Guide to Miles & Points

I would like to welcome you aboard the world of miles and points!

Everyone knows very well that traveling is always expensive and will cost a lot. However, with the introduction of miles and points into your life. Those vacations you always dreamed of and thought were never possible due to cost are now easily attainable at a fraction of the original cost. This guide will help you get you to your desired destination.

Step 1: Have a Travel Goal 

Travel Around The World

Have Plans for Traveling Around The World?

I’ve seen many travel hackers start collecting miles/points without a travel goal in mind. This eventually will leave them with orphaned points or points that can’t be used to their fullest potential. That is why I suggest that you first take some time to reflect and ask yourself the following questions:

  • What airport am I near?
  • Do I want to travel domestically or internationally?
  • What destinations have I always dreamed of but never thought of going because of the cost?
  • How many people do I need to cover for my travels?
  • Do I want to fly on economy, business, or first class?
  • Do I want to stay in a budget hotel or in a luxurious hotel?

Once you set a specific travel goal then you can start developing your strategy on reaching that goal. For an example, I’m close to San Francisco Airport (SFO), I want to travel to Japan, and stay in luxurious hotels. You don’t want to be focusing on southwest points, which are better suited for domestic flights. You would want to focus on collecting United and British Airway points. These two airlines will provide you great redemption awards for your flight from SFO to Japan. As for your hotel, you would want to either get the Citi Hilton Reserve Credit Card or Hyatt Credit Card. Which both provide two free nights each at their respective hotel chains, Conrad Tokyo and Park Hyatt Tokyo.

Step 2: Sign up for Loyalty Programs
You don’t have to go and sign up for all of loyalty programs at once. I would take it slow and sign up to those programs that are best suited for your travel goal. In my step 1 example, I would definitely open up a United, British Airways, Hyatt, and Hilton loyalty account. However, before signing up I would suggest trying to find some deals or promotions that may give you a sign up bonus for new loyalty members.

Elite Access

Step 3: Be Organized
The more travel goals you have, the more loyalty programs and credit cards you will start to incur. Being on top of your budget and all your credit cards will enable you to get the most value out of your points. If you are not organized or responsible enough you could miss a payment and that will have a negative impact on your credit score.

Here are two great websites that will help you to be organized:

  • AwardWallet: Keeps track of all your loyalty accounts in a centralized location.
  • Mint: Centralized location that will organize and track all of your bank accounts, credit cards, loans, and even investments.
Mint helps keep track of my due dates for all of my credit cards.

Mint helps keep track of my due dates for all of my credit cards.

I use both of these websites to help me track my credit cards and loyalty accounts. Another suggested tool you should use is definitely an Excel spreadsheet. I have multiple credit cards, each having their own payment due date, annual fee, balances owed, etc. to take note. I use Excel to stay on top of my budget and track that my credit cards are hitting the minimum spending thresholds.

Step 4: Check Your Credit Scores and Credit Reports
Check your score at least once a year. Annual Credit Report will allow you to pull your credit report once a year per each credit bureau for free. So it’s a good way to check your report annually. I check my credit score and credit report every quarter before I have an app-o-rama, which means applying for multiple credit cards in 1 day. Some credit card benefits give you a monthly FICO score for free, such as the Barclay US Airways Card. By having a good credit score you will make your life that much easier when it comes to applying for credit cards

Three Major Credit Bureaus

Three Major Credit Bureaus

Step 5: Apply for A Credit Card
After checking your credit score and report. Assuming all is good and no impairments. The next step is researching and applying for the best suited credit card for your travel goals.

There are three types of credit cards:

  1. Transferable Point Cards (Flexible Points)
  2. Co-branded Cards (Hotel/Airline credit cards)
  3. Fixed Value Cards (Cash Back)

Depending on your travel goals, your first card can fall between any of these category types. For an example, for travelers only traveling domestically with their spouse. I would recommend the co-branded card of Southwest. Southwest is notoriously known for domestic flights because of their companion pass. The companion pass is one of the best deals you can ever get for flights because you’re essentially buying two airfares for the price of one.

Out of the three types of credit cards. Your best value will definitely be a transferable point card. The overall best entry travel credit card that I always suggest to anyone starting off is the Chase Sapphire Preferred Card. Your points are easily transferable to any partnered hotels and airlines of the Chase Ultimate Rewards Program. Hence, why they are called “flexible points”.

All of Chase Ultimate Rewards' Transfer Partners

All of Chase Ultimate Rewards Transfer Partners. All transfers are a 1:1 ratio.

Step 6: Shift Payments from Cash to Credit Cards
For fixed expenses you normally would have used cash or checks, switch them over to the credit card. For an example, monthly expenses like utilities, groceries, gas, insurance, phone bill, etc. that you normally would have paid with cash. You should now pay with your credit card. You are merely substituting the way you make your normal payments. This hobby is not meant for everyone. If you see yourself uncontrollably spending money on items that you normally couldn’t buy with cash but with a credit card you are. Then this is definitely not something you should consider getting into. This hobby is very lucrative and rewarding to those that know their budget, spend within their budget, and are financially discipline when making purchases on their extended credit. We are in this hobby to minimize our costs not increase them.

Step 7: Meet Minimum Spending Requirements
The easiest and quickest way to start earning free travel is by hitting the rewards sign up bonus per each rewards card. Each card usually requires you to hit a minimum spending threshold within a certain time period. That spending threshold can range from just one purchase (any dollar amount) to upwards of $10,000. For the Chase Sapphire Preferred Card, you need to hit a $3,000 minimum spending threshold within 3 months to earn 40,000 points. If there wasn’t a sign up bonus, in order to get those 40,000 points you would normally have to spend at least $20,000 worth of travel or dining purchases (2x bonus per $1 on travel/dining). You can see why people always apply for new credit cards per quarter.

Step 8: Maximize Your Point Earnings
Now that you’ve hit your minimum spending and converted over to utilizing credit cards for your payments. I consider this step as one of your key steps because you’re constantly learning or reminding yourself how to maximize your points as much as possible. Either by buying items through a shopping portal, signing up your card to a dining rewards program, or learning all of the different category bonuses (gas, grocery, airlines, etc.) a card has to offer when spending money.

Additionally, you should keep an eye on cards that may have a special promotion or  bonus. Like the Chase Freedom Card, this card has a rotating category bonuses each quarter where you can earn 5x per $1.

Rotating Category Bonus for Chase Freedom

Rotating Category Bonus for Chase Freedom

Step 9: Redeem Miles & Points
Learning how to earn points is half the battle. Redeeming them is the other half. This step combined with earning points will be your two most important phases of travel hacking. Now once you’ve earned enough points for your travel goal it’s time to redeem them. The reason why I said that redeeming miles is half the battle it’s because it does take some researching, patience, and assertiveness to find the best award flights. You’ll definitely need to be very flexible in your outbound/inbound flights. Not only does flexibility apply to flights it also applies to hotel award nights. Don’t let this discourage you and keep you from redeeming your points. Overtime miles/points devalue just like the purchase power of a dollar. Do not hoard your points as there are great award availability out there. You just have to be persistent and seek them out.

Step 10: Enjoy Yourself
Finally, take that dream vacation that you’ve been planning for. While this hobby may seem like it takes a lot of effort it’s also fun and exciting. You worked hard for that travel goal and you should definitely reward yourself by enjoying your vacation.

Step 11: Rinse and Repeat
Earn and burn as fast as you can and do it all over again.

3 Responses

  1. Prak says:

    good analysis, i am greatful i encountered this webpage. Thanks

  2. Kuthz says:

    If you don’t have a credit card, you proabbly don’t have any credit history and therefore have no credit report. However, if you bank at one of the larger banks (Chase, Fifth Third, WaMu), they can run your information through Qualifile and pull up your score and see if there’s any history. They might only do it for you if you open a new checking account though. The best way nowadays to start a credit history is to apply for department store credit cards or gas station credit cards since these cards have less stricter lending requirements but higher interest rates.

  1. November 5, 2014

    […] Guide to Miles & Points […]

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