So if you’ve read any of my blog posts thus far, you would have noticed that I reference points a lot. That’s because earning points and miles is the easiest and best way to travel cheaply. Unfortunately, the hobby of ‘travel hacking’ is quickly dying thanks to thousands of people abusing the system. Therefore, I won’t go into too much detail on hacking but rather I’ll just give you an introduction to how the system works. Please please please, if you do get into this hobby… Remember to take a chill pill every once in a while. Travel hacking used to be a much more lucrative hobby, until bloggers, Flyertalk, and Reddit offered a public forum for exposing travel secrets. Usually, I love free information, especially if it means that I get to travel for free. BUT we have people in this world that just want to ruin it for the rest of us. So DON’T BE THAT PERSON!… Haha I’m talking about this like I’ve been doing it for years…
Anyways, let’s get started. So what are points and miles? Why are they important? How do I earn them?
- Hotel chains have loyalty programs where you earn points and airlines have frequent flyer programs where you earn miles. Banks like Chase, Citi, and American Express also have their own points system that can be transferred to hotel loyalty programs and frequent flyer programs.
- Miles and points are typically accrued by staying at hotels and flying. However, these hotel chains and airlines can also partner with credit card companies, allowing you to earn miles and points on every transaction. Once you have obtained a certain amount of points, you can then redeem them for free flights and hotel stays.
- In addition, if you stay a lot at a hotel chain or fly a lot with a certain frequent flyer program, you will earn elite status with those programs. This could mean free breakfast at your hotel, free room upgrades, free cabin upgrades on flights, free lounge access, etc.
Awesome, now you have a GENERAL idea of how everything works. Let’s get a little more specific. You are probably wondering how I, a broke student, can afford to accrue so many points/miles and obtain elite status. The answer… CREDIT CARDS.
- Credit cards typically will give you a sign up bonus. For example, American Airline’s Citi Aadvantage Card gives you 50,000 miles after you spend $3000 in the first 3 months. That is enough for 2 roundtrip domestic economy flights and just 10,000 points short of a roundtrip economy flight to Europe. The problem for most people, though, seems to be the spending. “So in order to get a free flight, I have to SPEND money?!” My answer to that is to just be creative and natural with your spending. Don’t go on a $3000 shopping spree just to get the bonus miles. Instead, think of all the things you have to pay for. In my case, that is rent, groceries, and gas. Rent usually runs me about $350/month. But if I ask my roommate(s) if I can pay for their portion of the rent with my credit card and have them pay me back, then that’s easily ~$1000/month x 3 months = $3000 spent and 50,000 bonus miles.
- Credit cards will usually have perks. For example, the Chase IHG card will give cardholders Platinum Elite status which comes with free room upgrades, late checkout, and 50% higher earning on hotel stays. That card also comes with one free night/year at any IHG property (Intercontinental, Crowne Plaza, Hotel Indigo, Holiday Inn, etc.). So if you and your significant-other each had the card, that could be a weekend getaway at any IHG property in the world.
- Many credit cards will have “bonus” categories that allow you to earn more than just 1 point per dollar spent. With the Chase Sapphire Preferred, you get 2x points for travel and dining, and 1x point for everything else. But you can pair that with the Chase Freedom which can earn 5x points on rotating categories (for example, 5x on gas from January-March, 5x on groceries April-June, etc.). Finally, to complete the trifecta, you can add the Chase Freedom Unlimited which earns 1.5x points on every purchase. I’ll talk more about Chase’s amazing Ultimate Rewards program next week, but just know that having these 3 cards in your wallet could ultimately lead to a lot of free travel.
- Most credit cards worth having will also have an annual fee. This is another problem that prevents people from getting involved. I think about it this way: If the benefits I get from the card outweigh the annual fee, then I’ll pay the annual fee. The IHG card, for example, has an annual fee of $49. But I can use my annual free night at an Intercontinental in Times Square which could be worth >$500 a night… WORTH IT. Some cards have outrageously high annual fees and you might not think you’ll ever get them, but the benefits can add up to a lot more. A hot credit card right now is the Chase Sapphire Reserve. This card has a $450 annual fee. Wow that’s a lot. But you get 100,000 Chase Ultimate Rewards (UR) points after spending $4000, $300 annual travel credit to spend on almost any form of travel, and lounge access at airports via Priority Pass. Your first year with this card will get you AT LEAST $2,100 worth of travel. $450 for >$2,100? I’ll take it!!!
- Lastly, a lot of people worry about their credit score when applying for credit cards. I know I did… My advice: Take it slow and easy. Do not sign up for 4 credit cards in one day if you are not comfortable. Know this though: Signing up for credit cards and paying them off on time will increase your credit score eventually. Sometimes by leaps and bounds. There are a lot of articles about this on the internet, but long story short: Since you are adding more credit to your credit line (and paying your cards off on time), companies will see that they can trust you with more money. Thereby leading to a higher credit score. Other factors like the average age of account, # of credit lines, and credit card utilization will also play a role in your credit score. If you are curious about your credit score, Credit Karma offers a free way to check and monitor your score.
**I feel like I need to put a disclaimer here. Credit cards are awesome for traveling and all, but they can also ruin your life. Make sure that before you get into this hobby, that you paid off all your credit cards. I treat my credit cards like they’re debit cards and pay them off 2-3 times a month in order to maintain a $0 balance. If you don’t do this, then interest will add up and you’ll be knee deep in never-ending credit card debt. These credit card companies are unforgiving and will have no problem destroying your credit or your bank account. Let me repeat, this hobby is NOT for the financially irresponsible.**
Okay, so hopefully now you have a sense of the points and miles system. Let’s call this post “Part 1” because there is still a lot more to cover. I’ll release “Part 2” next week and that will probably cover some of the different lucrative points and miles programs out there. Thanks for reading and happy travels!