At the rate we travel, it would appear that we have unlimited financial resources. Not true! Our secret is that we are obsessive collectors and skilled redeemers of frequent flyer miles and hotel loyalty points, and all of our flights and most of our accommodations are paid exclusively with points and miles. Sometimes our rental car, too. For most of our trips, we are paying only for meals and activities.
We don’t earn these points and miles the “regular” way with paid flights and hotel stays. Instead, we do it through credit card sign-up bonuses, credit card spending by strategically using bonus categories, online shopping through miles-earning portals, and a host of other promotions we take advantage of on a daily basis. You can easily do it, too. Here’s everything you need to know in “Miles and Points 101”:
Rewards Credit Cards
Points and miles come from rewards credit cards in 2 ways. First, when you get a new credit card, you should be getting one with a “sign-up bonus.” This is the best way to accumulate large amounts of points quickly. Usually you don’t get the bonus just for signing up, you have to make a minimum amount of spend (often around $3000) in a set amount of time (often 3 months). As soon as you do that, the bonus miles automatically post to your account. You and your spouse should never be joint owners of one account. It makes much more sense for you to both apply for the same card – that way you earn 2 bonuses!
The second way to earn rewards is from the money you actually spend on the cards. Most cards have “category bonuses.” One card might earn double points on all spending at restaurants, another card might earn double points at gas stations. You want to be using the best card for each type of spend. Once you are fully addicted to this “hobby,” you will have a wallet full of cards and it will be second nature as to which one to pull out when, but for now we will assume you are only willing to have 1-3 different cards.
It is important to start charging everything. Never use cash. Cash does not earn points! Any bill that can be paid by a credit card should be paid by a credit card. For instance, most cell phone/cable providers allow you to pay by credit card with no fee. It all adds up!
You can earn points/miles in various programs such as United, Hyatt, Starwood, etc., or you can earn a transferable reward currency such as Ultimate Rewards (through Chase) or Membership Rewards (through AmEx). I highly recommend starting with a transferable reward currency, as this gives you the most options for redemptions.
My personal favorite is Chase’s Ultimate Rewards program. In this program, you earn Ultimate Rewards points, which is Chase’s proprietary rewards currency. These Ultimate Rewards points can be converted on a 1:1 basis to United, Southwest, British Airways, Hyatt, Marriott, Intercontinental Group, Amtrak, and a few other foreign airlines. So if you want to redeem 25,000 miles on United, you just login to your Ultimate Rewards account and move 25,000 miles to United. The transfer is instant and takes about 2 seconds. The rest of your Ultimate Rewards stay put until you need them. The other nice thing about this is you can transfer Ultimate Rewards to your spouse’s United (or other program) account. If you earn United miles directly (such as with United’s own credit card), you cannot transfer them to anyone without paying a hefty fee. There are 3 credit cards that earn Ultimate Rewards points, which are discussed below.
AmEx’s Membership Rewards work similarly, but the transfer partners are much less attractive (Delta, Choice hotels). I personally earn miles through AmEx as well, but for getting started I’d focus on Chase.
Starwood (Westin, Sheraton, W properties) also has transferrable points currency in that you can convert 20,000 Starwood points to 25,000 airline miles.
It is important to understand the “value” of each program’s currency. In other words, how many points are required to get a free flight/free night on each airline/hotel. Some of the best ones are discussed below.
Airlines that Are Ultimate Rewards Partners:
United requires 12,500 miles each way (25,000 round trip) for a domestic ticket, 25,000 each way (50,000 round trip) for business class. For travel to Hawaii, you need 45,000 roundtrip and 80,000 in business. For travel to Europe, you need 60,000 miles roundtrip or 120,000 in business. Importantly, you have to find frequent flier availability, which means you won’t always get what you want.
American/US Airways also requires 25,000 miles for a domestic ticket, but you can’t transfer Ultimate Rewards points to American/US Airways. However, British Airways is a partner of American, and you can transfer Ultimate Rewards to British Airways, and then use those points to book seats on American/US Airways flights. And, the amount of points you need for British Airways is often much less because they use a distance-based program. For instance, a flight between Washington, DC and NYC is only 4,500 points each way (9,000 round trip). So you can fly the American/US Airways shuttle using British Airways miles (called Avios) you earned from your Ultimate Rewards account for 16,000 LESS than if you had used American miles for that exact same flight! For calculating how many Avios you need based on your destination, you can look at a calculator at http://wandr.me/avios-calculator/. Again, though, there has to be an available award seat.
Southwest works completely differently. You can book any available seat and the number of miles required is based on how much a particular ticket cost. This isn’t static, but generally is about 7,000 miles for every $100 of ticket cost. I love using points for Southwest flights because it is so easy to get the seats, and you can cancel them up to 10 minutes before departure and get all of your points refunded to your account! Also, each person gets 2 free bags, and skis and hockey bags fly free! Also, you can get a Companion Pass that allows a companion to fly with you FREE every time you fly, even if you are flying using points. See the separate discussion on the Southwest Companion Pass for more about this.
Hotels that Are Ultimate Rewards Transfer Partners
Hands down, Hyatt has the best program. The number of points needed for a top property caps out at 30,000 points per night (most are less), which can be transferred from Ultimate Rewards points. You can even use points to stay at an all-inclusive. For instance, my husband and I stayed at the Hyatt Zilara in Jamaica for 25,000 points per night in March 2015, with all meals and drinks included. You can find the full Hyatt redemption chart at www.hyatt.com/gp/en/awards/hyatt_free_night.jsp.
Compare this to Marriott. The upside is that there are Marriotts everywhere. The downside is that each costs a lot of points per night. The chart tops out at 45,000 points per night, and most nice properties are near the high end. See www.marriott.com/rewards/pointsGridPopUp.mi?awardType=Standard. When you book award stays with Marriott, the 5th night is free. You can also use Marriott points at Ritz-Carlton properties (higher number of points needed per night).
IHG, which includes Intercontinental, Crowne Plaza, Holiday Inn, Park Inn, Staybridge, Candlewood Suites, and others, requires up to 50,000 points per night for the nicer properties. See www.ihg.com/hotels/us/en/reservation/rewardnights for the chart.
All of these hotels have “cash and points” options which allow you to use less points and add some cash if you are short.
So as you can see, if you are going to transfer points for a free hotel stay, your points will go a lot further if you stay at a high-end Hyatt versus a high-end Intercontinental.
I will also mention Starwood (Westin, W, Sheraton, and others) because this currency is very valuable. A top-end hotel is only 35,000 points per night, but most are much less. For instance, the Westin Mt. Tremblant ski-out property is only 12,000 points per night! Starwood also gives you the 5th night free on reward redemptions.
If you are interested in using points to stay at Disney World, the Swan and Dolphin are both Starwood properties that require only 10,000 points per night. And, Starwood has something called “Nights and Flights” where you can redeem 70,000 Starwood points and get 50,000 airline miles (your choice of airline, but this is enough for 2 domestic tickets) plus 5 nights at the Swan or Dolphin. That’s an amazing deal. Since the Swan and Dolphin are on-site properties, you get Disney benefits such as early entry into the parks.
You cannot transfer points to Starwood, though, you have to earn them from the Starwood Preferred Guest AmEx credit card, which I also recommend getting at some point. It earns 1 point per dollar for all regular spend, 2 points per dollar for money spent at Starwood properties. The sign up bonus for the Starwood card is usually 25,000 points, but goes up to 30,000 points for a short time each year.
Hilton is a terrible program. Its nice hotels cost 95,000 points per night. Hilton does at least give you the 5th night free. You cannot transfer directly from Ultimate Rewards to Hilton. We redeemed 950,000 Hilton points for 2 rooms/6 nights at the Grand Wailea in Maui in March 2015 and it was amazing, but that is a lot of points! Focus your efforts elsewhere for now.
Best Credit Cards
To get started, I recommend you get the Chase Sapphire Preferred Visa card. It earns 40,000 Ultimate Rewards points as a sign up bonus once you spend $4,000 in the first three months (this changes periodically). If I only had one card, this is the one I would have. It earns double points on all restaurant spend, and double points on travel, which includes airfare, hotels, rental cars, train tickets, public transportation, and parking. It earns one point per dollar on everything else. This card has an annual fee of $95, but is free for the first year.
A second card that goes nicely with this is the Chase Ink Visa card (annual fee $95, waived first year). If you cannot get the fee waived the second year, you can ask that it be converted to the Ink Cash (or apply separately for that card to get the bonus!), which gives the same benefits with no annual fee. There is typically a bonus of 50,000 Ultimate Reward points for getting this card.
The Ink is a business card, but anyone can get it. If you don’t actually have a business, just use your name and social security number, and be creative on the nature of your business (unreimbursed business expenses from your job, consultant, kids sports coach, babysitter, eBay reseller, etc. all work). This card earns double points at gas stations, double points at hotels, 5 times points on cell phone/cable/satellite bills (just set up for autopay!), and 5 times points at office supply stores. This last one is huge. Office supply stores sell a large selection of gift cards. Planning to spend your Saturday at Starbucks before buying stuff at Bed Bath and Beyond then hitting Chipotle for lunch? First stop by Staples and buy gift cards for these stores using your Ink card. You will earn 5 times points for those purchases! Worried you won’t be organized enough to remember to actually use the gift cards? Adopt a very simple system where you get a mini wallet or Ziploc bag that lives in your purse and holds all your gift cards (but nothing else, except coupons like those 20% Bed, Bath & Beyond coupons you also never remember to use!). I automatically look in mine when I check out of a store. You will, too, in no time.
Do you make a lot of Amazon purchases? Buy large quantities of Amazon gift cards at Staples using your Ink card, earn 5 times points, and then go right into your Amazon account and load the cards. The credit will automatically be in there for future purchases without you having to remember. That’s 5 times points on all Amazon purchases!
Finally, the Chase Freedom card is the final piece of the Ultimate Rewards trifecta. This card is advertised as earning cash back, but if you have either the Sapphire or the Ink card along with the Freedom, you can earn Ultimate Rewards instead, which are more valuable. This card earns 5 times points on different categories that rotate each quarter. For instance, in 2015, the categories are/were grocery stores (Jan-Mar), restaurants (April-June), gas stations (July-Sept), and Amazon and other online shopping (Oct-Dec). This card never has an annual fee! The sign-up bonus is typically only 10,000 points, although it sometimes goes up to 20,000. This one is more about the category bonuses, not the sign up.
All of the points you earn from these 3 cards get pooled together into your Ultimate Rewards account. If you think it will be hard to remember which cards to use for which purchases, put tiny little stickers on each card that say “gas,” “restaurant,” “office supply.”
So, if you and your spouse each got one of these cards, assuming the current bonuses, you would earn a total of 200000 Ultimate rewards points right off the bat! That would be enough for 4 domestic tickets on United, plus four nights at a beautiful Hyatt all-inclusive property!
People often askme out cash-back credit cards. For instance, the Capital One Venture card earns 2x points on all purchases, and can be used on any airline at any time. This is true, but each point is worth exactly 1 penny. So it will take 50,000 points (earned from spending $25,000) to redeem for a $500 ticket. However, you do earn miles from the airline when you fly on that ticket. This is easy and not bad. But you can do much better in most cases if you convert miles to an airline/hotel currency.
What happens after the first year, when the annual fee on the Sapphire and Ink come due ($95 each). First of all, both spouses don’t need to keep the cards. At that point, keep only one and have the other spouse become an authorized user on the account because now it is only about the category bonuses.
Secondly, call Chase and tell them you are thinking about cancelling the card. They will usually either offer to waive the fee again, or offer you some sort of retention bonus (usually some points) to keep it open.
If you do decide to actually cancel a card, ask to transfer the credit line from one to another. So if one spouse wants to cancel the Sapphire, ask to transfer the credit limit over to your Freedom card. That way it doesn’t negatively impact your credit score, which is discussed in more detail, below.
Your Credit Score
Isn’t having all of these credit cards going to kill your credit score??? To the contrary, it will actually improve it. My credit score is currently 848 and I have more than 20 credit cards.
Your credit score is based on 4 factors. First, length of credit history, which is based on the date you opened your first card. Never cancel that original card (mine is from college). Second, payment history. Never make a late payment! Set everything on auto-pay. Even if you want to manually override each month, at least you know it will be taken care of if you accidentally forget. Third, the amount of available credit. The more banks have extended to you, the better your score. Finally, the last factor is credit utilization rate. In other words, if you have one credit card with $10,000 of available credit and you charge $7,000 per month, that is a high utilization rate, which hurts your score. On the other hand, if you have several cards for a total of $50,000 available credit but still spend only $7000 per month, your utilization rate is much lower, and it helps your score. That’s why closing a card can hurt you. It is because your utilization rate increases. You can avoid this by transferring that credit to another card.
One other thing that impacts your credit score in the short term is a “hard credit inquiry.” This happens when a bank runs your credit, such as when you apply for a loan or credit card. Each hard inquiry knocks your score down about 2-3 points, but after 90 days it typically goes back up. A hard inquiry shows up on your credit report for 2 years. A few per year are not a big deal.
Other Ways to Earn Points
Shopping Portals – Another way to earn a lot of points is to do all of your online shopping through shopping portals. Chase Ultimate Rewards has its own portal. When you are going to make an online purchase, say at Sephora, start at the Ultimate Rewards website. You then “click through” to the store where you want to shop, but a “cookie” in your browser tells Chase you made the purchase through the site and you earn a big multiplier. The multipliers change constantly, but are typically between 5-15 points per dollar. For instance, if Sephora is offering 12 points/$, which is typical for them, if I order $100 of merchandise through Sephora.com, but started at the Ultimate Rewards site, I will earn 1,200 Ultimate Rewards points on that purchase, in addition to the points I’ll earn on the credit card I use. Super easy way to earn more points. Just make it a habit to ALWAYS start your online shopping on the Ultimate Rewards site.
Restaurant Programs – The major airlines all have restaurant programs. Every time you dine at a participating restaurant, you automatically earn bonus points. You don’t have to remember anything about this! You register for the program, register your credit cards, and then when you use that card at a participating restaurant, you automatically get the points. In most cases you won’t even know you were dining at a participating restaurant until you see the points show up in your account. I use United’s Mileage Plus program, which you can register for at http://mpdining.rewardsnetwork.com/. There is currently a bonus where you get 3,000 United miles when you sign up.
How do you keep this all straight? Since I have lots of cards, I keep spreadsheets so I can keep track of when annual fees are due, what cards earn what bonuses, etc., but if you only have 3 cards, it really shouldn’t be that hard.
To keep track of how many points you have in each program, I highly recommend getting the free app AwardWallet, which keeps track of miles/points balances.
Another app I’ll mention if you don’t have it is Keeper. This genius app keeps track of all of your frequent flier/hotel numbers and your passwords for everything in your life. At $9.99/year it is worth every penny.
Redeeming – Getting the Trip!
This is the best part! But really it is the hardest. Once you decide you want to go on a trip, it is a little overwhelming on where to start.
Let’s start with airfare. United and American release seats about 330 days ahead of time. For optimal availability, look then! I try to plan our big trips (spring break!) a year ahead of time, and book the tickets as soon as they are released. You have to search for availability on the websites for the airlines. More seats may be released throughout the year, and many more are often released in the last month, so there is hope if you are having trouble finding availability.
Southwest doesn’t release their schedule until more like 6 months ahead, but you can book any seat, so being early isn’t as important.
If you are planning a big trip outside the country and are having trouble finding availability, you might consider a service where they find and book the award seats for you! They typically charge $75-100 per ticket to do this, but it could be worth it for complicated or very expensive itineraries. Pointspros.com is one example.
Hotel availability is much easier. Most hotels programs don’t have black-outs so you can usually book a room using your points. You have to search on the website, but one cool tool to use is AwardMapper (www.awardmapper.com). You type in a city and it tells you every hotel where you can use points, and how many points will be required.
Southwest Companion Pass
One of the best deals for free flights is the Southwest Airlines Companion Pass. When you earn the pass, you get to designate a companion, and that person flies free with you every time you fly, even if you are flying for free on miles! The companion pass is good for the rest of the year in which you earn it, plus all of the following year! So if you earn it in January, it is essentially good for 2 years. Two years of free flying!
To earn the Companion Pass, you need to earn 110,000 Southwest miles in one year. You can do this from flying or from credit card bonuses and spend. The simplest way to do this is to wait until Southwest has its credit card promotion where their Visa card earns 50,000 bonus points. They offer this on both the personal and business version of the cards. If you get both of them, that is 100,000 points. You just need to spend $10,000 on the card (or in other ways, such as through the Southwest shopping portal), and you’ve earned the pass! If both spouses get one of these, you will have earned 220,000 Southwest points (you get to keep the points and get the pass!) PLUS if you have 2 kids they will fly free with you as you redeem all those miles. We had 2 companion passes for 2 years and made more free trips than I can remember. We plan to get them again this year.
These are just some of the “baby steps” you can use to get started in the world of points and mile. There are many blogs that extensively cover these topics. A few of my favorites are Mommy Points, Frequent Miler, TravelisFree, and The Points Guy.