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(Almost) Free Frequent Flyer Miles
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pazzesco Offline
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Post: #1
(Almost) Free Frequent Flyer Miles
Overview:

I'm sure this isn't new to many of you, but there is an entire community online, on sites like flyertalk.com, that tracks credit card sign up bonuses, free/bonus mile promotions, and other offers in order to accumulate ungodly amounts of frequent flyer miles. At first I was skeptical, then overwhelmed, but now I'm a believer.

I started this just under a year ago. I previously wasn't even a member of any frequent flyer program. Since getting into this, I've earned around 700k miles, mostly for BA and United (for various reasons, but there are opportunities for all airline programs. Due to the different alliances, you may be suprised at what airline program serves you best since they all have different award charts and fees). These points were gained through credit card sign up bonuses (majority) and optimizing normal credit card spend. I estimate I've spent ~$500 more than I normally would due to credit card annual fees and making purchases that require a credit card surcharge, that I would usually pay with cash.


The catch:

The real cash cows are signing up for credit cards with lucrative bonuses, sometimes 50k-100k miles or points JUST for signing up and completing a minimum spend. This minimum spend, however, can be anywhere from making a first purchase to $10k in 6 months, but normally falls between $500-3000 in the first 3 months. Personally, I only apply for cards that are 50k points or more to make it worth my while.

Obviously, the BIG concern is the hit on your credit score. After lots of research on this I started applying for cards. The recommended technique is to apply for multiple cards on one day so that it only shows up as one "hit" on your credit score. There are many nuances to this which are too detailed to get into now, but can be easily researched by looking at the references I'll list at the end of the post. Each "hit" is usually 2-5 points off your credit score. But at the same time, adding credit to your name that isn't being utilized will raise your score. In the last year my score has RISEN from about ~750 to ~760, depending on the credit bureau. I've opened 7 new credit cards in the last year (which sounds like HEAPS, but isn't relative to some people who do that in a day). Some of those I will keep, some of those I will close at the end of the first year (since the annual fee was waived for the first year).


Other ways to earn miles:

Apart from the sign-up bonuses, you obviously earn miles when you use your card. Depending on the card, you may earn double or triple miles when you spend on special categories like dining or travel. So if you need to buy a $1500 plane ticket, you obviously want to use a card that earns 3x for airfare. Most credit cards and airline miles programs also have online shopping portals, so if you buy online alot you can earn lots of bonus points that way as well.

Some cards, like AMEX or Chase Sapphire, earn points that can be transferred to several different partners including airline frequent flyer and hotel loyalty programs. These partners sometimes offer transfer bonuses that be as high as 50%.

There are also buy miles promotions, like in the Buy US Airways Dividend Miles thread in this forum. They can be a good deal, but your cash outlay is obviously much, much higher. But for those who aren't in the position to take advantage of the other strategies and want to fly business, then its a good deal. Buying miles might also make sense if you are short on the miles required for your desired award.


Other things to know:

As mentioned earlier, the frequent flyer program that you should earn with may not be clear cut. This is because almost all airlines belong to one of 3 alliances, and their miles can be redeemed for award flights on their partner airlines. For example, I use my British Airways miles for Qantas flights within Australia since I've been living in Sydney as well as for LAN flights within South America when I go there in a few months. All 3 airlines are part of the One World alliance. Also, each airline's program obviously has a unique award chart. So your location and preferred destinations will play a role. In some cases you may want an award flight on a particular carrier, but it makes sense to redeem miles from a partner airline's program for that same flight since it costs less miles.

The worth of a mile is debatable, but many of the "experts" estimate it to be around $0.02 depending on the airline (since some charge more or less for award flights). This is a conservative estimate that I use to make sure I'm getting enough value for an award redemption. In other words, if the revenue ticket price divided by the number of points for an award is less than 2 cents it's usually not worth it. Miles can be worth HEAPS more though, especially when redeemd for business and first class cabins.


Who this is NOT for:

-anyone with questionable credit, or who will be applying for a mortage or loan in the next couple years
-anyone that normally does not have much credit card spend. Some people on flyertalk will open a credit card for the bonus, and then buy gift cards for future use in order to meet the minimum spend. I think this is dumb. This last year I had lots of expenses I was able to put on credit card, so I did not have to change spending habits to qualify for the bonuses.
-non-US citizens, as other countries credit card sign up bonuses tend to be A LOT lower


Summary:

This is just an overview, so if you have specific questions just ask. Maybe I'll write a "getting started" post later on with recommendations of cards to get, etc. Also, I know many people will be skeptical about something that can mess with your credit - I was the same. Like I said before, this is not for everyone, but in my experience this has been a fucking sweet deal.

References:

-flyertalk.com (credit card bonuses are the tip of the iceberg on this site, lots of travel knowledge to be gained)

-this thread is good for the top, current credit card promotions: http://www.flyertalk.com/forum/milesbuzz...hread.html

-thepointsguy.com (blog which is a good place for newbies, explains the different airline programs and best-value award redemptions, lists best credit card offers, etc)

-frugaltravelguy.com (another helpful blog)
03-26-2012 08:31 PM
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Smitty Away
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Post: #2
RE: (Almost) Free Frequent Flyer Miles
(03-26-2012 08:31 PM)pazzesco Wrote:  Overview:
The recommended technique is to apply for multiple cards on one day so that it only shows up as one "hit" on your credit score.

Not quite. Credit inquiries are unique (not grouped as one "hit"). Ten inquiries for credit is logged on your report as ten inquiries for credit regardless of whether they were all the same day, same week or same month.

Otherwise, good post and welcome aboard. Thanks.
03-26-2012 09:03 PM
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hun73r Offline
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Post: #3
RE: (Almost) Free Frequent Flyer Miles
I read Chris Guillbeau's book (spelling?) and definitely believed before hand that getting lots of CC would hurt my credit.
One of his main points is that as long as u leave your old credit cards intact and just recycle the new ones, it won't change your credit that much. he's right. I have signed up for tons of new CCs like Chase Ink, Capital One Venture, spirit and at creditkarma.com it hasn't changed my credit score.
So I am all about maximizing points and then cancelling them quick. great strategy
03-28-2012 10:27 PM
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_DC_ Offline
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Post: #4
RE: (Almost) Free Frequent Flyer Miles
I've been thinking about doing this. I've got a decent amount of disposable income and I just use a debit card. It doesn't provide any rewards whatsoever.

As long as the credit card has an automatic payment every month, there really is no difference between a debit card as long as you spend money you can pay off every month.

I really need to look into this. Duh me.
03-28-2012 10:39 PM
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JackHammer11 Offline
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Post: #5
RE: (Almost) Free Frequent Flyer Miles
(03-28-2012 10:39 PM)_DC_ Wrote:  I've been thinking about doing this. I've got a decent amount of disposable income and I just use a debit card. It doesn't provide any rewards whatsoever.

As long as the credit card has an automatic payment every month, there really is no difference between a debit card as long as you spend money you can pay off every month.

I really need to look into this. Duh me.

Yeah man you've definitely been missing out! I'm able to travel to Europe once a year and the west coast twice a year just by using free miles. I'm also able to mix in 2-3 hotel nights at Starwood or Hilton hotels, just by applying for credit cards. And the best part? I've never paid a penny. Just call up and cancel before the annual fee.

It's so simple but it's amazing how few people actually do it. Two great sites to get you started:

http://www.thepointsguy.com
http://www.frugaltravelguy.com
03-28-2012 11:11 PM
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