Using Miles/Points to Travel
I'm here to fill you in on a little secret (known to many, but surprisingly not most). You do not have to spend money to travel! I know that sounds insane, but it is true. Technically you are spending money, but not on your travel directly. What I mean by this is that if you earn miles and points through credit card usage, you can then use those miles and points to book your travel. Think of it this way: anything you are spending money on already (food, gas, bills, shopping, entertainment, etc.), wouldn't it make more sense to get something in return for those purchases? That's where reward travel comes into play. I will use this blog to break it down as basic as possible. There is a whole dark web type world out there for miles/points earning that is insane, so I won't go near that since most of us do not have the time or patience for that. Let's start with the basics.
1. Credit Card Sign-Up Bonuses:
For most credit cards, when you sign up you get a bonus if you spend a certain amount of money within the first few months. This is how most people build up their miles/points banks quickly. As an easy example, right now if you sign up for the Chase Sapphire Preferred credit card and you spend $4,000 in the first three months from account opening, you will receive 50,000 Chase Ultimate Rewards Points. That is a lot of points! What is crucial to remember is the $4,000 you spend in the first three months is money you would ALREADY be spending. Think about your monthly expenditures and I bet you have a lot more than you think. Let's break it down even more:
Monthly Expenditures:
Most of us have a set number of bills that we pay each month for which we can (and should!) use a credit card for payment. These bills include cell phone, electricity/gas, car/vehicle, insurance (both vehicle and medical), cable, internet, and perhaps one or two other random bills. In addition, we pay monthly for gas for our vehicles, food (both grocery and dining out), coffee (that adds up!), miscellaneous shopping, and entertainment. If you took the time to write out what you spend each month on all of these things, you'd probably be surprised to see what you spend a month (and perhaps a little shocked haha). Which brings us back to the spending requirement for the sign-up bonus. It really isn't as difficult as you might think to spend $4,000 in the first three months without having to spend any money on extras. Keep in mind as well that if you add up everything and you're under $4,000 by a few hundred bucks, most bills can be paid in advanced. Use the third month to pay your next cell phone bill, cable bill, etc. and you'll hit the $4,000.
Important Things to Remember About Credit Cards:
After you've determined that you can in fact reach the minimum spend requirement for the sign-up bonus, there are a few things to remember before you apply for the credit card. First and foremost is the Annual Fee. Most credit cards that offer a lucrative sign-up bonus will include an annual fee. To continue using the Chase Sapphire Preferred card as our example, this credit card has an Annual Fee of $95. With a lot of credit cards (such as this one), the Annual Fee will be waived the first year. Therefore you won't have to pay the fee until the first anniversary of your account opening. The majority of credit cards I use have Annual Fees that range from $49-$95 a year. However, there are several cards that have fees as high as $450, so be sure to pay attention to that before applying.
The next thing to be aware of is the credit card's APR. While I highly recommend that you only charge on your card items you already have the cash for in your bank account, there are emergencies, deals, etc. in which you may charge something without having the cash. This will mean that you will have a balance that will carry over to the next month. A balance that carries over will accrue interest, so it is vital to be aware of what the APR is on your credit card. If you aren't careful, you can end up paying interest on your balance that essentially negates using the card in the first place. As someone who went down this rabbit hole in college, be warned! It took me quite a few years to get out of that hole and build my credit score back up. So it is vital to only charge what you have in cash when at all possible!
I am someone who has taken advantage of sign-up bonuses to support my travel and that means I've opened a lot of credit cards. When you're starting out in the game, it's best to only open what you can reasonably manage. If you open too many at once, not only do you have to meet the spending requirements of all cards (which can add up to a LOT of spending), but you also have Annual Fees that will all be charged around the same time in a year. Do the steps above to determine your monthly expenditures and then go from there on what you can handle. Also, note that Chase (since we're using that as an example) as what is called the "5/24 Rule." This rule essentially means that if you have opened five new credit cards in the preceding 24 months (across all banks, not just Chase), you will be automatically denied for any new credit card applications with Chase. A little over a year ago this affected me hard! There was a new Chase Sapphire Reserve credit card that had a 100,000 point sign-up bonus (an insane amount of points and the highest sign-up bonus you could find!) which I immediately applied for and was denied. I called the reconsideration phone number and was told I was denied because of the 5/24 Rule. That one hurt!
Choose a Credit Card Based on Where You Want to Travel:
If you are just getting into the miles game by opening up a credit card to earn miles for your trip, make sure you pick the right card for your destination. Depending on where you want to go in the world, not all airlines will have routes to that location. For instance, you can find flights to Europe from the US on just about any US carrier, but if you want to go to Africa or Asia, your options might be limited. Often times you can book through partner airlines, but is important to know what airlines are partners. The three big airline alliances are One World (includes American Airlines, British Airways, Cathay Pacific, & Japan Airlines), Star Alliance (includes United, ANA, Singapore, & Lufthansa), and Sky Team (includes Delta, Air France, KLM, & Korean Air). Pick your destination, research the rewards charts (see below) and determine how many miles you need to get there. Once you've done that, pick the right credit card that has a sign-up bonus that will get you miles to get to your destination.
2. Online Shopping Portals:
After the initial sign up bonuses, there are other ways in which you can earn miles. One great option is online shopping portals. Each major airline rewards program has an online shopping portal. You can find the portal for United here and the one for American Airlines here. Basically how these work is you sign into your account (United Mileage Plus or AAdvantage) and then find the store at which you want to purchase an item. Instead of going directly to that store's website or their brick and mortar store, you click on the link for the store in the airline's shopping portal. Each store will have a certain amount of miles earned per dollar, so when you click on the store, the portal will take you directly to that store and any purchases made through that click will earn you miles. This is another one of those no brainers where if you're going to be making the purchase anyways, why not earn miles on top of that? For an example, on United's portal today you could get 2.5 miles per dollar spent at Macy's, 2 miles per dollar at Rite Aid, 3 miles per dollar at Warby Parker, and 6 miles per dollar at 4inkjets.com. All of these are stores which most people purchase items frequently. The American Airlines portal has similar deals such as 5 miles per dollar at Gap, 2 miles per dollar at Staples, and 5 miles per dollar at The Body Shop. This is basically free money! Always think of miles as money (valuations further detailed below).
3. Hotel Stays and Car Rentals:
Another easy way to earn miles or points is through hotel stays and car rentals. All major hotel chains will have their own rewards programs in which you can earn points on stays. These hotels also have their own credit cards with sign up bonuses (example: the IHG Mastercard currently has a sign-up bonus of 60,000 points when you spend $1,000 in the first month - a GREAT deal!). If you have reward accounts with both airlines and hotels, most times it is a better option to earn the hotel points than miles. However, if you're just starting in on the game and you want to focus on earning miles, most major hotels will give you the option to earn miles on your stay. You just indicate your airline program and your rewards account number when you book your room and then you earn on your stay!
The same is true for rental car companies. When you book your rental car, there is usually a drop down item in which you pick your airline program and enter your info. Often times there will be a set number (e.g., 500 miles per rental), but if you check the car rental company's website there are often deals specific to airline programs. Another great thing to remember when renting a car is that most credit cards (e.g., the Chase Sapphire Preferred) will give you double (or more) points/miles on all travel purchases. Car rentals fall into the travel category, so not only will you earn miles through the car rental company by entering your mileage rewards account number, you'll also earn double (or more) points/miles on your credit card. There are also targeted offers that are periodically sent out to card holders, so always keep your eye out for those deals!
For a fun read, this article details how one man earned 1.2 Million (yes, MILLION!) United miles by renting a car.
4. Everyday Spending:
This may seem obvious to state, but you'd be surprised the amount of people I see using a debit card to make purchases (even when they have credit cards to use). For almost all major rewards credit cards, there are spending categories. To use our trusty Chase Sapphire Preferred card as an example, you earn two times the points on travel and dining at restaurants and one point per dollar for all other purchases. Travel purchases include anything that involves travel, including airfare, on-board purchases, baggage charges, seat selection charges, train tickets, bus tickets, rental cars, gas for vehicles, parking, hotels, and hotel purchases. Restaurants include everything from fine dining, to fast food, to cafés. Other credit cards such as the Bank of American Premium Rewards Card offer two points for travel and dining and 1.5 points for all other purchases, while the American Express Platinum Card offers five times Membership Rewards points on flights booked directly with airlines or with American Express Travel and five times Membership Rewards points on eligible hotels booked on amextravel.com. It is important to research what each card offers on everyday purchases and decide which one is best for your lifestyle and travel goals.
5. Using Your Points/Miles To Book Travel:
Alright, we've covered the basics on how to start earning miles/points through credit card sign-up bonuses, online shopping portals, hotel stays, car rentals, and everyday purchases. Now it's time to discuss how to actually use all these points/miles for your travels. How to use your points/miles all depends on what credit card you have opened. While some credit cards allow you to transfer your points/miles directly to your airline or hotel rewards account, other credit cards require you to book your travel through their travel agency. Let's start with direct conversion of points/miles:
Converting Points/Miles Directly:
If you have a credit card that is a branded credit card for a specific airline, all miles earned will be directly added to your personal mileage account. For example, the Chase United MileagePlus Explorer credit card (current sign-up bonus is 40,000 miles after spending $2,000 in the first three months) gives you two miles per $1 spent on airline tickets purchased from United and one mile per $1 spent on all other purchases. These miles will go directly into your linked Mileage Plus account with United. From there you can use miles to purchase flights directly through united.com. Depending on where you are traveling, that can get you a round-trip ticket (more on rewards charts below).
In addition to airline branded credit cards, certain rewards programs will allow you to transfer your points directly to your airline or hotel rewards account. Chase Ultimate Rewards points are a great example of having the ability to transfer directly to travel partners. Chase Ultimate Rewards gives you several airline options and hotel chains. You can transfer points directly to the following airlines' rewards accounts: Aer Lingus, British Airways, Flying Blue (Air France and KLM), Iberia, Korean Air, Singapore Airlines, Southwest Airlines, United, and Virgin Atlantic. Chase Ultimate Rewards points can be transferred directly to the following hotels' rewards programs: IHG, Marriott, The Ritz Carlton, and Hyatt.
Using Points Through Credit Card Travel Portals:
Many credit card companies have their own travel portal in which you apply your earned points towards travel booked directly through the credit card company. American Express has their "America Express Travel" portal in which you can select your flight, prepaid hotel, vacation package, or cruise. You then select the option to "use all or some Membership Rewards points" for your booking when checking out, you then choose the amount of points you would like to redeem and your points will be deducted from your account.
Capital One has the "Capital One Venture" program which allows you to redeem miles earned with credit card purchases for travel. You can purchase award travel directly through their website or you can receive a credit on your statement for travel purchases made. With Capital One, you cannot transfer miles directly to an airline or hotel program, but they do give you the ability to redeem miles to pay for almost all travel purchases. For every 100 miles you earn, you can get $1 in a statement credit for travel expenses (that is a 100:1 redemption rate).
Citibank has their own rewards program where you can earn "ThankYou" points. You can use your ThankYou points to book travel directly through Citi's ThankYou Travel Center. Citi will give you the option to pay with Citi ThankYou points or you can redeem Citi ThankYou points for part of the flight cost and pay cash for the remaining balance (very handy when you may not have enough points for the whole trip). Note that when Citi books your travel for you, it may take up to 24 hours for your itinerary to be visible on the airline's website. Similar to Chase Ultimate Rewards, Citi ThankYou points can also be transferred to airline and hotel programs starting with a minimum of 1,000 points (airlines include Etihad, Qantas, and Qatar).
6. Rewards Charts:
Once you've determined where you want to go, and you know which airlines will get you there or which hotel programs have hotels there, the next step is figuring out how many miles you'll need for the flights and/or how many points you'll need for the hotel. Starting with flights, almost all airlines have an awards chart which will tell you how many miles are needed per flight segment. For those that do not have an award chart, they offer an award calculator to determine how many miles you need. You can find charts/calculators for the following airlines on their websites under the tab for the applicable program:
Air France/KLM: Flying Blue
Alaska Airlines: Mileage Plan
American Airlines: AAdvantage
All Nippon Airways: ANA Mileage Club
British Airways: Avios =
Cathay Pacific (and partners): Asia Miles
Emirates: Skywards Miles
Hawaiian Airlines: HawaiianMiles
Korean Air: SKYPASS Mileage
Lufthansa: Miles & More
Qantas: Qantas Points
Singapore Airlines: KrisFlyer
United Airlines: United Mileage
For hotel programs, click on the reward night link on each of the following hotel chain’s website:
Hilton Honors
Hyatt
Marriott
IHG
The Ritz Carlton
7. Miles/Points Valuation:
It is handy to know what your miles and points are actually valued at from a dollar standpoint. You may may find yourself in a situation in which the value of the mile/point makes it totally worth it to book the award (e.g., 55,000 miles for business class one-way compared to $6,000+ in cash). However, there may be times when, specifically with hotels, it makes more sense to use cash to pay for a hotel instead of points. As an example, if an IHG hotel is 25,000 IHG points for one night OR $121 in cash, it would make more sense to book with cash. As of January 2018, IHG points are valued at 0.7 cents each, thus 25,000 points = $175 (more than what it costs to just pay cash).
The Points Guy (more on that website below) updates their miles/points valuation each month. You can find January's valuations here. I highly suggest checking the current valuation when deciding whether using points/miles is financially your best bet.
I have found in my personal travel that miles redemptions are your best bet from a valuation standpoint. My first trip using miles was when my dad and I went to China in 2012. We used American Airlines miles to book a one-way trip from New York to Beijing and a one-way trip from Hong Kong to New York. We used 105,000 miles each for the round trip and flew American Airlines Business Class fron NYC to Tokyo, Japan Airlines Business Class from Tokyo to Beijing, and Cathay Pacific Business Class from Hong Kong to NYC. It was an amazing experience and totally worth using miles. We priced the tickets with cash and we would've had to pay roughly $8,600 EACH for the same flights! In no world could we have ever afforded to pay that in cash, but by each of us opening two different American AAdvantage credit cards with 50,000 mile sign-up bonuses, we booked the flights with only having to pay about $11.00 total in taxes. Needless to say, that trip cemented by place in the miles game :)
8. Websites/Blogs to Follow:
All of the tricks and credit card offers I have learned about come from following travel websites/blogs that specialize in this field. I find it easiest to follow the websites/blogs' Facebook pages because then I see daily posts which I then click on. If you aren't on Facebook, then just bookmark each website and visit them daily. Most of the big websites make their money off of ads and referrals at this point, so you will see offers on their websites you may not be able to find on your own. However, it is always good to google on your own as well for deals/links for sign-up bonuses.
The best part about following these websites/blogs is that their daily job is to find the best deals and share them with their followers. I have learned about tricks for redeeming miles, earning miles, and credit card sign-ups from these blogs that have saved me thousands in travel! They also have invaluable resources such as points valuations and info on changes to awards programs which you may not learn of on your own. My suggested sites would be the following:
The Points Guy
One Mile At A Time
Mommy Points (good for families)
Happy Earnings!
