Flying for (almost) free {How to exploit credit card companies to travel the world}

I hate to spend money on plane tickets. In the past 12-ish months, we flew to Costa Rica, Arizona, Colorado, New Orleans, the Philippines, and Thailand for practically nothing using airline miles. No, we don’t have all these miles because we’re fancy business people flying every week. And we’re not accruing them by spending lots of money to get lots of points (we don’t spend nearly enough $$ to do that). We do it instead by redeeming promotional credit card deals – and then cancelling those cards a few months later.

First the disclaimers – don’t do this if:

  • You carry a credit card balance (most of these cards have huge monthly interest rates) or having a credit card makes it hard for you to stick to your budget
  • You are about to buy a house or get any other significant loan – lenders usually don’t like to see any new accounts opened within 90 days or thereabouts

Now, those of you who are particularly fiscally responsible may be wondering “Won’t that RUIN my credit score?” Well, according to MyFico.com, your score will probably decrease by 5 points or less. After doing this for the 4+ years, Micah and I both have credit scores in the “excellent” range, so it hasn’t hurt us.

Onto the details…

Focus in on 2-3 airlines. This might be influenced by which airline has a hub at an airport near you, or who flies to a particular destination you’d like to go, which airlines have easy-to-redeem miles, or some airline you just like to fly. We usually stick to Southwest, United, and American.

Next, pick a worthwhile deal.  I look for deals where I am offered at least 40,000 airline miles (usually I go for 50,000+) and where the annual service fee is waived for the first year.  You can search online for deals or go to a site like Milecards.com and they will give you an overview of current deals.  Some cards, allow you to transfer miles to a variety of airlines.  Once you are signed up for rewards programs, you may get better offers than what is posted on websites– so keep your eyes peeled and look at your email or snail mail! If we are really trying to save up miles, we might both apply for the same card.

As a general rule, I don’t think its worth it to get cards where you earn points and then have to book through their travel system on any airline (Like any Citibank or Capital One, etc) because the return is not as good. On United or American, for instance, I can use 25,000 miles to get a round trip ticket in the US or Canada, whether that ticket costs $300 or $500. But using points, it is often just a ratio of points to dollars– so 25,000 points will usually just get you a $250 ticket.

After you’ve applied for a card and have been accepted, you have to remember to fulfill the deal’s requirements. For most cards this is a minimum amount of money spent in the first 3-6 months. We try to plan strategically to use a new card to pay for our auto insurance or charitable giving or other big ticket expenditure. If nothing else, we’ve bought gift cards to places we shop often – like gas stations, Amazon.com, or the grocery store. Here’s a cheat sheet of 40+ ways to hit those spending requirements. Once you’ve seen the miles added to your rewards account, don’t forget to cancel the card!

The last hurtle is finding a time to redeem those miles. Usually the farther you book in advance, the more options you’ll have. Airlines have charts with the amount of miles you need to fly to a specific region. Generally if you plan ahead, you can fly for 25,000 miles (roundtrip) within the US, 35,000ish to Central America and Hawaii, 55,000 to Europe, etc. Redeeming miles can be frustrating as flights available change day to day. Check back regularly if you are trying to book. Don’t forget to check with airlines’ partner airlines, too.

Be sure to compare airlines. To get to the Philippines, it costs 100,000 British Airways “Avios” + $500 in taxes and fuel surcharges for each ticket. Instead, we booked with United, where it was 65,000 miles + $25. But when we recently flew to New Orleans, we could fly using our British Airways Avios (on their partner American Airlines) for 15,000 round trip, as opposed to 25,000 United miles.

Another great way to get a lot out of your miles is to use a stop over, which allows you to hit two destinations for the price of one. This is how we went to 2 countries on our recent trip: officially our trip was a trip to Thailand with a 3 week “stop over” in the Philippines.

There are a lot of strategies with using miles I have internalized, so let me know if you have questions.

What other tips to you have for getting travel deals with credit cards or using airline miles? Or success stories from planning a trip for free? We’d love to hear them in the comments!

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