With all the anti-credit card sentiments out there, I usually try to repress my true feeling about credit cards. Occasionally, I slip and say positive things about credit cards. I think my last positive mention was during the British Airways 100,000 mile promotion.
Here’s a basic summary of my thoughts on credit cards. If you are organized and disciplined, using credit cards can be anywhere between fine and really good. If, however, you’re not organized or tend to carry a balance on your credit card, they will crush you.
I’ve never had a personal traumatic experience with credit cards, so if I did, I’d probably have a more jaded view. In fact, in 15 plus years of using a credit card, I’ve never once paid a penny in interest.
But, I’ve got to say publicly that I love collecting frequent flyer miles by using credit card sign up bonuses.
I Use Credit Cards to Get Free Flights
Today I want to tell you why I love them and how I use them to earn thousands of dollars of free travel.
Know why I’m telling you?
Because I tell everyone. Seriously, I talk about this stuff all the time with my family and personal friends. Don’t think I’m just posting this stuff online because I want to convince you to do something to make a sale. If you’re not a credit card user, then I applaud you. That’s a great decision. However, if you are a plastic user, I wonder if you’re maximizing your earning potential.
Also, I want to explain why you’ll be reading about my family traveling all around the world next year. I don’t want you to think I’ve abandoned my frugal and simple living mantra. I’m simply doing a lot more traveling than the average person on a lot less money than the average person.
Is Using Credit Cards to Collect Miles a Scam?
I was talking to a friend of mine when we were in Houston, and I was telling him about all the free trips we had planned for 2012. He wanted to know the recipe for the secret sauce. So I told him about credit card sign up bonuses.
He said he’d seen ads for the bonuses and heard about them, but he felt leery to sign up.
“If it sounds too good to be true”, the old sage once said, “it usually is.”
And I agree with those wise words.
But collecting miles is not a scam. It’s the real deal.
You benefit by doing something different than normal people do.
See, the average person carries a small collection of credit cards. Let’s say that is 3-5 credit cards. That same person is crazy busy like 90% of all citizens of the United States, so they don’t want to mess with changing up their credit cards frequently.
As a result, credit card companies fight and compete to encourage you to open up a spot in your purse or wallet for their card.
How do they do that?
Big fat, generous, insane, lucrative credit card sign up bonuses!
** Big reminder. I’m not encouraging non-credit card users to go out and get credit cards. This is for financially responsible people with a proven track record at not being dumb with money.
Again, the average person is going to sign up for the card and use it a lot and keep it for a long term. Mathematically, it is to the credit card company’s advantage to offer these huge sign up bonuses. They get a long term customer.
Therefore, you can win by refusing to be normal. Don’t become a long term customer.
You can win by following the types of strategies I blog about at Help Me Travel Cheap.
How to Earn Thousands of Dollars of Free Flights
In general, here’s what I do:
- Sign up for a credit card when they’re offering a really big sign up bonus. These days, that’s anything with 40,000 points or miles and up. I pay special attention to cards that don’t offer an annual fee. Note: I keep an excel document that tracks when I sign up for the card, and I set a calendar reminder for 11 months away – before the annual fee will be charged for the second year.
- Complete the required minimum spend. Every card sets an amount you must spend in a set timeframe. Sometimes you just need to make one purchase. Other times you need to spend $2,500 in the first 3 months.
- Make the occasional token purchase. Once the credit card minimum spend requirement has been reached, I use my Chase appeasement strategy. Just do a purchase or so each month over the next 11 months.
- Call to cancel the card. In fact, I usually do cancel the card. However, if they offer a good bonus (like waiving the annual fee for another year and giving bonus miles) to keep the card, I’ll keep it!
- Cancel the card. Eventually, before paying any annual fees, I cancel the card.
- I start shopping again and repeat at step one. I usually start shopping again for a new card long before the year is up on my first card.
How many points can a person earn by doing this?
Hundreds of thousands, plus more and more. In a twelve month period, if both husband and wife sign up for cards, you can easily and conservatively earn $2,000 worth of travel.
There are multiple credit card companies (Chase, Citibank, American Express, Discover, Barclays) who offer sign up bonuses. While they all have different policies as to how often you can sign up for a card and get a bonus, a person could literally go almost the rest of their lives getting more and more bonus points every year.
With the right expectations, this is the real deal. You can learn how to develop appropriate expectations from my free eBook.
What trips do I have planned? The proof this works.
When we move back to the United States next year, we’re going to take a month or two to travel. We love to travel as a family, and I believe it still fits within our frugal lifestyle because we always fund a large portion of our trips with points.
1. 7 nights with two rooms at Sheraton Imperial Kuala Lumpur Hotel. Total cost = $0. Our family will spend a week in Kuala Lampur. My wife and I each used 26,000 Starwood points to get a total of two rooms. The cost of a vacation is definitely reduced when you don’t have to pay for hotels. This hotel is saving us $1,600 (the cash price of the hotel for seven nights for two rooms). Those points were earned by a sign up promotion with the Starwood American Express.
2. 2 one-way plane tickets from Phuket, Thailand to Toronto, Ontario. Total cost = $154.20. My wife and daughters bought tickets at $1,000 each. It’s part of our fund for returning back to the US when we finished up here in PNG. However, the fund wouldn’t allow us to go through Thailand and Malaysia. However, if we used miles to pay for part of the tickets, we’d have enough money. As a result, my son and I will be using miles to fly to Toronto. We saved $2,000 by using 70,000 United miles.
3. 2 round trip tickets from Toronto to Budapest. Total cost = $250. My wife and I are going to take five nights away from the kids. We’ll be flying to Budapest in business class and home in economy. The tickets would have cost over $5,000 each, but we used 70,000 American miles and $125 each.
4. 4 nights at the Hilton Budapest. Total cost = $0. We’ll be redeeming about 120,000 Hilton Honors points for our four nights in Budapest. We actually earned those points mostly by staying at the Homewood Suites. However, we used the credit card to earn even more on every Hilton dollar we spent.
5. Train Trip to somewhere in North Eastern USA – Washington DC? Baltimore? Boston? Total cost = 15,000 Amtrak points. Since we got the Chase Sapphire Preferred credit card with a 40,000 point sign up bonus, we plan to transfer 15,000 points to Amtrak. We can go from Buffalo, New York to anywhere in the Northeast for 3,000 Amtrak points. Most trips are about $100 per person so, we’ll probably get a $500 value out of those 15,000 points. For hotels, we still have ThankYou rewards points, Ultimate Rewards points, Hilton points, and Starwood points, so I’m sure we’ll snag another 3-4 free nights whereever we end up.
6. Carribean or Hawaii. Total Cost = $220. Earlier this year, I promoted the 100,000 British Airways promotion on this site. I also got the card. With the 100,000 miles, we (my wife and I) plan to go to either the Carribean or Hawaii in the fall of 2012. We’ll have enough miles to fly one way in business class and one way in economy. That’s another couple thousand dollars saved.
What do others have to say about mileage credit card promotions?
After promoting the British Airways card, I had a couple of MH4C readers head over to my travel site and get the card. They both emailed to tell me about their experience.
Jason and his family were getting ready to head out on the mission field. Here’s what Jason formerly from Des Moines said:
I wanted to let you know that I just booked August 17, 2011 one way tickets from Des Moines, IA to San Jose, Costa Rica on American Airlines for my whole family (me, wife, four children and one infant) for 106,750 points earned by signing up for the BA card you recommended through your site. There was an additional $269 in fees, plus of course the credit card annual fee of $95. This would have cost me $2,472 to book with Frontier, so you saved me $2,108!
Another MH4C reader and his wife were in the process of planning a vacation to Hawaii when I posted about the BA promotion. Here’s what Paul in Pennsylvania emailed:
We FINALLY got [my wife's] miles and I just booked the trip to Hawaii. Total booking fee was $52.80. But yeah – total cost of $242.80 for tickets that would have been $1,800. Can’t beat that!!!! Thanks so much for your help. Now about those deals for hotels…?
The Big Disclaimer and My Reservation for Posting This
My litmus test for promoting something is this – do I use it and love it? Would I encourage my closest friend to do it?
I do and I would. In fact, I know which real life friends are sick of hearing me talk about it and which ones want more.
Of course, you do need to use your brain when doing this!
If you can’t trust yourself with a credit card, then getting a lot of credit cards would be like a drug addict filling up his house with drugs. I have never, never, never (in over 15 years) paid a penny in late fees or interest to a credit card company.
If you carry a balance, then I think Dave Ramsey is the Credit Card Sage. Interest payments will financially sink anyone. Late payments will be an anchor on your finances. If you don’t completely 1,000,000% trust yourself with credit, then realize this is the worst piece of advice you’ve heard all day.
However, if you are disciplined, organized, and have a desire to see the world on pennies rather than dollars, then it’s time to get into the game.
Two Cards Worth Mentioning
To help my MH4C readers who are interested get started, I want to point out a couple of good current promotions. If you’re having trouble choosing a card to get started with I do offer a free credit card consult where I look at your desired vacation destinations and help suggest a card. You can get more information here.
Chase Sapphire Preferred
Chase is offering 40,000 Ultimate Rewards points for signing up for this card and spending $3,000 in the first 90 days. Those points can use used towards $480 worth of travel if you book on Chase’s travel site. If you prefer to get miles, you transfer those points and get 40,000 miles/points on United, Southwest, British Airways, or Korean Air.
British Airways Visa
Chase is offering up to 100,000 British Airways Avios miles for signing up for their credit card. With their distance based award chart you could turn that into a thousand dollars worth of short haul flights.
Affiliate Disclosure: I do get an affiliate payment (commission) when you use certain links on my travel site to sign up for a credit card. In fact, a large portion of my future income will be based on my income from Help Me Travel Cheap. If that is a problem to you, you can just Google the card and do it that way. However, if you want to help support my online business, I’d love it if you popped over to Help Me Travel Cheap if you want to sign up for a credit card.
P.S. I’m not going to post about this stuff all the time. That’s why I created my travel site. But a couple times a year I might just let you know what’s happening over on the other blog.