Thursday, July 26, 2018

How We Use Points to Travel Inexpensively Part 2-- A Timeline

Hi Everyone! I was surprised by how many people checked out our little post about how we travel the world while using our points. Apparently there are a lot of you out there who love to travel too but don't necessarily have the travel budget you wish you had. In this next post, Dev gets a little bit more specific with it all broken down.

Beginning Dev's post:

Okay, let's look at 4 specific cards: Chase’s Freedom, Freedom Unlimited, Sapphire Preferred, and Sapphire Reserve.

Chase Freedom and Freedom Unlimited both have no annual fee, and a $150 sign up bonus, which is actually paid in 15,000 bonus points towards their Ultimate Rewards program.

Chase Sapphire Preferred has a $95 annual fee, and 50,000 pt sign up bonus.

Chase Sapphire Reserve has a $450 annual fee and 50,000 pt sign up bonus. But it gives $300 back in travel credit (Uber, train tickets, rental car, flight, hotel…all count towards this), so if you can do that in a year it’s a $150 annual fee. This card also offers a 50% bonus when using your points on travel, so 100,000 pts is worth $1,500 instead of $1,000 (big help, as shown below!). This is a great card to get for people who travel a lot for work.

Lauren in St. Kitt's in 2016, a trip we paid for almost entirely with points. We also went to Italy that year, first class, paid almost entirely with points.

Here's a timeline of what we did/you could do. During this time we were using our points to travel to China and Japan, the Caribbean multiple times, and Europe multiple times. You don't need to wait until the end of the 5 year period to use your points, I'm just showing you what it would look like if you did.

Year 1 Get three cards: Freedom, Freedom Unlimited, and Sapphire Reserve. That’s 80,000 in sign up bonuses for $150. And 80K pts is worth $1,200 in travel with the 50% bonus from the Sapphire Reserve. At the end of the year cancel the 2 Freedom Cards.

Year 2 Get the Sapphire Preferred, now your total is 130,000 pts (or just under $2,000 in travel), and that’s ONLY from sign up bonuses. If you are using these cards for normal spending you could have 20-50K more points…but let’s ignore that for now. Cancel the Sapphire Reserve.

Year 3 Get both Freedoms AGAIN (trust me, the credit card company doesn’t mind you’ve cancelled and gotten the cards again. We've done this and know multiple other people who have too). Another 30K to bring your total to 160,000 pts. Cancel the Sapphire Preferred.

Year 4 Take it easy, just keeping the 2 Freedom cards.

Year 5 Get both Sapphire cards for another 100,000 points. This brings your total to 260,000 points in sign up bonuses. Assuming you’ve spent $20,000 each year in groceries, dining, and Amazon (damn you Prime day), that’s another 100,000 MINIMUM in points. This is 360,000 pts in 5 years. Minimum. That’s equal to $5,400 in travel. It cost you less than $800 in annual fees.

Lauren and I in China in 2015. We flew with points and were also able to get friends to come with us by convincing them to do a little "churning" too. You can see our friend poking her head out of the Great Wall.

So after 5 years, you have $5,400 to spend on travel, and it cost you $800. Another way to look at it is each year you spent $160 to get $1,080 in money to travel. Travel to Spain, or Japan, or Bali, or Machu Pichu, wherever. Even crazier, you can transfer those points to an airline to use as frequent flyer miles (I'll explain this in a future post). A flight to Europe costs 50,000 miles, Asia 50-75K miles. That means for $800 over 5 years, you could have flown to Europe or Asia once a year, EVERY year, for 5 years, for no extra cost. It’s not often you find $160 flights for the 45 minutes trip from Charlotte to Wilmington, let alone across the ocean.

And these are just 4 cards. You can also get a few Airline cards (American, United, Delta, Southwest…they all have the same bonuses and benefits) and hotel cards (Marriott, Hilton, Hyatt…you get it) over the same course of time. They are all typically $95 annual fee, and offer 50,000 miles or 80,000 hotel points, which are usually estimated to be $750 in value.

The reason I go through this process, of applying for and cancelling cards, tracking my points and miles, figuring out what I should do next…is because I love travelling. Even though I am fortunate to travel for work, I would still go broke trying to visit everywhere I want to go, because as I stated in the beginning, miles take forever to get and a second to use. But with churning credit cards, while still being responsible with my credit card spending, I am able to earn so many more miles for a fraction of what they would normally cost me. And Lauren and I are obviously not the only ones to figure this out. Simply google “churning” and dozens of blogs, chats, and subreddits will pop up about the topic, stating the same thing we are saying here…that you can travel where you want and when you want with a little effort and real desire to see the world.

We’ll add a few more posts throughout the month to add a little clarity about points vs miles, detail some real redemptions we’ve used and how we got those points, and provide some tools you can use to help get the most travel cheaper based on your spending habits and situations. I look forward to sharing in the future, but I look forward even more to hearing your stories and questions!

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