Are you in the 1%??

No, I’m not referring to the Occupy movement.  You’ll have to go somewhere else to read about them (they can’t really earn you free travel, so I don’t know why you’d bother :)).

I’m referring to a recent post by Rick @ Frugal Travel Guy.  Flyertalk recently held a seminar over a weekend in Chicago, organized by Rick and a few others, where we all heard various presentations about a wide variety of reward and loyalty programs, as well as some of the more famous exploits of certain members.

Anyway, Nightline did a story on frequent flier miles and the “hacking” we do (see the full video at the link).  The report features Rick from Frugal Travel Guy, so after the story aired just before Thanksgiving, Rick tracked how the traffic changed after the Nightline report.  In the post linked above, he estimates (not with the most scientific methods, but close enough) that about 1% of the people that visited his site after the story aired actually reading the blog.  The common held belief in the frequent flyer collecting / travel hacking community is that maybe 1% of people are actually willing to invest the time and effort and dedication to this game.

So are you in the 1%? 🙂

Earning Miles with Credit Cards

A step back to a few basics, from all the various deals that have been posted lately.  In this post, I want to go more in-depth into one of the best tools at your disposal for accumulating miles quickly.  Credit cards and their signup bonuses.   We’ve previous covered some of the basics of credit card churning, but I’d like to go into more detail.  Most of you have probably encountered airline specific credit cards.  They usually come with an annual fee between $60-$100, and typically net you 1 mile per dollar on most purchases, and bonus miles on purchases with the airline.  While this is a way to build up airline miles, I don’t think it’s necessarily the best way.

In my previous post, I discussed rough valuations of miles based on what type of flights you take.  Let’s say you value your miles at 1-2 cents apiece. If you are earning one miles per dollar on say, the United Mileage Plus Explorer card, you’re getting roughly a 1-2% return on your card.  But to have this card, you pay an annual fee of $90 (check?).  While it’s nice that you’re getting miles and traveling for free, you could honestly find a cash back card that gives you better values.  Most cash back cards offer 1% on general purchase, but have categories where you could be earning 3-5% cash back per dollar, with no annual fee.

However, the United Mileage Plus Explorer card comes with a bonus of 40,000 (or 60,000 miles, if you are a Mileage Plus elite member (see end of post) ).  If you take that account, you are earning miles for as low as fractions of a cent.  At that rate, it is definitely worth getting the card, AND paying the annual fee (if it isn’t waived the first year, which a lot of cards do).

I would like to digress a moment, regarding credit card annual fees.  Yes, I agree that annual fees are terrible, a seemingly unnecessary expense, and if you get a card with an annual fee purely for the signup bonus, you have to somehow remember to cancel your card before the fee comes up again or else you’ll get charged again.

However, consider what you’re getting out of the annual fee…at least one free domestic trip that is generally worth much more than the annual fee (maybe even the annual fee twice over).  It’s hard to dispute the value there.  Yes you will have to remember to cancel the card if you don’t want to pay the annual feed again, but I think with today’s technology, you can set your self email, calendar reminders, etc., there’s really no excuse.  Personally, I keep a spreadsheet where I keep track of all the cards I’ve applied for, the dates I applied for each, the amount I’ve spent on each, and a few other things (if there is enough demand, I’d be willing to post a blank version of that for people to use themselves).

Another point on canceling cards with annual fees, despite how easy it makes things to just cancel the card after the bonus miles post, you should avoid doing this.  It does not look good to the bank issuing your credit card if it looks like you just opened a card for the bonus, particularly if you develop a pattern of this.  Banks may blacklist you if you do that too much.  In fact, some cards or banks explicitly prohibit doing this in the terms of their condition.  Generally, it’s best to keep a card open for at least 6 months before canceling, and when you do call to cancel, it’s not uncommon for the bank to offer you retention bonuses to keep you as a customer (sometimes including thousands of bonus miles on the spot).

So whether or not using a card such as the United Explorer card is worth it in your situation, there are several programs out there that allow you to earn points that are transferable to a wide variety of programs that are much better options than confining yourself to a single mileage or hotel program.  These programs are the Starwood Preferred Guest (SPG) program, the American Express (AMEX) Membership Rewards (MR) program, and the Chase Ultimate Rewards (UR) program (covered by Mommy Points).  Stay tuned for upcoming posts on all of these programs!  That’s all for now….

-ffc

A few good deals (and credit cards!)…

Got a quick post on a few good deals…

Million Miles Secrets posts about getting 500 free Hawaiian Airline miles for connecting your Twitter account to your Hawaiian Airlines account.

Also, you can currently get 1,500 United for a (now $25 minimum) purchase at Gilt Groupe.  It’s only for new members though.  However, I’m sure most of us also have multiple email accounts that have not registered on Gilt yet.

Also, this a little bit older, but Million Mile Secrets had a post on a couple of good credit card deals

From Mommy Points: Chase Ultimate Rewards 101

Hey everyone,

I’ve had a couple of long days at work, so I haven’t had time to post.  However, I am still keeping tabs on my blogs 🙂  Mommy Points wrote a through primer post about the Chase Ultimate Rewards Program.  Acknowledgements to her for creating this resource for us all.  I’ll summarize the main points below:

  • Ultimate Rewards points are the points earned by certain Chase credit cards.  These points can be redeemed for gift cards, merchandise, or travel at a value of about $.01 per point (more on certain things, less on certain things).  However, the maximal value of these points lies in their ability to be transferred at a 1:1 ratio into Continenal OnePass/United Mileage Plus, British Airways, Korean Air, Amtrak, Hyatt, Marriott, and Priority Club miles/points.  The best values in that list are generally considered to be transfers to United or Hyatt…but it’s nice to have the flexibility of transferring to any of those programs, depending on your particular needs at a given time.  Transfers are instant into the award program of your choice.
  • The cards that earn Ultimate Rewards points are the Chase Sapphire Preferred, Chase Ink Bold (business card), and the Chase Freedom.  Get one of these cards!  I have links for the Chase Sapphire Preferred on the Credit Card Offers page.
  • The Chase Sapphire Preferred and Ink Bold both currently offer a 50k Ultimate Rewards points sign-up bonus, while the Chase Freedom offers a 30k bonus.  The Chase Sapphire Preferred earns 2 points per dollar on dining and travel (their definition of travel is very broad, including but not limited to airlines, hotels, rental cars, taxis, buses, and subways).  The Ink Bold earns five points per dollar at office supply stores, on cable and wireless service, and landline communications.  It also earns 2 points on hotel and gas expenses.  The Chase Freedom has quarterly rotating 5x points categories (limited to $1500).  On all other purchases, these cards earn 1 point per $.
  • When buying stuff online, check if the store you’re buying from is on the Ultimate Rewards Mall.  if it is, you can generally earn an extra 2 to 20 points per dollar by using the Ultimate Reward Mall’s link.
  • Do click on the link above to Mommy Points’ post  and read it through when you have a chance!

A Credit Card Churn by View From The Wing

Following up our recent post on credit card churning, View From The Wing is out with a post on a recent credit card churn that netted nearly 200,000 miles.  Combine that with his recent post on taking a dream vacation on credit card signup bonuses, and you can see how with a bit of attention, those bonus miles can really count!

Acknowledgements to Gary at View From The Wing for these two excellent articles.

A couple of good reads…

Over the past couple days, I’ve ran across a few interesting articles from The Points Guy (TPG).

He has been running a series about maximizing airlines elite status, with the most recent article covering mid-tier elite status I think mid-tier is the highest realistically attainable status if you’re doing mostly personal travel, so this article is worth checking out for what this might be worth to you.  The series also includes an introduction to elite status and mileage runs (where people fly on low fares purely to earn miles), an article on the value of the different tiers of elite status, as well as a couple of other articles.  I definitely recommend reading these!  But I will warn you, the articles are a bit long.

Additional, TPG has a Reader Question post about the value of American Express Membership Rewards points.  The article demonstrates some of the thought process behind valuing miles/points, and how your redemption choices affect that value.  Also, the article eventually goes into cash back cards, and there’s a long list of cash back credit cards at the end of it.

The value of miles

In this post, I’d like to discuss how you should value your miles.  Miles ARE a currency, but it can be hard to peg values on them because it depends on where you are going, which cabin (class) you want to fly in, and how you value each of these.  But it’s important to consider how you personally value miles, because that really determines to what extent and expense you would be willing to go to while accumulating miles.

 

Valuing Miles for Domestic vs International Award Redemptions

Let’s start by looking at the cost of domestic coach class tickets vs. a domestic coach miles award.  Note that there are many exceptions and variables in this, but I’ll try to make some generalizations for the sake of discussion.  Whenever booking an award, it’s good to compare the price of the award ticket you’re booking vs. the number of miles that it costs, and make your decision based on that.

Let’s estimate that a domestic ticket typically costs $250-$500.  It also normally costs roughly 25k to 50k miles to book a domestic ticket using miles. At this rate, I would say you can value miles at approximate 1 to 2 cents each for domestic ticket redemptions.  Now, lets consider valuing miles for international flights.  International coach class tickets range probably from $700-$2000.  I am really generalizing on this one, because it obviously depends where you are, where you want to go, the dates you choose, etc., but let’s say it would be about 60-100k for a coach class international award.  If you have the miles, I think you’re doing a bit better with international coach class tickets, but it can sometimes still work out to 1-2 cents a mile.  However, consider business class or even first class redemptions.  For these prices, you’re talking several thousand dollars and ranging up to tens of thousands.  Yet, if you do your homework and pick the right redemptions, you generally never exceed about 150k miles for a one way ticket.  In this case, your miles could be worth up to 10 cents apiece.

 

How should YOU value miles?

Obviously accumulating larger amounts of miles and putting it into upper class redemptions can you a lot of value in normally expensive seats.  However, should you say your miles are all worth 10 cents apiece?  No, for a couple of reasons.

The first is mainly that you don’t know if you’ll always be able to get an award ticket which values it at that level.  It’s subject to availability, and you generally have to be pretty flexible if you want the best award redemption values.

The second, is more my personal take, but I think my perspective would apply to most people.  Generally, if I travel out of pocket, I can only afford to (or at least choose) to travel coach.  Yes the miles make upper class redemptions possible at fairly reasonable cost, but I would probably never ever purchase a $10,000 business class ticket, when I could fly in coach for $1500.  That’s not to say I don’t enjoy business class and would never fly it with miles, but I don’t believe I can realistically say I value at miles at 10 cents per, because I would just choose not to fly business class otherwise.  I think there’s some happy medium in there, and I believe that I can fairly value my miles in the neighborhood of 5 to 6 cents, balancing out the notion that I would not actually have booked business class tickets at the price they’re sold at, but I do enjoy the experience and comfort of getting to fly in it.

 

Use Your Miles and Points for Your Greatest Benefit

I would like to make one final point on this topic, which has been a hot topic of late in the frequent flyer community (most of the blogs in my blogroll have made posts about this topic in the past month).  Ultimately, the most important thing is that you use your miles to do the things you value most.  Yes, I and other bloggers will post about great business and first class experiences and such, and I generally pay for my domestic trips and save the miles for international trips.  However, for some people they may not travel internationally, and/or they can’t afford to pay for domestic trips.  For some people, having free domestic flights allows them to see family, relatives, and friends, that they might not otherwise be able to do.  And using your miles for that is a perfectly legitimate use (not to insinuate that I had a right to tell anyone how to use them to begin with).  The only caveat is to try and optimize the cost of your miles based on what you do with them.

We’ve put up an introductory post about churning credit cards, which is a way to generate miles for fractions of a cent (less than $0.01).  Do check out this post, but consider that if you are able to generate RDM (redeemable miles) at such low cost, all your travel is essentially at little to no cost, whether you choose to book all your domestic travel with miles, or you book pricy premium class seats.  Until next time!

Credit Card Churning for Miles!

One of the quickest and easiest way to earn a lot of frequent flyer miles is churning credit cards.  What is churning?  The miles and points credit cards we’ll look at here generally give you some amount of bonus points for signing up, and in some case, spending a certain amount of money on the card within a certain amount of time.  For many of these credit cards, you can apply for these credit cards over and over and get the bonus miles each time.  However, in the past couple of years, the banks have started cracking down on this, so for many cards, you have to wait approximately about two years after cancelling before you can apply and get a bonus again.  There are still a few exceptions, cards which you can churn every 3 months and get a bonus.

Before you begin, keep in mind that churning cards does affect your credit.  As Rick of Frugal Travel Guy says “Your credit is your most important asset.”  If you are thinking of buying a house in the next two years, you should be careful about applying for too many credit cards (or credit cards at all), because even a small change in your credit score could affect the interest rate you are charged on your mortgage or your ability to qualify for the loan you need.

When churning cards, the short-term effect on your credit score is less than 10 points per credit card application.  In the long run, as long as you pay your bills on time and in full each month, credit card churning will not negatively affect your credit score.

And what can you get for all this trouble?  Anywhere from 500k – 1  million miles per year if you churn credit cards smartly.  That is enough for twenty free domestic tickets in coach, or about five free business class trips to Europe!

Eventually we’ll take the time to post a detailed strategy for credit card churning here.  But for now here is a link to a great article about credit card churning on the Million Mile Secrets blog:

Are you ready to Churn Credit Cards?

 

An award trip booked with AA miles

Frugal Travel Guy’s, Sunday Success Stories series has an article today about a trip that someone was able to book with a relatively small amount of AAdvantage Miles.  Check out the story here!

Considering how easy it is to earn 150,000 AA miles with 3 credit card sign up bonuses (acknowledgment to Daraius at Million Mile Secrets for the post about signing up for AA cards), booking a trip like the one above is well within anyone’s reach!

TopGuest – Earn points for checking in on social networking websites

This morning, I learned about a service that I had never heard of, through Gary at View From The Wing.  TopGuest is a website that allows you to earn points and miles with various loyalty programs, including Hilton HHonors, Priority Club (Holday Inn), MLife (MGM hotel properties), Virgin America, and according to today’s post at View From The Wing, you will now be able to earn miles on United/Continental for airport check-ins.  If you use any social networking check-in service, or are willing to do so to earn miles, and you are ever near any of the properties on the list, I recommend signing up for TopGuest.