You read that right. In less than 4 months my wife and I have earned over 200,000 frequent flyer miles without ever stepping on an airplane. All 100% legal, all 100% legit.
I started out in the travel hacking game very slowly and with much trepidation, as I did not want to start sinking a lot of money or time into learning this whole new world of free travel. I had done some traveling, so I had a decent handle on which airlines flew where, which ones were part of which alliances, and so on. So I started reading all I could read on the topic. The Frugal Travel Guy‘s blog was the first resource that I really used to get up to speed on the topic, as jumping into the FlyerTalk forums was just too daunting of an endeavor. It is information overload for the novice travel hacker.
Rick’s blog talks about the big wins of large credit card bonuses for signing up and spending a little bit of money on the card. As an example (I am making this up), Chase Bank will offer you 50,000 United Airlines miles if you apply for, are approved for their credit card and spend $1,500 in the first 3 months. 50k miles on united is the equivalent to 2 domestic round trip fares.
First things first, here is why Chase Bank does this. They WANT people to have their credit card with it’s 15-20% interest rate. They WANT people to spend money on that card because most American’s will end up carrying a balance, which in turn they pay interest on to Chase.
Sounds like a good deal for Chase, if you ask me. Dangle that carrot of 50k miles but end up with card holders that continue to carry balances and earn them interest. But there is a way to rack up those miles without going into financial debt.
Beating the System
Ask any financial analyst or really, any financially responsible person, if you cannot maintain a budget, credit cards will be the death of you. In today’s economy, your credit score is everything, and racking up credit card bills is NOT the way to improve that score. With a bad credit score, you will have a hard time buying a car, renting an apartment, hell, even getting a cell phone. Unfortunately, your credit score has become the single most important factor in your financial stability and freedom here in the U.S.
So, why would I say all that, but still be professing the benefits of using the dangling carrot of rewards points in exchange for the risk of credit cards? Because if you are financially responsible, with a good to great credit score, you can easily turn these credit card rewards into tons of free travel all while actually INCREASING your credit score.
Some credit cards offer the free miles rewards after activating and using the card just one time. Others (most others) require what is known as a ‘minimum spend’ where they will give you the rewards points, but only once you have spent a certain amount of money on the card, in a certain period of time. Some cards the minimum spend requirement is $1,500 in 3 months, some it is $5,000 in 6 months, still others, are higher than that.
To use their system to accrue your rewards miles, it is as easy as adjusting your budget for a month or two. Instead of paying some bills out of your checking account, pay them with the credit card. Once you do that, you take the same money from your checking account, put it in savings, and when the credit card bill comes due, you pay it off in full, carrying no balance, therefore, no finance charges.
If you can adjust your budget (and stick to your budget) accordingly, you can easily beat the system and rack up the miles.
How I Did It
Here is first hand proof that this can be done, and done easily.
To dip my preverbal toe in the travel hacking waters, I signed up for a Continental Airlines branded Chase rewards card which offered 50,000 Continental miles for using the card one time. I read all the terms and conditions and even when I called to activate the card, I verified that I would be awarded the points after my first statement that showed (at minimum) one usage. With everything all set, the card activated, I set out to Target to buy a few last minute items for the Epic Road Trip 2011. Grand total, under $35.
Around the same time, Juliet and I decided to each sign up for an American Airlines branded Citibank card offering 75,000 miles for a $1,500 minimum spend in 6 months. Juliet started using her AA card for groceries, gas and other items within our budget. I used mine as my primary card on the Epic Road Trip. Within 2 months we had each spent over the minimum of $1,500 on our respective cards with nothing more than items we would have paid for our of pocket. Items from our budget.
Another perk with the rewards cards is that in addition to the sign up bonus, they typically will offer (at minimum) 1 miles per dollar spent, so on a $1,000 charge, you also receive 1,000 frequent flyer miles. Read those details when you sign up, some offer higher rewards (such as 6 miles per $1 spent) on certain items like gas or groceries.
Logging into my Award Wallet account showed that after 1 month, my Continental Miles hit and after 2 months, both of our American Airlines points hit. 3 months, nothing out of pocket besides what was in our budget and we accrued over 200,000 miles.
Everyone needs a plan B. What if credit card bonuses are not for you. Does that mean you are out of luck? NOT AT ALL. There are tons of frequent flyer miles earning opportunities out there, and the Travel Hacking Cartel is one of the best resources to find those. Options that range from online shopping to web-based surveys and even good, old-fashioned sweepstakes/giveaways. Here are just a few examples:
- Shop online – AA eShopping Mall
- Online surveys – e-Rewards and e-Miles
- Foursquare/GoWalla/Facebook check-ins – Top Guest
- Sweepstakes/Giveaways – AA 30 Deals/30 days
Am I telling you to run out right now and sign up for every credit card with free miles offer? NO.
What I am telling you is that the credit card rewards game is VERY lucrative. You can earn big rewards, very quickly, with nothing out of pocket. But with that being said, here is advice I give to anyone who wants to get started earning miles this way:
- Know your credit score, it is the most important asset you have.
- Understand how credit card applications and inquiries affect your credit score. This is a big one as too many inquiries in a short period of time can affect your score. Also, credit card inquiries fall off after a certain period of time, it is important to understand that too.
- Do your research. Understand the credit card offer BEFORE you sign up for it. Read the forums, read the blogs. Make 110% sure this deal is for you.
- Know the rules. Most times, if you own a small/personal business with a Tax ID, you can sign up for a business card as well as a personal card, essentially doubling your miles.
- Shop around. Just because you see an offer for 25,000 points to sign up for a card, doesn’t mean there isn’t a better one out there. Even some “expired” offers can still be found with a little research.
- Know your financial situation. If you are currently working on the minimum spend for 2 other credit cards, signing up for a 3rd one probably isn’t a safe bet. Also understand that if the minimum spend for a card is outside of your budget ($25,000 in 12 months) or something you are not comfortable with, don’t do it.
- Another deal will come along. In the past 5-6 months, we have seen a bunch of offers ranging from 50,000 to 100,000 points. Airlines want you to fly, credit card companies want you to spend money. The deals will come, just be patient.
- Understand the alliances, as I pointed out a few days ago. If you can rack up miles on multiple carriers that are part of the same alliance, you are typically in better shape.
I cannot stress this enough. Do your research. Read the blogs. Learn about credit card churning, credit inquiries and things of the sort. I am just getting into this whole world and wanted to make sure that I spread the love with some of my friends/family that read my site.
Here are a few good blog posts that should get you started:
- The Points Guy offers a great article on the topic of Credit Card rewards, the differences you will encounter and what it all means.
- Frugal Travel Guy, Rick Ingersoll is an absolute wealth of knowledge on credit card churning, approvals, inquiries, etc. Go read his site. The whole thing.
I am by no means an expert in this game, but I am just figuring my way around. If you have any questions, please feel free to ask, I will do what I can to help or guide you. The last thing I want to see is anyone ruining their credit over something silly like accruing miles.
If you are a fellow travel hacker, I would love to hear any tips, tricks, advice, stories, etc in the comments below. Otherwise, see you all on the beach!