1. Starting Notes
2. Points Vs. Miles (And Their Value)
3. Envisioning a Goal
4. Checking Your Credit
5. Choosing an Airline
6. How to Pick a Card (Or Two)
7. Real Life Examples
9. How to Keep It Going
10. Keeping Track of It All
11. Wonderful Side Effects
12. Final Words
Editor’s note: This is a text-heavy read. Some may find it kinda dry. Feel free to skip to the next section.
Sometimes it’s easier to hear a couple of real life examples. It allows you to compare and evaluate your own options and may point out something you may have missed.
Let’s start with my friend Suzy. She lives in Chicago and has family in Phoenix and Albuquerque. She’s more interested in visiting her family than traveling internationally, at least for the moment. When I told her she could freely travel to anywhere in the world, she said, “But what if I just want to visit home as often as I want?” She now does just that for free.
Chicago has two airports: Midway and O’Hare. Did she have a preference? “Midway, please.” With just a little research, I found that Southwest has direct flights from Midway to both Phoenix and Albuquerque. And with Chase as a banking partner, it would be quite easy to quickly accumulate lots of miles. “Perfect,” she said. “I already bank with Chase.” I recommended the Chase Sapphire Preferred card, which had a 50,000 point signup bonus and the Chase Southwest Premier Rapid Rewards card, which also had a 50,000 point signup bonus.
After a few months, I suggested she add a Chase Freedom card to the mix, which gave her another 10,000 points. The Freedom card was added to increase and sustain earning potential with its unique spend categories. So she got three cards in total. Two at first, then one more a few months later. In four months, she had accumulated over 110,000 points, all directly transferrable to Southwest. Incredible. What is 110,00 of these points worth? $2,000 dollars in free flights. At Southwest’s low prices, if each round-trip flight is $200, that’s ten free flights to go home to visit family. She goes home for weekend trips now more than ever.
Another friend, Alan, works as a publisher in Brooklyn. He puts out a magazine two times a year. Each round of printing costs about $30,000. Alan loves to visit France once a year in the spring, and Australia once a year in the winter. I casually asked him if he was running his expenses through a points-earning card. I was shocked when he told me he was paying everything with a debit card. Like most Americans, he’d been conditioned to believe that credit cards are bad. I told him he should run all of his expenses through a credit card, and set it up to be paid automatically each month so he’ll never pay a dime in interest and get a ton of points for free.
He liked the idea, but had no idea where to start. I recommended the American Express Business Gold Rewards card. This card offers 3 points a dollar on airfare, 2 points a dollar on advertising, shipping, and gas (which would be huge for him), and 1 point per dollar on everything else. The signup bonus was 50,000 points. American Express operates the Membership Rewards program, which transfers into Air France for his yearly trip to France, and either Delta or British Airways for his yearly visit to Australia.
Within a month of getting the card and running the cost of producing his magazine through it, he had over 100,000 points: 50,000 from the signup bonus and over 50,000 from his business expenses, including double points for his advertising and shipping costs. After the magazine was distributed, he transferred 60,000 points to Air France and visited Lyon for two weeks.
After the next round of printing, he’ll have enough to go to Australia. Through his bi-annual project cycle, he sets himself up to take two free vacations a year to places he loves.
One more example. My friend Chris wanted badly to visit Easter Island, one of the most remote places on the planet. The flights there are normally over $2,000 or even $3,000. Or free, I told him. I found that LAN Airlines operates the only flights there. Knowing they are a partner in the Oneworld Alliance, I knew he could book those flights through British Airways or American Airlines, both of whom are also part of Oneworld. Through British Airways, the cost was 70,000 Avios and on American, it was 75,000 AAdvantage miles. Pretty close. The decision would come down to the banking partners.
British Airways is a transfer partner of both Chase and American Express. American is a banking partner with Citibank. Chris said he’d prefer Citibank, so I set him up with a Citibank Platinum Select/AAdvantge Visa Signature, which came with a 40,000 mile signup bonus. Knowing he’d be booking through American, he had 35,000 miles left to go. I advised him to sign up for dining rewards and to order things he’d normally buy online through American’s shopping portal (more on this soon), as well as run all his normal spend through the card. He spends about $3,000 a month, which is 3,000 miles a month, but with targeted spend and the various other ways to earn miles, he was able to earn over 5,000 miles a month.
Since he was in no hurry to go, he sat back and watched the points add up. Then he logged in to the American website when he was ready, and, having flexible dates, got the perfect flights to and from Easter Island. He’s now all set to go next month to one of the most far-flung places on Earth. For free.
Next up: Score!
- Track your net worth with Personal Capital
- Start a blog and learn how to monetize it
- Get a travel rewards card
- Open a SoFi Money account to distribute your funds and get a $25 bonus - it's the best checking account out there right now (here's my review)
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