Travel Hacking

April 21, 2014

If You Had an American Express Card Before and Want It Again, Apply Before 5/1

American Express has recently announced that as of May 1st, if you’ve previously had an American Express card (and that card is now closed), you will no longer be able to signup for that card again and get the signup bonus. 

As I’ve discussed in the past, the biggest perk of signing up for credit cards is the big, initial signup bonus the banks give you, say 50,000 points or miles for spending a certain amount of money on that credit card. With certain banks, like American Express and Bank of America, you could signup for a credit card, get that large 50,000 signup bonus and cancel it before the next year’s annual fee was up. Then in a few months, signup  for that same credit card again and get that large 50,000 signup bonus. Rinse, repeat and this is the definition of credit card churning.

However, with these new rules by Amex, this will effectively end credit churning for all American Express cards. Once you get a credit card from American Express, that will be the only time you’ll be able to obtain that signup bonus. This has two important ramifications:

 1. Consider applying for any American Express Card that you had previously NOW.  For example, if you previously had the Delta Gold Skymiles card but closed it last April, you should consider signing up for it again for the current signup bonus, which on that card is 35,000 miles. After 5/1, you will not be able to earn those 35,000 miles on that card.

2. Be more selective on when you apply for American Express credit cards. Now that you can only get the signup bonus once per card, you obviously want to time your application for the card when the signup bonus is the highest for the card. This might be difficult to predict but certain cards like the Platinum Card has seen 75,000 to 100,000 targeted offers and the Starwood (SPG) card typically increases to a 30,000 point signup bonus in August. In those situations, it might be best to wait for one of those offers to come along.

Lastly, the wording on American Express applications have already changed and seem to indicate this rule is already in effect. Per Dan’s Deal and others on Flyertalk, those rules still don’t effect until May 1st. I’ve pasted in the wording from the Starwood application as it stands now but until 5/1, you should still get the signup bonus but there is some risk and YMMV (your mileage may vary). And to be more clear, the application has to be approved by 5/1 so you should apply before 5/1 to allow time for your application to be approved.

 

That last paragraph is Bad News Bears

That last paragraph is Bad News Bears

There is some risk you may not get the signup bonus – be prepared to accept that risk.This is not for everyone.

I recently completed a mini App-O-Rama for Andrea & I based on this Amex news – stay tuned for the next post on how we dealt with this news.

April 10, 2014

Good Morning America Discusses Points & Miles

A co-worker passed this along to me (knowing how obsessed I am with points & miles) and wanted my opinion if the GMA crew did a solid job discussing the world of points & miles. Furthermore, a bunch of you may have seen this as it was on national TV, so let’s break it down!

GMA Discusses Points & Miles (click here for video)

Generally when I see mainstream media discuss our little hobby, I see a lot of misinformation and generalities that wouldn’t apply to most individuals. However, in this piece, I think GMA actually does a fair job discussing when to use and not use points and miles.

A few of the good things they discuss:

  • The biggest mistake people make is not getting full value for their miles. They go over the example of using miles for expensive flights like NY to Seattle instead of using them for NY to Miami as the NY to Seattle flight will almost always be more expensive. So since those flights cost the same amount of miles, use them for the more expensive flight!
  • GMA brings up how confusing understanding miles can be and I think there is some truth in that for novices in this game. It can be overwhelming at first and I’m glad they didn’t downplay this notion to make what we do super easy and made for everyone (hey this is why my consulting and award booking services exist :p )
  • And probably the best point they make, do not redeem your miles for car rentals or merchandise online. This is by far the worst value you could possibly get for miles, so simply don’t do it.

GMA wasn’t perfect though as they discussed a very specific example where you could upgrade an economy ticket to a business class ticket for only 15,000 miles. The amount of miles greatly varies depending on the program and some even charge an additional co-pay (i.e. United) and most of the time, only certain economy tickets are eligible to be upgraded – the lowest, most discounted economy tickets (which is what most people buy) may not be upgradeable in some cases.

Watch the video and look forward to more specific posts in the future on my site where I’ll go into much more detail on some of the items they discussed.

March 18, 2014

Points & Miles 101: Creating Your Travel Bucket List

Today, I’m going to offer the single best piece of advice yet in my Points & Miles 101 series and it has absolutely nothing to do with points and miles! Additionally, I’m giving my readers some homework or at least permission to take a few minutes out of their day to think about the following:

I want everyone reading this to construct a travel bucket list – that is a list of at least 5 places you want to visit in your lifetime (feel free to share yours in the comments below!). 

Sounds simple enough but I know you’re thinking why – what does this have to do with points & miles? Before we get to that, let’s take a look at some sample bucket list items, including some of mine.

These all sound great with one major problem – all of these places are really freaking expensive!! I would love to scuba dive the Great Barrier Reef just as much as anyone but between flights and hotels alone it could easily cost $2,000 to $3,000 a person just to get there! I’m not made of that kind of money but I do have an easy solution – points and miles (c’mon you all saw that coming!)

Points and miles can allow you to experience trips that would otherwise be impossible for most people. The reason I think this is the most important piece of advice I’ve given yet is by writing down or creating your travel goals, it’s going to make you more interested and inclined to partake in the points and miles game. If I told you 150,000 miles and 100,000 hotel points later you could travel somewhere, that sounds fine and all but without a set goal in mind, you might not appreciate the value of those points and miles.

But if I told you two years and several credit cards later, you could be on your way to Bali, that sounds a hell of a lot better. In fact, I’d be willing to bet your going to work harder and become more involved in this game to take advantage of not only earning miles for that trip but all your future travel goals. And trust me once you get that one big free trip, you’re going to want more.

There is a reason most people consider some of these “bucket list trips” as once in a lifetime – they really are expensive and most people would be lucky to do this once in a lifetime. However, points and miles could allow you to do most, if not all of these trips for almost nothing! 

P.S. Even if your travel bucket list doesn’t have crazy, exotic goals on them, it doesn’t mean points and miles can’t help you. If your bucket list includes going to Disney or driving the Pacific Coast Highway, let points and miles take care of the flights and hotels for you!

March 6, 2014

The Real Value of Travel Hacking (and Why You Should Do It)

Travel hacking – It sounds illegal but I assure you, it’s far from it. And best part is you don’t need to be a skilled computer programmer or anything of the like – almost anyone can do this type of hacking!

Bora Bora looks much better when its almost free!

Bora Bora looks much better when its almost free!

If I had to summarize travel hacking in one sentence (which doesn’t do the term full justice) is as follows: Travel hacking is the art of acquiring frequent flyer miles and points at little to no cost and then leveraging them towards free travel. 

By far the easiest way to “travel hack”, is to take advantage of credit card offers when large signup bonuses appear. For example, you can sign up for the Citi American AAdvantage Mastercard and receive 50,000 miles after spending $3,000 in 3 months. What is 50,000 miles worth? Its the equivalent of two domestic roundtrip flight in the US or one roundtrip flight to Europe (from Oct to May) or a one way business class flight to Europe. So for simply signing up for a credit card, you could get anywhere from $500 to $2,000 or more in value! Now imagine if you scale this idea – you could very easily earn hundreds of thousands of points & miles every year this way. And this is with your everyday spending you already do – by not using cash or debit cards and putting all your expenses on a credit card.

Let’s say you spend an average of $1,000 per month on everything outside your rent or mortgage. If you stuck with your current average credit card, you might earn 1% cash back so over 3 months you’ve earned a whopping $30. Now let’s say you applied for the AA card mentioned above. At the end of 3 months, you will have 53,000 miles (50,000 signup bonus + 3,000 per dollar spent). That value as shown above is anywhere from $500 to $2,000. To recap at the end of 3 months, you could have either $30 cash or $500 to $2,000 worth of miles to book free travel with. I know what I’m choosing.

Travel hacking is also about recognizing value, so in some cases it makes sense to pay for miles as long as you maximize the redemption of them. For example, US Airways had a promotion where you could essentially buy miles at almost a penny per mile. So if you bought 100,000 miles it would cost you about $1,000. Sounds expensive right? Well, from a finance perspective if I redeem those miles for more then $1,000 worth of travel, I’ve come out ahead.

In that example, 100,000 miles could be 4 roundtrip domestic flights that are valued at $250 each. That’s probably a fair value and one I think some people would jump at, especially if they had long transcontinental flights that are never under $250. But, what if I said, you could use 90,000 of those miles to fly business class from NY to Paris, hang in Paris for 3 days, fly business class to Hong Kong, stay there for a week or so and then fly business class back to NY. Three longhaul business class flights covering three continents is easily worth over $10,000. 

So let me ask you, would you pay the $1,000 above to save 90% on the retail cost of travel above? I hope you said yes as a simple economy flight to Paris generally costs over $1,000 and this is what you are currently paying if you are not considering travel hacking.

I gave two specific examples on how valuable travel hacking can be but these aren’t extreme or abnormal cases. These types of savings are quite normal – just take a look where I’ve traveled. Of course, it’s bit more complicated then I laid out as you need to know which points & miles to collect, how to use them effectively and more. I’m here to help and guide people with my consulting and award booking services but I think once you see how much money you can save on the retail cost of travel, you’ll be hooked and well on your way to being your own travel hacker.