#134 | Travel hacking our way to 1 million points in 2022

January 31, 2022

Episode Summary:

In this episode, we discuss our individual goals to earn 500,000 airline, hotel, or travel points this year for a friends on FIRE total of one million points!  Travel hacking is a fun and lucrative activity if you learn how to do it right.  We discuss our strategies and experiences accumulating points.  We also share our travel plans and real-world examples of how we’re using points.   

Episode Notes:

 

We start this episode with a couple of basics on travel hacking and credit card churning:

  • If you’re nervous about it, don’t be! Millions of people play this game. Mike has played it for a decade, earning millions of miles, and his credit score is near perfect. It works if done thoughtfully. 
  • There are many card types:
    • Hotels, Airlines, Cash Back, Retailers, etc.
    • Banks like Chase, Citi, US Bank
    • Card providers like Visa, Mastercard, American Express
    • Business Cards, Consumer Cards
    • The variations of these create so many opportunities for sign-up bonuses.

 

How it works

  • The value comes from the sign-up bonuses, not from everyday spending. So if you want to play the game, you need to churn.
  • You apply for a card, meet the minimum requirements such as spending $3,000 in the first three months, and then the points are deposited into your account.
  • When you get the points, here’s how you use them:
  • Hotel points are generally worth about $0.005 apiece. Airline miles are around $0.02 apiece. So on everyday credit card spend, that’s .5% and 2% back.
  • Always do the math when you’re looking for ways to use your points and miles. For example, if a hotel room costs $50 or 50,000 points, pay with cash! Because you can likely use those 50,000 points to get $250 or more in value later.
  • Think of your miles and points as cash and do your due diligence.
  • Our one million miles goal is worth about $20,000.

 

Risks + Considerations for travel hacking through credit card churning:

  • Canceling a card hurts your score because it lowers your available credit, raising your credit utilization. But it doesn’t hurt a lot if you have different types of credit and a good history.  Do not ever cancel your oldest or first credit card, as that’s your years of credit history and will impact your credit rating.  
  • Canceling a card might get you “flagged” by a card provider, but we’ve never gotten denied for a card, which makes us think that if it’s a factor, it’s a minor factor in them approving you. 
  • Mike typically keeps a card for a year, canceling before the fee or just over a year if there’s no fee. And he has never had an issue.
  • Remember that many cards now will only let you earn a bonus once per lifetime, so you can’t get the same 100,000 miles from the Delta Gold Amex card. But there’s a Delta Platinum Amex, a Delta Gold Business, and a Delta Platinum Business. There are so many opportunities; you won’t run out. Check out thepointsguy.com for a great list of cards.
  • Don’t do too many at a time. Banks won’t approve you with too many open lines of credit. Also, it’s hard to manage, and you may end up missing a bonus. We recommend you do 2-3 a year if you’re starting out.  And then ramp up to maybe 5 or 6 when you’re good at the game.

 

How to make it work

  • Keep track of your points with a site like Awardwallet.com. Mike’s been using Award wallet for over ten years. It shows your current balances, links to your accounts, and notifies you when your balances are about to expire. 
  • Think ahead to where you want to go and have a general plan for the types of points you want to use and earn. For example, if you live in an area that doesn’t fly Southwest much, don’t get a ton of Southwest points that you have no plan to use. On the other hand, getting Delta SkyMiles is a no-brainer if you live in Atlanta, a Delta hub.
  • Think ahead of big expenses coming up to have your cards in time for those expenses.  Remember it can take 2-3 weeks for that card to arrive after you’re approved online.  
  • Remember to pay these new credit card bills, or it will ding your credit, and you’ll get charged late fees and interest, which you don’t want.
  • Remember, you can do personal and business credit cards if you have a business or LLC.  

 

We wrap up this episode by sharing some of our upcoming summer travel plans and how we leveraged points to book those trips.  

 

Top 3 takeaways:

  1. You could easily rack up 500,000 in travel points this year, especially across a couple who hasn’t done a significant amount of travel hacking already.  
  2. Be thoughtful and intentional about how you approach this, and it can be very lucrative if done well.  
  3. This approach to earning points and then using them takes extra time, so realize this is a tradeoff in your time versus your money.  And it can be a fun tradeoff!  

 

Show References:

 

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