Credit Cards and Travel Hacking

Update: BlueBird has shut down many accounts of people who have used them to Manufacture Money Spent as in this article and others. While not all have been shut down and it is still possible to open accounts and do a bit of MMSing, it is dying and should not be seen as a guaranteed option.

Until I was twenty, when I was about to go on my first backpacking trip, I, like many, was nervous about credit cards. I was mainly concerned about having to pay interest on something i could pay cash for, rather than actually getting into a lot of debt; I never buy anything I can not afford. My dad had urged me to get one for a couple of years, telling me that as long as I paid the card off in full each month, I would never have to pay interest on any of my purchases, but for some reason, I was not convinced.

One day, I received a promotion in the mail for a cash back card with a sign up bonus of $200 cash back after spending $3,000 in three months and it got me thinking, if I am not going to pay any interest, not allow myself to get into any debt that I can not afford, and could actually help my credit score, why not get a credit card?

I looked further into it and decided that I would get one to try. I used my card to pay for things I would previously would have used my debit card for, nothing more, and I hit my spending requirement to receive the bonus after a couple of months.

I set up autopay, linked to my bank so the previous statement amount would be paid in full on the due date each month. This way I never had to think about paying it on time and never had to pay a cent in interest. I considered this a very successful test with a nice profit, so with this, I was hooked.

I applied for, and got accepted for, about four more credit cards before I started getting rejected, now that seems like it would come with a lot of spending requirements, but I got smarter as I went along, finding spending requirements of one purchase, $500, $1,000, and $2,000. It was not much more than the previous requirement from the first card and I watched as the percentage I was getting back for each amount spent increased to above 20% (I kept finding better offers.) These sign up bonuses paid for a lot of my travel gear along with some snowboarding gear.

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After my trip, as I mention in my post Introduction to Travel Hacking, I began learning about travel hacking, and that a major part of this was travel credit cards. As I researched this new topic, I began learning about different types of credit cards, cards that give bonus points for rotating or set categories (usually 3-5 points per dollar) vs. cards that give a lower, but set, amount on any purchase (usually 1 or 2.)

Cards that are used for one loyalty program vs. cards that are transferable to multiple programs. I also learned which points and miles are more valuable, therefore which travel cards are more valuable (more points does not always mean more value.) As I was learning all of this, I decided that travel cards were much more valuable, when used to travel, than cash back cards, and again, started applying.

At first I was hesitant about the annual fees on a lot of the better cards out there, often ranging from $70-100 each, with some up to just under $500! So, I stuck to the weaker, free, cards, but soon realized that cards can be cancelled before the next annual fee and that the benefits and bonuses of most of these cards vastly outweigh the annual fees. They offer benefits such as free checked bags, buddy passes, access to lounges and priority check in, and often the annual fee is waived for the first year.

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The best part about these cards is definitely the signing bonus, and it is my favorite way to earn a lot of points, very quickly. Keep in mind, as I mentioned, different programs have different values, which I will discuss in a later post, so one point or mile, more often than not, does not equal one cent.

Before I apply for a card, I will consider what benefits it comes with to decide if it would be worth keeping after the first six to nine months and paying the annual fee the next year, but I mainly look at the sign up bonus. I try to wait until a card has at least a bonus of 50,000 miles or points before applying. My highest bonus was 70,000 points with an un-waived annual fee of $89 and $5,000 minimum spending requirement in six months, but there are targeted promotions for up to 100,000 for certain cards.

There are also a few cards, like the American Express Starwood Preferred Guest (SPG, Starpoints) card, whose bonuses I have never seen reach above 30,000 points, but these cards, these points, are also widely considered the most valuable points out there because of its wide variety of transfer partners. This bonus is more valuable than some cards with a 50,000 point bonus.

Watch for the high rollers and apply without discrimination; they will all add to your mile/point balances and there is no such thing as having too many credit cards. At the time of writing, I have twenty active cards, with one more on it’s way and looking forward to many more, but I only use two to four for my everyday purchases.

Don’t worry too much about the required spending amounts to receive the sign up bonuses either, just Manufacturing Money Spent to hit them. Even with all of these cards, we travel hackers have excellent credit and pay off our cards in full each month. We are not rich, we just realize that paying the high interest rates on these cards highly outweighs the benefits of having them in the first place. Use these cards wisely, as a person would with a debit card, only buy what can be paid off, and enjoy the free travel that comes with it!

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I will go further into detail about which credit cards are best, which to apply for first, how to manage all of these new cards and rewards programs, and much more info in later posts. Please post any questions you have and I will be happy to answer them!

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-The Travel Economist

Introduction to Travel Hacking

After last years six month trip through the Carribean and Central America, I returned home to work and continue school for the next six months. While I was home, I came upon a book and a few new sources of information that I soon found to be invaluable. Over the next six months, and i continue to today, I studied this new information, used it, toyed with it, varied, improved, and created my own techniques to go with this information allowing me to use it in ways that no one else (that I have found) has. I used this information and my own techniques to earn, in six months, a combined total of more than 600,000 miles and points through about seven different loyalty programs. These points, on average, are worth around $10,000-$15,000, depending on how I use them, with the possibilty of being worth even more. Most people would read this and think, okay, most loyalty programs give one point per dollar spent, he must be rich and spent around sixty million dollars to earn all of those points! Those people are wrong, I actually only spent around $500 to earn all of these miles and points!

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The information I am referring to is known throughout the community as “Travel Hacking.” Much like what is known as “Life Hacking,” techniques to make life easier, travel hacking is used to “hack” the travel industry, to make earning free travel rewards easier. There are people in the community who do not like the term “hacking” to refer to these techniques, it is a word that brings a negative feel it makes it seem that we are doing something morally wrong, or illegal. Rest assured, there is a fairly large community of “Travel-hackers,” numerous blogs and books that teach it, and even conferences about it held by credit card companies and other huge companies and organizations. It is known what we do, we are simply intelligent consumers who have learned how to use the system to our advantage, and there is nothing wrong with it. Now, to put it simply, the term “Travel Hacking” refers to leveraging the loyalty programs of airlines, hotels, booking sites, credit card companies, and anything else that rewards consumers for their loyalty.

Learn to "fill up" your loyalty accounts! Ben Earwicker
Garrison Photography, Boise, ID
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Most of us already know about loyalty programs; earn some miles for each flight, some for renting a car or staying in a hotel, points for our purchases on credit cards, but it all takes so long to earn enough points for a single flight, let alone enough to have the great problematic question of “where to next?” instead of “how much is it going to cost?”, so, what’s the secret? How does a person become a “Travel Hacker?” How can I “fill up” my loyalty accounts and earn hundreds of thousand of miles and points to be able to travel anywhere in the world for next to nothing? These are just a few popular questions that I will answer in my blog and upcoming posts.

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-The Travel Economist

Barclays US Airways Credit Card to AAviator Promotion!

Hey guys, I just received a email that select current cardholders of Barclays US Airways credit card holders have received or will receive. The E-mail informs us that card holders will be receiving the new American Airlines AAviator Red card to replace the US Airways card due to the merger between the two airlines, and with this, they are offering a promotion; 50% more miles on qualifying purchases, so now instead of the usual one mile earned on everything outside of flights, you’ll get 1.5 and 3 miles on flights up to 10,000 additional miles! This offer is good begininning April 1st and ends June 30th 2015.

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This is very exciting because the qualifying purchases includes groceries. Don’t know why that is exciting? Subscribe to my blog for my future posts; Introduction to Travel Hacking and How to Manufacture Money Spent. The technique I will outline is my favorite way of earning miles and points outside of credit card sign up bonuses and how, whenever I buy a flight or take a cruise, I consider my price to be half of the listed price! Using these techniques along with this promotion, it will be possible to get over 30,000 AAdvantage miles for a mere $238. The 30,000 miles are easily worth atleast $540 in airfare, althought I used 20,000 of these miles to get a $2,000 flight from Eberdeen Scotland back to Florida for only $380 in taxes and fees; at this value, the miles are worth $2430; that’s a $2192 profit! So watch out for the e-mail and make sure to register for it by June 30th to receive the promotion. All accounts must be open, active, and in good standing during the promotional period (mine is sitting in a drawer at home, which apparently is active enough!)

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-The Travel Economist