Advertiser Disclosure: Travel Freedom has partnered with CardRatings for our coverage of credit card products. Travel Freedom and CardRatings may receive a commission from card issuers if you apply and are approved for a card. All credit card names are registered trademarks of their issuer. Please check offers closely on the application page as they change frequently and our info can sometimes be out of date. Travel Freedom may earn commissions from qualifying purchases.
PART 1: INTRODUCTION
Introduction to Miles & Points
1. How to Travel with Points & Miles
I'm sure you've seen advertisements before offering you points or airline miles just for signing up for a credit card. While your first thought might be "what's the catch?", you better believe that these offers are very valuable! If you do it right, there is no catch at all. These introductory bonuses are often worth a thousand dollars or more.
Here's what the process of these offers looks like:
1. Apply and get approved for a credit card with a huge introductory bonus.
2. Meet a minimum spending requirement set by the bank to earn your introductory bonus. (example: Spend $2000 in the first 3 months)
3. Receive your points or miles bonus. (typically between 40,000 and 100,000 points/miles)
4. Spend your points or miles on a free flight. (many cards give enough points for multiple round trip flights)
5. Do it again with another credit card! Voila! Free(ish) travel for life...
It's really that easy! Of course there are more details which I will get into, but it doesn't take a rocket scientist to learn how to travel for nearly free. I learned by reading blog post after blog post. I'd like to make things a little bit easier for you, which is why I made this course. I've been traveling for a fraction of the regular price for years using these techniques. It's changed my life dramatically as I am able to travel as much as I want without breaking the bank. When I started to travel using points and miles, I was working a part time job making less than $30,000 a year, but was easily able to travel often. I would even go to Hawaii more than once a year, which most people think is extremely expensive. I've heard it over and over again... "I'd love to travel to (fill in the blank), but it's just too expensive". Don't let that be the excuse any more. Traveling does not need to be expensive when you can use points and miles instead of dollars.
2. Why Banks Offer introductory Bonuses
In the 2000's banks started paying airlines and hotels for their loyalty rewards points and miles. They wanted these points and miles to give out as a bonus to lure in new customers to their credit card products. Banks will pay large amounts of money to earn a new customer in hopes of making a lot of money off them in the future. Banks make money off of three things. Merchant fees, account fees, and interest charges. The main one related to the customer is interest charges. We're going to stay away from those completely. In order to earn travel points through credit cards, you MUST pay off your credit cards IN FULL & ON TIME, every single month! NO EXCEPTIONS!!! Credit card interest rates are insanely high and are never worth paying. If you can't pay off your credit card in full every month, using it more like a debit card, then earning travel points is NOT for you. The money lost in interest far outweighs the money you will save with travel.
Because banks want new customers so bad, it's easy to take advantage of their insanely good offers. Not only is it easy, but it's nearly endless. There are hundreds of credit cards on the market that offer travel introductory bonuses, and new cards are being offered every year. I've been traveling with points and miles for a good part of the decade. I have been approved for 26 credit cards and earning well over a million points and miles simply through introductory bonuses. I'm not even close to running out of offers to apply for. I've saved tens of thousands of dollars and plan on saving even more in the future.
3. Will This Effect Your Credit Score?
Yes... Using credit cards to earn travel points can actually IMPROVE your credit score. You heard that right... IMPROVE! If you follow the rule of paying off your credit cards in full and on time, every single month, you'll not only be earning tons of miles, but over time you'll likely end up with a better credit score. My credit is now in the 800's which is extremely high (850 is the maximum).
There are a lot of myths about how credit scores work, and what effects them both negatively and positively. I'll show you how it really works.
A FICO credit score is calculated using five categories with the following weights:
35% PAYMENT HISTORY - By paying credit cards off fully every month, your credit score is optimized.
30% AMOUNTS OWED - This = [credit balance / total available credit] By keeping a low balance, the more credit line you have available, the better.
15% LENGTH OF CREDIT HISTORY - As you keep cards open (even cards you don't use that have no fees) your credit history grows.
10% NEW CREDIT - This is the only category that comes down with a credit card application (~4pts per application), but drops off after 2 years.
10% CREDIT MIX - This does not apply. It has to do with the types of credit you have such as a car loan, mortgage, credit cards, etc.
4. True Value of Points
This is very important to understand. All points are not created equally. I repeat. All points ARE NOT created equally! Some points are worth much more than others. For instance, a roundtrip economy flight to Hawaii (my favorite destination) can run anywhere from 25,000 miles to 45,000 miles depending on what airline award program you use. That's a difference of 80% which means that with one award program you will be getting much more value per point than another. When you decide on a location for your vacation, do some research to find out your best points option.
Those "What's in your wallet" commercials are a bit deceiving... You may be earning 2 points per dollar on every purchase, but those points are worth half of what some others are...
5. If You Have Questions
I have set up a Facebook group called TRAVEL CREDIT CARDS Q&A for you to ask questions regarding this course or anything beyond. Either myself or others in the group will help you out the best we can! If we don't know the answer, we'll start researching to find out.
Create Your Strategy
1. Where Do You Want to Travel?
If you have an idea of where you want to travel before applying for a credit card, it can be very beneficial. You'll have a better idea of what credit card will give you the best introductory bonus to get to your specific destination. Like you learned in the last section, all points are not valued equally, so you may be able to get a better value if you know ahead of time where you are trying to travel. If you have no idea where you want to go, it's OK. You can still earn points with an airline, or better yet with a flexible point system that allows you to transfer to multiple airlines, such as the Chase Ultimate Rewards point system. When you're ready to take a vacation you can find a destination that works with the miles or points that you now have.
2. You'll Need a Good/Excellent Credit Score (700+ preferred)
In order to be approved for most travel credit cards you'll need to have a good credit score. According to many online sources in the points and miles travel community, a score of 700 or above will give you good odds of being approved for some of the higher level credit cards. The higher your score is, the better your chances of being approved, but there's never a guarantee as a lot of factors go into the banks consideration. Keep in mind that even if you aren't approved for a credit card, that you can call the bank and have your application reconsidered. I will cover approval reconsideration in more depth later in this course.
3. Keep Track of Your Points
Now that you know how to travel with points, and you'll be earning thousands if not millions of points in an assortment of loyalty programs, you'll need a way to keep track of all of them. Fortunately, there's a free way to keep track of your points and miles without having to make an Excel file. Award Wallet is a service that will track all of your points and miles for you. All you have to do is create an account and then each time you sign up for a new loyalty program such as Southwest Airlines or Alaska Airlines, you'll input your member number. For a small fee you can upgrade your account so that it will automatically update your reward balances and let you know if any points are close to expiring. I find it worth paying the small fee, but it will work fine either way.
4. Track Your Credit Cards
As a points and miles traveler, you'll need to be very organized. Don't wait to track your miles or to track which credit cards you've applied for. It's much easier if you start tracking from the beginning... Right now. Although there is no online program to track what credit cards you've already applied for, I've created an Excel file for you.
It can be used to track what credit cards you've applied for, how many points you've earned from the introductory bonuses, and what your credit limit is on each credit card. It also has space to keep track of whether you want to keep the card long term or cancel/convert it before an annual fee is charged. I've been using this file for the past five years and I'm glad I tracked from the beginning of my points and miles travel journey.
5. Keep It Simple
You don't want to over-complicate things any more than they need to be. While there are hundreds of airlines around the world, you should start out by focusing on just two or three. First become a relative expert in these few airline reward programs and work out from there. Of course, for certain destinations you may need to go outside of your main airlines, but learn about them when you get to that point. I personally focus mostly on Southwest, Alaska, and British Airways as they are the programs that I use most often.
On to the fun stuff... Now that you understand how free points work and you have a strategy, it's time to move on to the next section that details how to earn thousands, if not millions of miles and points.