend however you want.
You may also see credit card companies offering:
Free Airport Lounge Access
No Foreign Transaction Fees
Car Rental Insurance
Lost Luggage Reimbursement
Free Checked Luggage
Free Hotel Award Nights
I won’t go into the details of each credit card and each benefit because it would add an extra 10 pages to this guide. Plus, they are constantly changing. But don’t worry, I’m not leaving you hanging. Every month in my top 10 travel credit cards post, I highlight the biggest additional benefits of the top 10 cards. So, if you want the specifics on which card offers which benefit, be sure to check out the blog.
At this point, we’ve covered the benefits you want to look for when signing up for a card. Now we need to look at the less fun stuff. The stuff you want to watch out for when signing up for your next credit card.
The Annual Fee
An annual fee is what you have to pay every year for the privilege of keeping the card. The day you sign-up for a new credit card is called your “membership anniversary.” Every year you keep the card, you’ll be charged the annual fee on your membership anniversary (if it has one). It’s not a very nice anniversary present, is it?
Annual fees can range anywhere from $0 to $700, and several travel credit cards even waive it for the first year to entice you to sign-up for the card. This means you won’t have to pay the annual fee unless you decide to keep the card for a second year.
You shouldn’t let these annual fees scare you away from maximizing your miles and points with travel credit cards because, in almost every case, the benefits that you receive from the card will drastically outweigh the cost of the annual fee.
Even the cards that charge an annual fee of $450+ can offer value way beyond that amount. In fact, these premium credit cards are some of my favorites because of the huge value they offer.
For example, the American Express Platinum card has an annual fee of $695. Now let’s look at the value of this card’s benefits.
The signup bonus on this card usually ranges between 75,000 to 100,000 points, but has recently soared as high as 150,000 points. The minimum value you’ll receive from a Membership Reward point is $.01. Therefore, at a minimum, the sign-up bonus alone is worth a minimum of $750, but is almost always higher.
[75,000 x $.01 = $750]
This card also offers a $200 airline fee reimbursement. Plus, you’ll get $200 worth of uber credits ($15 per month Jan. - Nov. and $35 in Dec.), a Priority Pass membership that I would value at least $300 (depending on how often you use it), and finally, a number of other credits such as the $240 digital entertainment credit (for things like Audible, Hulu, Disney+ and more).
The card offers a host of other benefits, but those are the big ones. Now, let's do the math:
[$750 + $200 + $200 + $300 + $240 = $1,690 Worth of Benefits]
$1,690 (benefits) - $695 (annual fee) = $995
This is a pretty easy concept to grasp once you sit down and do the math. However, most people just see the high annual fee and never consider signing up for a premium credit card.
The lesson here is to take the annual fee into consideration when you’re signing up for a credit card, but don't let it be the deciding factor. You need to determine the overall value you’ll receive from a card before writing off credit cards with high annual fees.
The Minimum Spending Requirement
I’ve referenced minimum spending requirements several times throughout this guide, so you probably already have an idea of how they work. I’ll start by making sure we’re on the same page, though I want to spend the bulk of this section talking about how you can meet minimum spending requirements and why you shouldn’t let them hold you back from signing up for new credit cards.
A minimum spending requirement is an amount of money you have to spend on your credit card in order to receive the sign-up bonus. Credit card companies use minimum spending requirements to make sure you’re actually using a credit card and not just signing up for the card to receive the bonus points with no intentions of ever using it.
Almost all credit cards give you 90 days to meet the minimum spending requirement. This means that you have 90 days from the day you signed up for the card (not the day you received it in the mail) to meet the spending requirement.
The amount of money you have to spend in the first 90 days varies by card, but a very common minimum spend requirement is $3,000. Using these numbers as an example, in order to receive the sign-up bonus on this fictional credit card, you would need to spend $3,000 in the first 90 days after signing up for the card. You’ll sometimes hear this referred to as “$3,000 in the first 90 days of card membership.”
Once you’ve met the minimum spending requirement and paid off your bill, the sign-up will be deposited in your account. Unfortunately, this doesn’t happen instantly. It’s common to have to wait 30+ days to receive your sign-up bonus.
For a lot of people who are just getting into travel hacking, the minimum spending requirement can be a roadblock that hinders them from signing up for new credit cards. They are scared they won’t be able to meet the requirement and receive the sign-up bonus.
If we take into consideration that the average American family spends $60,000 per year, that’s $5,000 per month. The average person should have no trouble spending $3,000 on a credit card in 90 days.
However, I realize that everyone’s situation is different. It might be not easy for you to know whether or not you can spend $3,000 on a new credit card in 90 days. That’s why I want to give you some tips for meeting minimum spending requirements. You should never increase your spending on things you don’t need just to meet a minimum spending requirement, which is why I want to focus on several ways you can “spend money” without actually “spending money”... stick with me.
8 Ways to Meet Your Next Minimum Spending Requirement
1. Add an Authorized User
Most credit card companies will let you add an authorized user for no extra fee. As an authorized user on your account, anything they spend will go toward your minimum spending requirement. So, if you have a spouse, you could add them as an authorized user. With both of you using the credit card, you’ll meet the minimum spend quicker than you would with a single person’s spending.
2. Buy Gift Cards to Use in the Future
You could buy gift cards for your local grocery store, or you could buy gift cards for the gas station near your house. Try to focus on places you consistently spend money, so you don’t end up with gift cards that never get used. Gift cards to a specific store work best because there is no fee for the gift card purchase.
3. Buy Visa/Mastercard Gift Cards
If you want to ensure flexibility in your spending, you can purchase Visa/Mastercard gift cards for a fee. You’ll want to buy the highest denomination gift card possible because the fee will be the same no matter how much the gift card is worth.
For example, our neighborhood grocery store (Kroger) sells $500 Visa gift cards that can be purchased for a fee of $5.95 each. Paying a 1% fee on your money isn’t a great deal, but if it helps you meet a minimum spending requirement that will get you hundreds of dollars worth of free travel, it is probably worth it.
4. Pay Your Bills in Bulk
Many companies that you pay monthly will let you pay for multiple months in bulk if you just call. Some monthly bills you may be able to pay in bulk include: cable, car insurance, health insurance, cell phone, utilities, and more. Not every company will let you pay for future months in bulk, but it doesn’t hurt to call and try if you’re desperate to meet a minimum spending requirement.
5. Donate to Charity
Most large charities will accept credit card. If you plan to donate a large chunk of money to a charity, time your donation with a new credit card application. It’s a really easy way to meet your minimum spend.
6. Pay Your Mortgage and/or Car Payment with Your Credit Card
In most cases, you won’t be able to pay your mortgage directly with a credit card. If you could, that would be awesome! You’ll most likely have to use a third party service (such as Plastiq) that charges around a 2% fee. Paying a 2% fee on a large expense like your mortgage doesn’t make sense if you’re just doing it to earn points from your credit card spending, but if it helps you meet your minimum spending requirement which nets you hundreds of dollars in free travel, it could be totally worth it!
7. Pay Your Taxes with Your Credit Card
Signing up for a new credit card (or 2) before tax season could be a good idea because it makes it super easy to meet your minimum spending requirements on those new cards. Again, you won’t be able to pay your taxes without going through a third-party service and paying a fee, but the fee is worth it if you need the extra spending to meet your minimum spending requirement. The IRS has a list of approved third party companies you can use to pay your taxes using a credit card.
8. Send Money to Someone through PayPal
PayPal allows you to send money to people using a credit card if you’re willing to pay an additional fee. Again, it usually doesn’t make sense to pay the fee just to earn points for spending with your credit card, but if you need to meet a minimum spending requirement, it might be a good idea.
9. Pay your rent with a credit card
Just like with number 7, you can pay your rent with a credit card using 3rd party services. Many rental companies also have tenant portals that allow you to pay with a credit card for a pretty small fee of around 1.5-1.75%. If you need to pay an extra $20 per month on rent to unlock hundreds (or thousands) of dollars worth of free travel, I consider this a worthwhile move. Personally, I use this method when I have a high minimum spend requirement and want to take a big chunk off of it right away. If I pay my rent for two months with a credit card, I know my normal day-to-day spending will take care of the rest without even needing to think about it.
Those are my top ways for meeting a minimum spending requirement. Hopefully, now you see that there are a lot of options, and you won’t let a minimum spend intimate you from signing up for your next travel credit card.
Summary of How to Choose the Best Travel Credit Card(s)
The five main factors you want to consider when signing up for a new credit card are the sign up bonus, the spending bonuses, the additional bonuses, the annual fee, and the minimum spending requirement.
I recommend focusing on earning airline miles and transferable points because these points offer the most value. Before you just start signing up for cards, I recommend deciding which airline you want to earn miles with. Then, you can narrow down your options, and from there see which card(s) offer the most valuable benefits after subtracting the cost of the annual fee from the equation.
The last thing you need to do before signing up for a card is make sure you can meet the minimum spending requirement. The last thing you want to do is sign up for a card and miss out on the bonus points because you didn’t meet the spending requirement in time. If you use the tips I offered above for meeting a minimum spending requirement, you shouldn’t have any trouble.
If you’re still struggling to decide which card is best for you, don’t forget to reference my monthly post:
Signing Up for Credit Cards
Maximizing Sign-Up Bonuses
The strategy for maximizing sign-up bonuses is simple: the more credit cards you sign-up for, the more bonuses you’ll earn. Now, signing up for multiple credit cards may sound irresponsible, but don’t forget about the credit scores lesson you read way back at the beginning of this guide.
Banks view additional lines of credit (that you manage responsibility) as more proof that you can responsibly handle the credit that’s extended to you. Therefore, opening additional credit cards could actually help increase your credit score.
Together, Kara and I have signed up for over 20 credit cards, and both of our credit scores are above 800.
My Credit Score:
Okay, hopefully now I have you convinced that signing up for multiple credit cards is a good thing. Now let’s talk about the best way to go about signing up for multiple cards.
Bank Restrictions on Signing Up for Credit Cards
The order of the credit cards that you sign up for is actually surprisingly important. If you plan on signing up for several cards to maximize your points, you’ll run into restrictions from banks that could stop you from being approved for a new credit card from their bank.
The most important rule to be aware of is Chase’s 5/24 rule. This is a restriction that Chase has put in place to keep people from signing up for too many credit cards in a short amount of time. The rule is if you’ve gotten 5 or more new credit cards within the last 24 months, Chase will not approve you for a new credit card. :(
This rule doesn’t just refer to Chase credit cards. If you’ve gotten more than 5 credit cards from ANY bank in the last 24 months, Chase will not approve you for a new card.
The reason it’s so important to know this rule is because Chase has some of the best travel credit cards. So you’ll want to start by applying for Chase credit cards first. You should get your 5 most desired Chase cards before moving on to apply for cards from other banks.
The other biggest restriction is American Express’s “Once per lifetime” sign-up bonus. If you’ve ever researched travel hacking before, you may have heard of the term “churning.” This is when people would sign up for a card to receive the sign-up bonus, get the bonus, then cancel the card, and sign up for it again to get the sign-up bonus again. This practice is frowned upon by banks, and American Express’s “once per lifetime” rule was put in place to stop people from churning. The rule is pretty self-explanatory. You can only receive the sign-up bonus on a card once per lifetime.
Recently, American Express has been relaxing this rule by not including the same language in their terms and conditions. If you have held a card in the past (or currently hold it) and want to apply for the same card, you may still be able to get the signup bonus if you don’t see any mention of the above rule in the terms and conditions.
These are the two biggest restrictions you need to take into consideration when signing up for a new credit card. They might sound complicated, but the only thing you really need to remember is to start by signing up for Chase credit cards first.
Once you’re ready to actually start signing up for cards, there are two different approaches you can take. I call one the “fast track” and one the “slow and steady.”
The Fast Track
The fast track is for people who need to earn a lot of miles and points fast like Kara and I did when we decided we were going to start traveling full-time. This involves signing up for multiple credit cards from different banks on the same day, then waiting three months (for your credit score to rebound) and doing it again. This is the fastest way to earn miles and points from sign-up bonuses, and it’s the strategy Kara and I used the year before we left to travel full-time. However, it’s not the strategy I would recommend for most people. You need to be really organized, and you need a way to meet multiple sign-up bonuses at the same time for this strategy to work.
For most people, I recommend the slow and steady strategy.
Slow and Steady
This strategy involves signing up for a credit card (or two), meeting the minimum spending requirement on the card(s), and then (when you’re ready) signing up for a new card and repeating the process at a comfortable rate.
This is a great way to save up miles and points over time by signing up for new cards at your own pace.
For example, you could sign up for one new card, spend the next 3 months meeting the minimum spending requirement, and once you’ve received the sign-up bonus you could sign up for a new one. This would allow you to sign up for 4 new cards every year. Depending on which cards you signed up for, this could easily result in earning 200,000 points per year which, in most cases, would be enough for 3 round-trip tickets to Europe. :)
If you have the ability to meet the minimum spending requirements, and you want to earn points faster, you could sign up for a new credit card every other month which would result in 6 new cards at the end of the year.
The most important things to remember are to apply for new cards at the rate you’re comfortable with, and make sure you meet the minimum spending requirements.
Maximizing Spending Bonuses
Signing up for multiple credit cards in order to maximize your miles and points isn’t just beneficial because of the sign-up bonuses that you’ll earn. It’s also important to have multiple credit cards that earn spending bonuses in different categories so you can maximize the points you’ll earn on every purchase.
There are several main categories where credit companies tend to offer big spending bonuses (aka extra points for every dollar spent). These categories include:
You want to have a credit card that offers a spending bonus in the categories where you tend to spend the most money. There isn’t one card that gives out big spending bonuses in every category. Usually a card specializes in one or two specific categories. So, the card that offers the most bonus points on gas probably won’t offer the most bonus points on dining. For this reason, you’ll need to sign up for multiple cards in order to maximize your spending.
You’ll probably also make a lot of purchases throughout the year that won’t fit into any category, which is why it’s also important to have a card that earns bonus points on every purchase no matter the category.
If you’re maximizing your spending the correct way, you’ll probably have a few different cards you’re pulling out of your wallet on a weekly basis. You may have one card that’s dedicated to gas and groceries, one card that’s dedicated to restaurants, a go-to card purchasing travel, and one that you put all of your other spending on that doesn’t fit into the other categories.
Signing Up for Credit Cards (tips for getting approved)
At this point, you’re probably itching to start signing up for travel credit cards. Filling out the credit card application itself is a pretty simple process that most of you have probably done before, so I’m not going to walk you through all of the steps. However, I did want to give you one tip that most people don’t know about that could increase your odds of getting approved.
According to the amendment to the CARD Act, you can list any income to which you have "reasonable expectation of access." This means if you have a spouse or partner, and you have reasonable expectation of access to their money, you could report your joint income on the application as opposed to just your personal income.
For example, Kara and I are married and share a bank account, so I definitely have a reasonable expectation of access to her income. So on the application form, I report our joint income where it asks for total gross annual income.
Also, if you have a side hustle, you can report the income you make from it in addition to the income you make from your "official" job.
Why do you want to report your income as highly as possible on your application? It's simple. Banks want to see that you have the ability to pay back your debts. The more money you make, the more money you have to pay back debts. In most cases, the higher your income, the better chance you have of getting approved for a credit card.
With all of this said, do not lie about your income in order to increase your chances of getting approved for a credit card. That's considered credit card fraud, and it has serious consequences.
What Happens If You Aren’t Instantly Approved
If you get nervous before submitting a credit card application, you’re not alone. I still get a nervous/excited feeling everytime I submit a credit card application because I’m already thinking about how I’m going to use my points if I get approved.
When you submit your credit card application online, you’ll have the chance to be instantly approved. If this happens, congratulations! You should receive your new card in a couple of weeks, and you are now on your way to earning the sign-up bonus that will afford you hundreds of dollars in free travel.
If you don’t get instantly approved, you’ll probably get a notification letting you know that your application is either pending or denied.
If either one of these situations happens, not all hope is lost! Don’t automatically assume that you’re not qualified for the card. There are many reasons your application may not be instantly approved.
For example, you could have mistyped something on your application or accidently left something blank, or the bank may just need some clarity on something you entered on the application. I once forgot to add the last zero on my annual income, so it looked like I was applying for the card with only 4 figures of annual income. That’s why my application wasn’t instantly approved (rightfully so).
If You Receive a Denial
If you receive an automatic denial, you still have a chance of getting approved if you call the reconsideration line. All banks have a reconsideration line, and you can easily find the phone number by Googling (bank name + reconsideration phone number).
If you’re denied for a credit card, I highly recommend calling the reconsideration line to learn why you were denied. It could be something as simple as leaving a 0 off your income. When you call, the representative will ask you follow-up questions to your application and resubmit the application for review, and they’ll usually make the decision before you get off the phone.
This reconsideration does not require a second credit check, and it will not hurt your credit score. So there’s no reason not to call.
If You Receive a Pending Notification
If you receive a pending notification, you still have a chance of getting automatically approved. I’m not going to pretend to know why sometimes banks take longer than usual to approve an application, but people do receive approvals several days after submitting applications without having to give any additional information. In some cases, you may receive an email letting you know, or the card may just show up in the mail one day (that’s what happened when I applied for my most recent business credit card).
If you get a pending notification, I recommend waiting a few days before taking any action. If you still haven’t heard anything, I recommend calling the reconsideration line to check the status of your application. This can be intimidating if you’ve never done it before, but it can increase your odds of getting approved, so I highly recommend it.
You can start the conversation with something like, “Hi, I’m calling about the application I submitted for the [fill in the blank] card I submitted a few days ago. I wanted to see if a decision had been made, and if not I was wondering if there was any additional information you needed from me?”
At this point, they’ll usually open up your application, ask you a few simple questions, and you’ll have the answer by the end of the phone call.
I hope these simple tips will increase the odds of getting approved for your next travel credit card!
Think Outside the Box
If you really want to maximize your potential in this game, it can be really fun to come up with your own creative ways to earn and redeem points. Here are some of the things we’ve come up with over the years:
Be a travel agent
This is one of my favorite ways to earn points. If you’re like me, you love the puzzle of finding awards, scouting hotel prices and locations, and piecing together a trip from scratch. Well, most people are not like me, sadly… I have a ton of friends who love to travel but HATE the planning aspect of it. In their ideal world, someone else would do all the planning for them and they just need to show up at the airport.
I take advantage of this by offering to be a “travel agent” for my friends. Basically, I find great deals for them, plan out dates, book airline tickets and hotels, etc. and don’t charge my friends a cent for this service. The upside? I get all the points by paying for everything and my friends pay me back. They don’t have to deal with the planning and I earn a ton of points. Because of my travel experience, they also know that I can find the best deals out there. It’s a win-win.
Note: This should go without saying, but only do this with people who you can absolutely trust to pay you back.
Pay off friend’s debts
This is something that I’ve done a few times in the past, though I don’t imagine it will be a common opportunity. I have a couple of friends who got themselves into some debt - one of them missed a number of payments on their car and was drowning because of the interest that was racking up on the missed payments. I offered to pay off the entire debt with my credit card and let them pay me back over 6 months with no interest.
Furthermore, when my friend agreed to this, I opened a new credit card immediately. Why? Because I used this one purchase to meet the entire minimum spending requirement of a new card. So I got a massive signup bonus and thousands of points for the purchase itself without needing to spend a cent of my own money. My friend was also grateful to get out from under the accruing interest, and I was really happy to help that friend. Like with the last example, it should go without saying to only do this with people you trust to pay you back. In my case, there was no doubt in my mind that I could trust this friend, so it worked out great.
This is the single most under-utilized method of earning points. Points stacking is when you use various points-earning methods at the same time, for the same purchase. You can accomplish this by using many of the methods we talked about already including using a card with high earning rates and purchasing via shopping portals. It also includes timing your purchases with promotions. The best way to illustrate this concept is to give you an example.
I recently had to book a cash stay at a Hilton property. Given that I have a Hilton credit card, Hilton Honors elite status, and the fact that Hilton was offering a promotion at the time, it was the perfect opportunity for me to do some serious stacking. Let’s break down all of the ways I earned points on this purchase:
- Hilton Surpass Credit Card - This card earns 12 points per dollar at Hilton properties
- Hilton Honors membership - Anyone who is a Hilton Honors member (which you can sign up for for free) earns 10 points per dollar at all Hilton stays.
- Hilton Elite Status - With Diamond Elite status, I earn an EXTRA 10 points per dollar on all Hilton stays
- Hilton Promotion - At the time, Hilton was offering a promotion to get 3x the points on stays of 3 nights or longer (which mine was) - This means that instead of the aforementioned 10 points for Hilton Members, you get 30.
- Rakuten Shopping Portal - The exact return varies, but at the time Rakuten was offering 4.5% cash back on Hilton purchases
- Statement credit - On my amex card, I had an offer to receive a statement credit of $50 on a purchase of $200 or more
My purchase was for $308.72 - For simplicity, let’s just use an even $300 to calculate my return:
- Credit card - 3,600 points
- Membership (w/ promo) - 9,000 points
- Elite status - 3,000 points
- Rakuten - $13.50 cash back
- Statement credit - $50 credit
If we conservatively value Hilton points at .5 cents each, then I got $141.50 of value from a $300 purchase - that’s a whopping 47% return.
This is a pretty ridiculous example where things lined up perfectly, but I was able to jump on the opportunity because I know about points stacking. Even if you only did half of these things and got a 23% return, that is still basically an unheard of return on spend.
Charge whatever you can to hotel bills
When you stay at a hotel that has spa services, restaurants, or other paid amenities, be sure to charge them to your room bill instead of paying on the spot. The reason for this is that if the charges are part of your hotel bill, you’ll get points for hotel membership, elite status, etc. for these indirect purchases. Think about the stacking example from above - If I had added a massage, dinner at the hotel restaurant, or something from the gift shop to my bill, all of those purchases would’ve also gotten the ridiculous points-stacking returns as well.
Steps for Getting Started (creating a game plan)
If you’ve made it to this point, you’ve invested a lot of time into reading this guide. But you won’t see any benefits unless you take action on what you’ve learned. To help you get the ball rolling, I’m including a brief step-by-step guide you can follow to send you off down the right path.
Step 1: Check Your Credit Score
In order to get approved for the best travel credit cards, your credit score needs to be above 700. I recommend using a free service such as Credit Karma to check your credit score to make sure you’re ready to get started!
Step 2: Sign Up For Loyalty Programs
If you haven’t already, sign up for the loyalty programs listed below (it’s free). This will give your points somewhere to live once you start earning them.
Don’t forget to keep your details including your email, membership number, and password in a safe place.
Step 3: Choose a Travel Credit Card
If you’re having trouble deciding which credit card(s) is best for you, be sure to check out the Top Credit Cards Guide we publish every month.
Lastly, if you’ve gotten a lot of value out of this guide, please don’t forget to use our links when submitting your credit card application. This is a huge help because our affiliate relationships with banks allow us to earn a commission any time you sign up for a credit card.
Step 4: Submit Your Application
Don’t be intimidated by the application process. Use the tips I gave you in this guide to increase your odds of being approved.
Step 5: Meet the Minimum Spending Requirement & Receive the Sign-Up Bonus
After you’ve been approved for your new card, the work isn’t over yet. You still need to meet the minimum spending requirement in order to receive the sign-up bonus. If you find yourself struggling to meet your minimum spending requirement, be sure to use the tips I gave earlier in this guide.
Step 6: Repeat!
The more cards you sign up for, the more sign-up bonuses you’ll earn. Plus, you’ll want to sign up for multiple cards so you can maximize the points you earn from everyday spending by using cards that offer the highest spending bonuses on whatever purchase you’re making.
Step 7: Continue Your Education
Things in the travel hacking world change quickly. That’s why we’ve launched a newsletter called the Daily Drop. Every Monday through Friday we send out the latest tips, tricks, and strategies in the travel hacking world in bite-size pieces so you can stay up to date and continue to expand your travel hacking knowledge.
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