Mileage Hacking Mini Guide

Mileage HackingSince we started traveling full-time in January 2012, we have taken 146 flights, of which 102 have been purchased with frequent flyer miles, saving us $23,781 to date (our entire flight history, if you are interested). But you are probably thinking, “Wait a minute. Are these guys flight attendants? Stowaways? Straight out of their mind?!” None of the above.

We are “travel hackers”, and you could be one too. Mileage Hacking is the implementation of clever strategies to acquire massive amounts of frequent flier miles and hotel points, without having to spend a lot of money or take a bunch of flights. And contrary to the name, there are no high-tech skills needed, just a bit of diligence, organization, and creativity. While one of the best ways to earn troves of miles is credit cards bonuses, it doesn’t have any lasting affect on your credit score (despite my wife’s initial skepticism, our FICO score has actually gone up 60 points!). Note: Mileage hacking isn’t a free lunch, but if you follow this guide, and it could be your ticket to exploring the world.

Benefits of mileage hacking

  • Travel Catalyst: Having a large stash of miles will not only save you money on your travel (obviously!), but more importantly, it increases your chances of taking that next international trip.
  • VIP Perks: Having lots of miles can yield first class upgrades, lounge clubs with complimentary meals and drinks, hotel room upgrades, free WiFi, and purchase reimbursements. (One of our travel credit cards refunds us $300 per year in travel expenses, along with free lounge access worldwide, free TSA Precheck, and came with a sign-up bonus of 100k miles)
  • Flexibility: While online ticket prices seem to fluctuate by the minute, mileage tickets are a fixed amount–no matter how close to your departure date. As long as you aren’t trying to fly at a peak time, you can often snag cheap mileage tickets a week or two in advance.

Before you Start

  • Be Honest with Yourself: If you have a hard time paying your bills on time, and you aren’t particularly organized, then mileage hacking might not be for you. However, if you’re determined to have more travel in your life and aren’t scared of an excel spreadsheet, you’re efforts will be rewarded with tropical destinations.
  • Improve Your Credit Score: This is the single most important factor in mileage hacking. Your score should be at least 650 to begin, and preferably over 700. Regardless of your score, it can always be higher. Head to AnnualCreditReport.com and download all three of your credit reports for free. Repair any derogatory marks, close any dormant accounts, set all your credit cards on auto-pay for the entire balance, and follow the advice on MyFico.com.
  • Sign up for Reward Accounts: Joining frequent flyer and hotel reward programs gives you instant benefits such as discounts, point earning opportunities, VIP perks, and access to a larger networks of travel companies. We’d recommend signing up with these top players immediately: American Airlines, Delta, Southwest (hands down best rewards program in the world), United, British Airways, Hilton, Marriot, Starwood, IHG, and Club Carlson. Every time you book a hotel or flight, ask if that company is part of one of these programs, to accumulate points whenever possible.
    • Southwest Rapid Rewards: Our hands down favorite US domestic airline. The cheapest award flights of any carrier, two free checked bags, and NO-FEE cancellations up until 10-minutes before departure make Southwest #1!
    • United MileagePlus Program: United is our favorite international carrier, as their reward fares for regional flights are very reasonable, and they have a plethora of partners within Star Alliance.
    • American Advantage: As one of the largest and most popular frequent flier programs in the world, and as part of the Oneworld alliance, American partners with several different airlines to transport passengers to over 1,000 destinations all over the planet.
    • Delta Sky Miles: Points are not worth as much as the others, as rewards are “expensive”. Only consider earning Delta miles if you live in a city with a lot of Delta flights in/out, such as Atlanta, Cincinnati, Detroit, Memphis, Minneapolis and Salt Lake City.
    • British Airways Executive Club (Avios): These points are very good for short haul flights, as their rewards tiers are based on miles flown, and often cheaper than the other carriers. Be very careful when booking reward flights (or collecting BA/Avios miles), because BA charges exorbitant fuel surcharges.

The Basics

  • Points vs. Miles: Think of a mile and a point as the same thing (we’ll be using the terms interchangeably). You earn miles by flying, making purchases on your credit card, and a variety of other ways we will discuss. Typically, for every dollar you spend or mile you fly, you will earn one point (although there are ways to earn multiple, points per dollar). The “value” of a point or mile depends on many factors, but a fairly common estimation is around $.02 per point. Point values needed for flights and hotels change dramatically based on demand. (You can find round trip flights anywhere in the lower 48 states for around 25,000 points, with flights to Europe for 40,000 RT). Always do the math to decide whether it’s better to use points or cash; you’ll want to have those points handy if airfares ever skyrocket.
  • Types of Credit Cards: Airline Cards (i.e. the Southwest Card from Chase, currently offering a 50,000 mile sign-up bonus (link to Chase)) vs. Hotel Cards (i.e. Starwood Amex) vs. Flexible Point Cards (i.e. Chase Sapphire Preferred). When choosing a card, there are many factors in play (your travel style, monthly credit card spend, etc), but a general rule of thumb is: Flexible points are the best because you can choose whether you want to transfer them for a flight or hotel as needed. Airline Cards are a close second (for us they are first) because the bonuses are usually larger, and they come with perks like free checked bags, seat upgrades, early boarding, companion tickets, etc. Hotel Cards are a distant third, mainly because their reward levels are quite expensive when compared to a flight for an equal number of points, and usually enjoyed by people who frequent the same hotel chain, and require luxury hotels when they travel. (e.g. You can purchase a flight from New York City to Indonesia for the exact same number of points as just one night in a category 5 room at the Hilton Bali. What would you choose?)

How to Earn Miles (without taking a flight)

  • Credit Card Bonuses: Signing up for credit cards is the most efficient way to quickly get lots of points (that’s why having a solid credit score is so important). A good airline and hotel card will offer consumers anywhere from 30,000-140,000 points as a sign-up bonus. To get these points, you typically have to hit a minimum spend in the first few months (could be a $1 spend, could be $3,000.) But don’t worry, if you put every purchase on your new card, you will be surprised how quick you will hit the minimum spend.
  • Airline Shopping Portals: Nearly every airline has a shopping portal on their website, where they will reward you handsomely for simply clicking through to your favorite merchants. Just bookmark your top four airlines’ portals in your web browser and cross-reference these portals before you make any large purchases.
  • Brokerage Accounts: Do you have a 401k or a brokerage account with Schwab, Scottrade, TD or Etrade? Other brokerages, like Fidelity, will offer you a carrot (up to 50,000 carrots) to simply move your assets. The transfer is “in-kind” so you don’t sell any assets, and hence there is no tax liability or risk.
  • Manufactured Spending: All mileage hackers know you should use your credit card for every single possible purchase; however, there are ways to “manufacture” spending, without actually buying more stuff you don’t need. Examples: Give a micro-finance loan to those in need through Kiva.org (they have a 99%+ repay rate on their loans, and you will be helping others while helping yourself hit minimum spends); Purchase Gift Cards with your Credit Cards then withdraw the money to your bank (Only for the most advanced Mileage Hackers, but you will hear a lot of blogs talk about it); Pay outside family members bills on your credit card and have them Paypal you back…and countless other creative methods to increase your mileage earning.
    • The Points Traveler: Beginners Guide to Manufactured Spend with Gift Cards
    • Kiva: Hit your minimum spend while doing good. Tip #1: Pick loans with a short repay period. Tip #2: Pick loans that don’t have any currency risk. Tip #3: Once the loan is repaid you can either loan it out again (we have been loaning the same $200 for 7 years now, and we are on our 25th loan across 18 different countries, how’s that for a return?), or withdraw the money into your bank account.
    • PayPal: If you don’t already use PayPal, set up an account. There will be multiple occasions for you to use it. Especially if you start paying bills for your family members, this is a great way to get repaid quickly and reliably.
    • Plastiq: Use Plastiq to pay for any bills that don’t accept credit cards. They take between 1.5% and 2.5%, so you will probably only want to use Plastiq to hit large minimum spends.

Earning the Southwest Companion Pass

  • “Companion Pass is the benefit that lets you choose one person to fly free ($5.60 in fees) with you every time you purchase or redeem points for a flight. To qualify, fly 100 qualifying one-way flights or earn 110,000 Qualifying Points in a calendar year, and you’ll earn Companion Pass for the following full calendar year, plus the remainder of the year in which you earned it.” – From Southwest.com Companion Pass page
  • If you aren’t planning to take 100 flights next year (only the most hardcore business travelers hit that with flights), but you still think the companion pass sounds like a great idea, then you can earn it the way we did, via credit card sign-up bonuses. You need 110,000 points to get the pass. Currently there are two credit card offers offering 50k points each. Each have a minimum spend of $2k to earn the miles, so that will be 104k miles. Then you will just need 6k more points to earn the companion pass.
  • Timing: You want to earn the pass as early in the year as possible, because the pass is valid until the end of the following year (i.e. earn the pass 12/15/2016 and it’s good until the end of 2017. Earn it 1/15/2017 and it’s good until the end of 2018).
    – Sign up for the Premier Card first. It will take a few weeks to receive your card. Then, wait a few weeks and apply for the Plus card.
    – Then it will take one or two months to hit your minimum spend to earn the 50k bonus, so anywhere from late October through December is a great time to start the process.
    – You will be awarded the 50k point bonus in the month when you hit your 2k minimum spend, so make sure you hit the 2k minimum spend after January 1st.
  • Two offers currently live:
    Southwest Premier Card (50k bonus, no foreign exchange fees, great travel card)
    Southwest Plus Card (50k bonus, great card for USA purchases)
  • Note: We do not work for Southwest, we simply love their company ethos and their rewards program is hands down the best in the world. We do not make any money if you use the links above, they are our personal “share-with-a-friend” links, so Southwest gives us 5k miles if you sign up via those links.
    Note #2: If you are a traveling couple, only one of your should sign up for these card offers to earn the companion pass for 2017 & 2018…then at the end of 2018 your partner can earn the pass and take you as their companion (Anne and I have had the companion pass since Jan 2014)
  • When you get the Companion Pass we’d LOVE to see a photo of you on your first Companion Pass flight together. Share it over on our Facebook wall and we can inspire even more travel hackers!

Staying Organized

  • Track Your Applications: Use Google sheets or Excel to track your credit card applications. The sheet should include columns for: Application date, date to hit the minimum spend, points you will earn, if can you add an extra card holder (for an extra points), benefits of the card, a screen-shot of offer you are applied for (very important!), and the offer code where applicable.
  • Award Wallet: Sign up for an Award Wallet Pro account and enter every one of your rewards accounts. This online service will track your account balances so you can see them all in one place, give tips on how to earn more miles, and most importantly, they will alert you if any of your rewards are about to expire.
  • Prosper.com/Daily: This free online tool is the best way to keep track of your bank accounts and credit card charges. Enter all your credit cards and bank accounts into Prosper Mobile App. Yes, that sounds scary, but Prosper is easily one of the most secure and valuable tools when trying to keep your credit score high, reduce any pesky fees or interest charges, and make sure that nothing fraudulent is getting charged to your accounts.
  • Mind Your Deadlines: Before you reach the minimum spend deadline call your credit card company and confirm everything is on track to earn your points.

Travel Hacking is an incredible way to explore the world with very little cash outlay, though as we explained, it’s not without its own hurdles and learning curves. Don’t get dismayed if you aren’t earning a million miles in the first month. Take it slow and steady, learn from those who have laid a path before you, and you will be relaxing on that remote beach before you know it.

 

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