Travel Hacking: Credit Cards, Points, & Miles

One of the best and easiest ways to travel for next to nothing is by using credit cards to collect reward points and miles – or, more specifically – to sign up for a new credit card that’s offering a terrific sign-up bonus to collect a lump sum of reward points. Sound simple? Because it is!

This is the solid foundation behind our travel hacking. Because flights and hotels tend to be the most expensive part of travel, using credit cards is a great way to lower, and even waive, these costs. Sign-up bonuses are key here, as they provide far more points and miles than you could gain by spending over time. For example, let’s say you spend $20,000 a year on credit cards. Spending on a normal airline credit card without a sign-up bonus will earn you 20,000 miles. But by completing the steps below multiple times, with different cards, you can earn 20,000 miles in regular spending, plus another 300,000 miles in sign-up bonuses, for a total of 320,000 miles. Not to mention the free hotel nights, lounge access, and other perks that come with reward cards!

But wait. An IMPORTANT point before you apply for that first credit card: Always, always, always pay your credit card bill in full and on time. If you can’t do this, DO NOT use this travel hack. Doing so will only increase your debt and hurt your credit score.

The process itself is relatively simple. We’ll use Citi Card’s American Airlines AAdvantage Platinum Select Master Card – currently offering a 50,000 mile sign and spend bonus, with the first year’s fee waived – as an example. Here’s what I do:

1. To start, apply for an American Airlines AAdvantage account if you don’t already have one. Here, all of your miles are stored directly with the airline. You’ll receive an “AAdvantage Number” – Hold onto this!

2. Apply for the credit card. Be sure to include all necessary information, including your AAdvantage number.

3. When your card arrives in the mail, it’s time to work towards meeting the minimum spending requirement. In this case, spend $3,000 on the card within 3 months time. You can meet this spending requirement early (the earlier you do, the earlier the points will show up in your account). I will write more on creative ways to meet your spending requirement later.

4. I usually stop using the card once I’ve reached the minimum spending, wait for the miles to hit my account, and move on to a new card. This takes a bit of planning and organization, but is easily done! If you’d rather not get a second card, you can instead continue to spend on the card for the rest of the year to earn points slowly. In this case, $1 spent equals 1 mile earned.

5. Cancel the card just before one year has passed to avoid paying the $95 annual fee (I don’t recommend canceling any earlier, as having a card open for longer benefits your credit score). To do this, simply call the credit card company – the phone number will be on the back of your credit card – and ask to cancel. Sometimes, they will offer to waive the annual fee for another year. But, if they don’t, you’re best to cut up the card and not start paying an annual fee.

And voila! At the end of your spend, you’re 50,000 points richer: enough to get a round-trip ticket to anywhere in the US, or an off-peak ticket from the US to international destinations like Europe, Mexico, and the Caribbean.

Want to know which travel credit cards are the best fit for you? Stay tuned. In my next post, I’ll outline all of the offers out there – so you can decide what is right for you.

Want to juggle more than one card at once? Whoa there. (Just kidding – that’s exactly where we’re headed.) It’s definitely possible. I’ll write more about this in the coming posts. Start small!