Traveling is something that most of us enjoy doing, and that we would like to do more. Unfortunately, there are many roadblocks preventing most people from traveling as much as they would like. These include work and family commitments, but the most common reason most of us don’t travel more is probably the cost. A simple round trip flight to Europe typically costs at least $1,000, and once there, ten days in hotels will set you back another $1,000. Some people manage to save money on hotels by staying in cheaper hostels, or going to places like Southeast Asia where the cost of living is much lower; but they still need to come up with upwards of $1,500 just for the flights. Even staying closer to home in North America, round trip tickets to many exciting destinations cost hundreds of dollars. What most people don’t realize is that for those of us lucky enough to live in the United States, it’s actually possible to fly for free (there are taxes and fees, so its close to but not technically free) and get free hotel rooms, simply by taking advantage of loyalty programs offered by all the major airlines and hotel chains. Its even possible to enjoy traveling in greater comfort than ever before, while paying practically nothing.
If you’ve followed this blog, you know that my wife and I have been enjoying an eight month trip around the world, enjoying many of our flights at the front of the plane in business class. We spent over two years building up over two millions miles and points with the grand goal to fly for free around the world on this trip. With a bit of thought and planning, it could take just a few months for you to book your next trip with miles, paying only taxes and fees (which can be as little as $2.50). We’ve already written multiple posts explaining different aspects of the process, but my goal with this post is to lay out a step by step template that all of you can follow down the path to more future travel.
By far the easiest way to collect the tens of thousands of miles you’ll need to redeem for your free trips is to sign up for credit cards which offer good sign-up bonuses. Signing up for a single credit card can net you enough points (50,000) to take two round-trip flights within the lower 48 states. A round-trip economy flight to Europe can cost as little as 40,000 points if you fly off-peak with American Airlines. Thus, the process I’m laying out today lays out how you can start signing up for credit cards in an intelligent manner with specific goals in mind.
10 Simple Steps to intelligently signing up for credit card bonuses
1. Make sure that your personal finances are in order
I can’t stress enough how important it is for you to be in reasonable financial shape before you start signing up for miles credit cards. What do I mean by reasonable? Simply stated, you shouldn’t be carrying a balance month to month on any of your current credit cards. Doing so means that you’re almost certainly paying interest of 10-20%/year. Most award credit cards charge very high interest rates if you carry a balance, so the key to success in this game is to pay that balance in full every month. That way you’ll get all the miles, and free use of the money for 30-50 days, and you won’t pay a dime for it.
On the other hand, lets say you get a new card, spent $3,000 on it to meet the spending requirements to net the 50,000 miles, and then take a year to pay off the balance with 18% interest At the end of the year you’ll have repaid $3,600, or $600 more than you spent, in order to net the 50,000 miles. I hope its clear that it quickly becomes pointless to collect miles in this fashion as the amount you pay in interest can end up outweighing the value of the miles.
Thus, I highly recommend creating and executing a plan to pay off any outstanding credit card balances before moving forward.
2. Make sure that your credit report and credit score is in order
- Use CreditKarma and Credit Sesame to get a proxy of your current credit scores.
- Use Annual Credit Report to get a free copy of your credit reports with each of the three credit bureaus each year (If your credit score is already over 700, this step may be unnecessary).
- I’ve put together a post about understanding your credit score.
- Ideally, you’ll have a score over 700, which should make you reasonably certain to be approved for most credit cards. The higher the better really.
- If your score is under 670, you’ll need to spend some time getting it higher, as you’ll be unlikely to get approved for the good cards.
3. Sign up for, and start tracking your current loyalty program balances if you don’t already
- Make sure you sign up online at each company’s website and get online access to all your accounts
- AwardWallet is my favorite tool for managing the 40+ loyalty programs I’m signed up with.
If you want more details on the preceding steps, read this post I wrote about them last year.
4. Create a travel goal for yourself!
This is an important step in this process, because it sets a clear target for your efforts and allows you to formulate a plan of action to achieve the goal efficiently. In fact, you may want to do this before starting any of the other steps if doing so creates extra motivation. The travel goal can be anything, large or small. Perhaps you simply want to collect enough miles to take a couple of round trip flights back home to see your family. Maybe you want to collect some hotel points to use on a free get-away weekend with your significant other. Or your dream is to take a round trip to Europe, Asia, South America, Africa, or all of them! The possibilities are endless and only limited by your desire, credit score, and willingness to sign up for more cards.
On a personal note, Anna-Lisa and I wanted to collect enough miles to take a trip to Southeast Asia. Once I got into the groove, I decided I wanted the trip to be in business class, and I also decided to collect hotel points in order to stay free in some of the most expensive cities we were visiting (such as Hong Kong, Dubai, Melbourne, and Europe). I also had a goal to collect over one million points. It took us two years, but we were successful at reaching both of these goals. I’m confident that you will also reach your goals if you create them and follow these steps.
5. Figure out which credit cards will help you reach your goals
There are a lot of great credit cards which will give you a nice sign-up bonus for getting them, but the best card value-wise may not be the best card for you based on your specific goals. As an example, the Southwest Companion Pass is an incredible value (you can save over $3,000 with it), but if your goal is to save up for a trip to Europe, you should apply for a different set of credit cards. Personally, I love American Airlines miles because they allowed us to book an amazing award through Australia, Southeast Asia and on to Europe. Combining United Miles with Chase Ultimate Rewards cards is also a great approach to going pretty much anywhere around the world.
The key takeaway here is that you should base your credit card signups on what you want to do. I would love to make suggestions to anyone who wants to let me know their goal!
6. Make sure that you can meet the spending requirements of any card you sign up for
- Most awards credit cards have a spending requirement in order to receive the bonus points. A typical requirement these days is to spend $3,000 within the first 3 months to receive 50,000 bonus points.
- It’s very important to only spend money you would have spent anyway on the credit cards you sign up for. Otherwise, the cost of the extra spending may outweigh the travel benefits of the card.
- Thankfully, there are ways to meet minimum spending requirements even if your regular monthly spending isn’t high enough. However, these will require more time and effort on your part.
7. Make sure you are signing up for the best version of a particular credit card
Credit card companies offer signup bonuses because they are trying to acquire you as a new or more loyal customer. Their goal is to acquire you at the lowest price possible, so they will typically have multiple offers for the same credit card available at the same time. Knowing the best offer may mean the difference between enough points to fly to Europe versus simply enough for a US round trip. As an example, the public offer for the United credit card is 30,000 points. However, if you are already a MileagePlus member and logged in online, you may be targeted with a much better 50,000 point offer for the exact same card. Thus, its extremely important to inform yourself before you apply for any given card and make sure the offer you are applying for is actually a good one.
8. Once you’ve gotten approval and received your new credit card, make sure to stay on top of everything
- Sign up for online access so you can track everything from your computer.
- If you tend to forget to check regularly, set up automatic payments (Note: I’m not a big fan of auto-pay myself because I like to review my monthly purchases before paying. But my wife swears by it).
- Make sure you spend enough money to meet the minimum spend requirements in the allotted time frame.
9. Once your miles/points are in your account, plan your trip!
- Planning your trip can be a challenge depending on the types of miles you’ve collected.
- Certain types of rewards programs, such as Southwest’s program, make redeeming your points simple.
- Other programs make it more challenging, but typically more rewarding as well. Thankfully, we’ve put together a guide to booking more complicated trips.
- I also recommend using our award booking service if you want assistance in putting together the award you want. There are typically way more travel possibilities than what you see with a simple award search and we know how to find them.
10. Cancel credit cards once the annual fee comes around unless the benefits justify the fee
- Most people are really concerned about the effects of canceling a credit card. The fact is that canceling is as easy as a quick phone call, and really doesn’t have a large effect on your credit score.
- Many awards card have an annual fee between $60-125 which they may or may not waive the first year.
- After one year, the additional value of keeping the card is usually not worth the fee, so feel free to call the card company and cancel the card.
- Some credit cards are worthwhile to keep year after year. For example, the IHG Hotels credit card has a $49/annual fee, but offers you a free hotel night each year you renew.
That about covers it. I hope I’ve given you a good plan for taking advantage of the amazing bonuses credit card company’s are giving out now for getting their cards. I don’t imagine that these amazing offers will last forever, so take advantage of them while they are available.
I would love to answer any questions you may have. Feel free to post as a comment so all the readers can benefit from my response, or contact me directly if you have a more personal request.