I get PMed a lot by people asking about travel plans. It’s been a few years since I’ve actually put a pen to paper, so here goes…
Travel is cheap. Most Americans have no clue how the credit system in this country works and are predisposed to believe myths perpetrated by their parents and the media. It is true, there is a significant portion of our country that cannot handle high credit limits and the consequences if they do not pay off their balances monthly. But, for those of us that are financially responsible, there are many benefits to having good credit. Personally, I open 6-8 credit cards per year to reap the bonus benefits that each institution throws out there. As of today, my credit score is 803. In a way, it’s getting enough free samples from the grocery store and finding a way to make it into a meal. That’s really all the game is: One giant puzzle.
The most significant player in the credit card game is Chase. They hold the key to most of the airline and hotel programs out there. Much further down the list is Citibank. (Mostly for AA and Hilton) Then it’s AMEX and finally an assortment of smaller banks funding throwaway airlines. Where you should start depends solely on where you want to go. If you want to visit grandma in California, there is going to be a different strategy than wanting to take a train trip through Italy. My favorite airlines to use are British Airways, AA, United and Southwest. These programs have the best value out there and are the most exploitable. On the bottom of the list is Delta because their award chart is so far off calibration that it’s climbing a mountain with a spoon.
So let’s say that you want to take the wife and 2 kids to Destin, FL for Spring Break from DFW. AA would be your best bet as they fly into Pensacola. However, using AA miles is NOT the way that you want to accomplish this. You actually want to earn BA miles since they are a Oneworld Alliance partner. Even though you are redeeming BA miles, you are still flying on an AA flight. BA has a distance based award chart. DFW-PNS would be 9,000 miles roundtrip in coach. If you redeemed miles on AA for the same flight, it would cost you 25,000 miles to accomplish the same thing. So obtaining a British Airways card with a 50,000 bonus will cover your trip while getting an AA card with a 50,000 bonus will not. The price per ticket to redeem miles will be $5.60 roundtrip. So your total airfare cost for 4 tickets is $22.40. BA waives their annual fee for the first year that you have the card. So you can simple cancel the card before the year is up. For those married folks, you and your partner can both get an individual card and double the amount of points received. BA allows for family accounts, so you can throw them all into one pot. The downside of this benefit is that flights can only be redeemed by those listed in the family account. So it eliminates the ability to redeem miles for friends and family, should the need arise.
Let’s say that you want to go to Europe. After searching, you want to go to London, Rome and Amsterdam. In this case, your best routes are with AA and United. Some may argue with me on that point but the flexibility to book one-way award travel is very valuable. London and Rome are both hubs for AA. However, Amsterdam is not. But United does have transatlantic flights there. (Switching in EWR or IAH for you DFW folks) BA would be a terrible choice for the transatlantic flight because they charge a fuel surcharge of a few hundred dollars. Basically, you can fly DFW-LHR for $5.00 on AA or $200.00 on BA. You’ll find this pretty much the standard on your outbound regardless of the airline. On the outbound, it will be more expensive. Any of the UK airports will be the most expensive to fly out of because of the taxes levied and the exchange rate of the Pound Sterling vs. the Dollar. So always keep that in mind when planning your travel. In this instance, you would want London to be your first or second city, not the last. If you flew into London, and out of Rome, you could use AA miles for the entire trip. If you wanted to come back from Amsterdam, you could book AA on the way out and use UA on the way back. If you have BA miles, you could actually use those for inter-Europe travel the same way that you do domestically. However, you have to go in knowing that London Heathrow and Gatwick are hubs for BA and any flight using BA metal would most likely stop there. So I would book DFW-FCO on AA, FCO-LHR on BA, LHR-AMS on BA and finally AMS-EWR-DFW on UA. Knowing that I am going to need to stop in London to redeem my miles, I am moving London to the 2nd leg of my itinerary so that I don’t have to double-back trying to get to Amsterdam. Believe it or not, Wikipedia is one of my more valuable tools for planning travel. I can punch in any airport for any city worldwide and see what airlines fly there, from what city and to what terminal. If I have a place that I really want to go, it gives me the option of seeing what my mileage options are or if I need to book a cheap flight the traditional way.
Southwest is often overlooked because of their boarding policies. But they are actually pretty great for Texas based travelers. A companion pass, which is what you get when you earn 110,000 miles in a calendar year, let’s you designate anyone to fly for you for the cost of taxes for the entire year that you earn the pass + the following year. So if you earn it in January of 2017, you won’t be paying for a companion ticket until January 2019. Taxes for a roundtrip ticket are generally $11.60 domestically. However, if the Caribbean or Mexico is more your style, Southwest flies there too. Again, your companion flies free with you regardless if you buy a ticket or redeem your points for it. As many of you know, I moved to NYC back in 2013. With SWA’s free bag policy, my wife and I were able to move a lot of $#@! up beforehand in addition to flying home to see our kids while we were in transition for less than 2 tickets to the movies.
Hotels are a bit of a mixed bag. I admit, I have an advantage over the lay person because of the amount of business travel I do…or book for my employees that could not care less about hotel points or have the ability to open up a credit card. If you are a busy traveler, Hilton and Starwood are the best programs. Hilton has a ton of promos to boost your account and Starwood has very nice hotels and the option to transfer points to miles if you need it. If you are a casual travel and don’t need all the frills, IHG has a pretty decent setup. You’re looking at mostly Holiday Inns and Candlewood Suites but the Intercontinental and Indigo brands aren’t bad. There is excellent value for the casual traveler that needs to cram 2 adults and 3 kids into a room. If upscale is your thing, Hyatt and Fairmount may be the way to look. The disadvantage is that these two chains have limited properties. You won’t have a problem with either in London but there is nothing in Rome or Amsterdam for you. Both the Hyatt and Fairmount card offer 2 free nights after hitting the spending threshold of $1,000 in 3 months. So if you get the cards, and your wife gets the cards, you could theoretically have 4 nights at the Hyatt Paris Vendome ($1000/nt) and 4 nights at the Savoy Hotel in London ($800/nt). You would book 2 nights and she would book the next two. I’ve never had a hotel make me switch rooms on a split award. Plus, the cards give you Platinum level status which gets you free internet. Neither card has an annual fee, so you can cancel before your year is up and have $7,200 worth of free $#@!. Also, a lot of hotels allow you to status match. Let’s say that you get the Hilton Reserve Card, which gives you 2 free nights at any Hilton on the weekend + Gold status. You can send a screenshot of your status to a bevy of chains and they will automatically match it to their comparable level. In some hotels, this means upgrades, free breakfast and free internet. (All of which you get with that card too) Most hotel cards have an anniversary bonus of a free night to entice you to keep the card. If you want a free night in London, paying the $95.00 annual fee for the card is cheaper than paying $500 for a night at the Hilton Park Lane. Citi is pretty good at waiving your annual fee or throwing in further incentives. (Ex. If you spent $500 in the next 2 months, we’ll give you 10,000 AA miles) I just kept my AA card with them because they are waiving the fee if I can spend $100 in the next month on my card. Since I cannot apply for the card for another year, it’s worth it for me to make that deal. I will simply cancel the card before the annual fee is due next year, wait a few months, and then come back as a “new customer”. And of course, if you want to skip this whole thing and concentrate on flying there, there’s always AirBNB. But, for argument’s sake, don’t discount Accor hotels. You may recognize them as the proprietors of Motel 6 in the States but they have decent budget properties abroad. Novotel and Mercure also also decent budget options. Also to be considered is price matching hotels. Most chains have a variation of this. For example, if you can find a price better than what Radisson has on their website, they will match the price and give you 25% off the rate. Kayak becomes a good tool for this sort of thing because their matrix shows a wide range of sites where you can book the hotel. Radisson has it for $120, Hotels.com has it for $100, you are paying $75 after your claim is approved. (Usually need to claim within 24 hours of booking) 2 things with this: 1. Hotel has to be the same. You can’t price match a King Room and a Queen room. In most instances, the terms need to be the same, most notably cancellation. 2. Never, under any circumstances, book a non-refundable rate if your goal is to price match. If you are denied, you are stuck. There are a few chains that are notorious for this kind of thing. IHG, for example, will give you a free night if they can beat their rate. But their lowest rate is almost always a non-refundable pay now affair. They are very stringent with their terms and will deny your claim if the lampshade is a different color. I scored huge with a Penthouse Suite in Rome a few years back, so I was part of the problem.
Sometimes buying hotel points is a good thing. For example, my son and I are going to Pamplona next summer for the Running of the Bulls. I can pay $400 for a Holiday Inn during a time when they jack up their rates or buy 5,000 points for $62 + $40 on a cash and points rate. Starwood is another example. You can pay $400 for a Four Points hotel in Munich for Oktoberfest or purchase 12,000 points for a fraction of that cost. Always check what the points redemption value would be before making a final decision. Sometimes it’s better to go with points, sometimes it’s better to save them and simply purchase the room. If a hotel wants 50,000 Hhonors points, or $95.00, you’re better off paying for the room and saving the points.
So, back to credit cards. Chase will not let you get the same card bonus unless it has been at least 24 months between the time that you first applied. That means that you can get the Hyatt card every 2 years as a “new” customer. Citi has virtually the same policy but with an added kicker that you can’t obtain any 2 Citi cards within a 60-day period. So if you wanted to get 2 AA cards, you need to space this out a bit. Which card is best for you really depends on what you are trying to accomplish and the availability to use your gains towards that. As mentioned before, you DO NOT want to piss off Chase. So stagger your applications accordingly. If you open up too many cards in a short amount of time, you will be blacklisted for a few years and unable to open up anything else until a few of them have dropped off. Sadly, I am in this boat currently. AMEX will only let you get a bonus one time per card in your lifetime…so choose wisely. This is mostly for AA, Starwood and Hilton.
One thing that most people don’t know if that you are a business owner. Have you ever sold something on Craigslist, eBay or at a garage sale? Technically, that’s a business transaction. So you can reap the benefits of getting a business credit card in addition to getting a personal card. Your EIN is your Social Security number. Make up a name…any name. Spankytoes Enterprises, for example. Put whatever you want for your revenue. They won’t check, it’s simply a way for them to set your credit line. ($100,000 is my go-to) I’ve never been turned down before. The best part? Business credit lines are separate from your personal. So if you are falling a little behind in your life, you can pay off your personal credit card while letting your business card build up a bit. The net result is that your credit score rises because your credit card utilization has gone down. So you can get that 50,000 bonus Southwest Personal Card and that 50,000 bonus Southwest Business Card and be pretty close to the 110,000 point threshold you need for the Companion Pass. Or, you can get 200,000 $#@!ulative BA or AA miles with your partner for a Business Class trip to Ireland.
If you get the dreaded “We need more info to process this application” message after applying, don’t panic. Google “(Insert bank) reconsideration line” to find out where you need to call. Be nice to the agent on the phone and assuming that you have good credit, you will most likely be approved. Usually they want to talk to you about something from 1998 or something of that ilk.
Most people will have no problem hitting the spending threshold to earn their opening bonus. $1,000 in 3 months with a family? Easy. Charge all your groceries, gas, cell phone, entertainment, cable, etc. to the card and pay it off just like you did when you did an autopay from your checking account. Some bonuses, however, are a bit tougher. I don’t have a problem hitting a $4000 in 3 months’ requirement in NY, but $10,000 in 3 months is a bit steep. (This is usually for business cards) This is where the little known art of Manufactured Spending comes into play. Sadly, there isn’t a good plan that I can put into play because loopholes show up and then are stopped without any warning. Back in the day, it was a matter of creating as loop. I used to go to CVS to buy pre-paid cards called Vanilla Reloads for $5,000 on my card. I’d take them home, scratch off the number and load them into an online checking account that I had with AMEX and Walmart called Bluebird. Over 5 days, I’d unload all the cards since I was capped at $1,000 per day. From that account, I’d pay off my original $5,000 purchase. My only cost was time, gas to the store and a $2.95 activation fee for each card. So for the bargain price of $59.00, I could spend $10,000 on my card over a 2-month period and earn the really high bonus rewards. But, alas, AMEX caught on and shut down thousands of accounts, including mine. CVS stopped allowing people to buy Vanilla Reloads with credit cards as well. There are 2 popular methods that seem to be going strong. One, is PayPal Payments. You can send someone $500.00 through PayPal a month and not have to pay a fee. If that someone was your wife, she could deposit the money into your joint checking account and pay the credit card bill for a net cost of $0. Another popular method is Simon Mall Visa cards. They are in the same vein as Vanilla Reloads above. You could buy 2 cards at $500 a pop + a $2.95 activation fee. Federal law now requires gift cards to have a PIN. So you could setup the PIN, go to Walmart, buy a $500 money order and deposit it into your bank. Walmart machines are coded to accept debit cards, so a gift card with a PIN would go through just the same. The danger with this particular method is that you don’t want to deposit too many large money orders to your bank in a short period of time. That may raise some flags for embezzlement or laundering. Lastly, you can simply unload the cards the traditional way by using them as a debit. This is only realistic if you can afford to take the hit in your bank account during the time it takes you to unload the cards. The advantage being that you are hitting the spending threshold in the time you need it instead of hustling with your credit card.
There are 2 keys to mileage/points cards: 1. If you do not have a credit score over 750, you have a slim chance of being approved for the card 2. Don’t rack up charges that you can’t pay off as reward cards typically have a high APR. That 2nd rule is vital. If you are paying a 19.87% APR on $8,000 worth of debt, it would have been cheaper for you to simply buy the $200 hotel room instead of racking up interest. Also, open and close smartly. There are some cards, such as the Chase Ink, that I am willing to pay an annual fee on. I can transfer my chase points to a bevy or airlines or hotels vs. being strapped to only 1 program with a traditional card. Your credit score is heavily determined by how much credit you have available to you vs. how much you actually use. A person with $1,000 in debt and a credit line of $10,000 will have a worse score than someone with a credit line of $100,000. Every time you close a card, you are losing some of that credit line. If you are debt free, it doesn’t matter as 0% of $40,000 is the same as $90,000. There are some cards, particularly AMEX no-fee cards, that are worth putting in a drawer when you no longer need them. Another heavy component of credit is the length of time you have had it. I’ll never forget the Dillard’s card that I opened up in 1997 when I turned 18 and wanted to look cool that I closed in 2008 because I hadn’t used it in years, much less even knew where it was. I thought by closing it, my credit score would go up because it would show that I wasn’t reliant on a credit line. Exact opposite. My score plunged 25 points because I had just eliminated my oldest card and the average credit line dropped from 8.5 years to 2.5 years. Banks are much less willing to “lend” to you if you do not have a history. So if you aren’t paying a fee on the card, stick it in a drawer and bring it out every few years to make a purchase and keep it active so that the bank doesn’t close it. There is no downside to holding on to it.
I have a love/hate relationship with bloggers. They are great for the masses and sometimes I get a good fare deal or bonus promo that I wasn’t aware of. But they are also the #1 reason that things like Manufactured Spending get shut down. They spoon feed the information to the casual gamer trying to get a free hotel in Vegas while exposing the serious collector working on the Presidential Suite in Dubai. If I had to choose my blogs, I’d stick with Million Mile Secrets and The Points Guy. I think that both of them are complete douches, but they do parse a lot of information and give you a how-to on why certain cards are good deals. Flyertalk is the Bible of travel but it’s more for the advanced user. If you don’t know what DFW-LAX-SYD in J with an open jaw from SIN in F to earn EQMs means…stick with the blogs. When you have amassed enough posts at FT, you can gain access to more information on boards. Personally, I am an AA guy. I can tell you any routing to anyplace in the world on AA because I know their hubs. Choose your favorite airline and learn about it. It is vital in the mileage world because it really helps you map out the perfect vacation. I’ve used US Airways, United, BA and AA for European trips depending on my goal. Last year, I used Air Berlin (BA partner) from Munich to Moscow and flat out purchased my Moscow to New York leg because it was on sale for $225.00. The flight with miles would have been 30,000 in Coach + $189 in taxes because I would have had to fly to London on BA and then to JFK on AA. It was certainly worth the extra $36.00 to keep 30,000 miles for my next excursion.
Hopefully, this gives you a basic lesson on the seedy underbelly of playing the travel game. Understand, this only scratches the surface on what you can do when you really apply yourself towards your goal. I’m sure that there are others that do it better than I do that can chime in on how to play. But, know that it certainly can be accomplished with a little trial and error. I’m happy to answer questions when I have time.