Monday, July 23, 2018

How We Use Points to Travel Inexpensively

Good Morning! For the past few weeks I have been promising that Devin would do a blog post about how we travel the world for (almost) free using our credit card points. We did this when we went to Italy and Turks and Caicos. Whenever people hear this they immediately get uncomfortable and assume we spend beyond our means or have terrible credit, I can assure you that is not the case!! Devin loves a challenge and one day decided he wanted to find a way to figure out how to "beat the system" and find a way for us to be able to travel for free. It goes without saying that I am SO HAPPY he's figured it out. 

 Devin has written a post for you this morning about how we make our travel work for us... grab your coffee and settle in, you have the first of a series of posts ahead of you...

Beginning Dev's post:

Everyone loves to travel, but the only thing better than exploring some new place is doing it for free. There are plenty of ways to visit the world on a budget. Stowing away on a freight liner, joining the Marines, falling in love with an old rich man or woman…each one has its own benefits, but unfortunately they can come with a few downfalls (rats, war, and wrinkles. Not necessarily in order).
But more and more people are finding ways to travel cheaply by finding good deals, loopholes, and doing their best to understand the travel industry and how to exploit it to benefit themselves. I have been fortunate to learn about a number of these tips early in my life, which has given me an opportunity to go places and see things before I turned 30 that I never could have expected while still in high school or college. And even better, I was able to share these tips with Lauren and some close friends so that we could experience these adventures together. Because it doesn’t matter where you go, it’s always better when you go there with the ones you love…

Our first class flight to Italy booked with points :)

The point’s game is well known to anyone who travels for work. As George Clooney said in Up in the Air, “the points ARE the reason”. That’s because airlines, hotels, and credit card companies value loyalty, because loyalty to their company leads to more customers and more money. So every time you use their company by flying, sleeping, driving, or buying, they give you a kick back, and if you fly/sleep/drive/buy enough, you get free stuff! Sounds great, but spending $10,000 on flights to get a $300 flight for free isn’t really “flying for free” in my opinion. However, there is a great way to get plenty of points, with little to no spending, known as CHURNING.
Churning is the act of getting new credit cards in order to get the sign up bonuses that go with them. For example, if I get an airline’s branded credit card, they might offer 50,000 miles, and 1-2 miles for every dollar you spend, and every year you have to spend $95 as an annual fee. While I might get 10,000-20,000 miles each year by buying groceries, shopping on amazon, or going to the bar (maybe 20,000-30,000 for some of my friends if you include that…), that’s still not much compared to the first 50,000 miles you get when you first get the card! After 5 years, you might have 100,000 miles, which sounds like a lot, but in reality if you and a friend or spouse take one trip to the Caribbean, POOF, all those points are gone. All those points gone in a week (hopefully a GREAT week, but a week nonetheless). However, if I get a 50K sign up one year, then another the next year, then again and again, all while still using a credit card for my every day purchases, after 5 years you can have 300,000 miles (5 cards x 50K miles/card + 50k in miles from spending). Spend those miles right, and that’s a free trip the Caribbean, then to Europe, then to Asia! Or splurge and take a 1st class flight to Europe and stay in the Ritz, and STILL have points leftover to visit your brother in Colorado (I’m coming out eventually, I promise!).

Simply put, by getting a few credit cards for 1-2 years, cancelling them, then getting them again 1-2 years later, you can travel for free every year or two until you run out of places to go. NOW, a few details, since most people are skeptical about this at first.
1.      Getting multiple credit cards is NOT bad for your credit score long term. The only thing it negatively effects is your average age of credit, the LEAST important thing for credit card companies. Lauren and I have been doing this for years and both have excellent credit scores. 
2.      Having multiple credit cards is actually GOOD for your credit score, as it increases your Credit-Debt ratio…if you use your credit cards responsibly.
3.      This only works if you use your credit cards responsibly! Don’t spend more than you can pay off in 1 month, don’t start racking up credit card debt and paying interest, don’t worry about having to declare bankruptcy 

If you have a good credit score and don’t plan on buying a house or car anytime soon (3-6 months), and don’t abuse your credit cards, this will actually improve your credit score and help you long term. Full disclaimer, I have been doing this for 6 years and my score went UP 80 points (true story).
Let’s look at a quick example:
Chase bank has a ton of different credit cards (and the same goes for Amex, Barclays, Citi, and the other largest credit card providers). Some are personal, some are business, some have no annual fee and some cost hundreds or thousands of dollar a year. Each one is catered to someone’s needs, but all offer two things: Sign up bonuses and earnings bonuses (extra points/dollars spent on certain things like restaurants, travel, gas, etc). And points from each card can be combined with pts from other Chase cards…

In the next post we will look at 4 specific cards and how you can make them work for you. See you then! Let us know if you have any questions below.

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