I will preface this by saying I am a very responsible person when it comes to money. I pay all credit card bills in full each month and have not paid a penny in interest due to carrying a credit card balance since 2009. I paid off about $60,000 in student loans within 5 years of graduating college, and no I wasn’t making anywhere close to a 6 figure income. I packed lunch, lived home until I was 27 and lived within my means. When I moved out, I managed to find a rent-controlled apartment in NYC, which also allowed me to keep my cost of living as low as possible in an expensive city like New York. All of this has helped me develop a pretty good credit score as well as a few extra bucks in the bank. Everyone’s ability to make this process work will depend on their own unique situation.
The idea is to sign up for airline credit cards that include large mileage bonuses as long as you meet a spending threshold in a given time-frame. These large mileage bonuses will enable you to take advantage of low cost flights. If you are planning to travel RTW (round the world), long-term or even domestic, this can be a tremendous help to your pocket. Since we will be traveling long-term RTW, we likely will need to travel by air internationally between regions. For example, those flights could possibly include NYC to Europe, Europe to Asia, Asia to Australia, and Australia to South America. These flights have the potential to be expensive, and some of the sign up bonuses could give you enough miles to snag one of these one way tickets for free (you do have to pay a small fee in taxes, usually well below $50).
To give you an idea, the sign up bonus for the Delta Airlines branded credit card comes with 30,000 miles when you spend $1,000 in your first 3 months. Refer a friend and you’ll get another 5,000-10,000 miles, depending on their current promotion as this often seems to fluctuate. The United Airlines credit card offers 5,000 miles for adding an authorized user that makes 1 purchase. Give your spouse, sister, mother, cousin, whoever a card with their name on it, swipe it once and collect the miles and never use it again. The key is that this whole process only makes sense financially (the best possible situation for your wallet) if you are responsible and disciplined. If you don’t spend $1,000 over the course of a 3 month period in your everyday life, then don’t start going out to eat more or buy an expensive watch to hit the threshold. You are just defeating the purpose and not taking advantage of the free mileage bonus. If you are spending like a drunken sailor to hit the spending threshold, you are now paying for those miles and you are not saving as much as you could have been. If you live within your means and hit the spending threshold in due time without excess spending, you are now taking advantage of free bonus miles. The purpose is to always use the credit card instead of cash, and always pay the credit card bill in full at the end of the month. Pay your cable, utilities, groceries all on the credit card, but have the discipline to not swipe as if you’ve acquired a new source of income, and pay off the bill in full! I cannot stress this enough.
Sign up for all promotional newsletters from your airlines that you have frequent flyer accounts with. You’ll receive plenty of promotional offers and ways to earn miles, which may or may not make sense for you. Some offer an ability for you to do surveys online in exchange for airline miles. This is a quick way to pick up some extra miles in your spare time. Keep in mind you must sign up for the emails, and be on the lookout as this is invite only.
After signing up for one card, try another if you are disciplined enough, and another after that if you have a grip on your spending habits. United, Delta & American all have credit cards with similar bonus miles programs. All allow you to exchange your miles for one-way international travel, from many hubs around the world. Other smaller airlines such as Hawaiian, JetBlue and Southwest offer similar credit card bonus mileage programs. Most of the cards offer some additional bonuses such as priority boarding, free checked bags, double miles on airline purchases, zero foreign transaction fees and more. They also usually waive an annual fee in Year 1. Keep in mind that you will have to pay this upon your 1 year anniversary if you wish to keep the card in year 2, and it can be anywhere from $100 – $400+ per year. It may make sense to cancel as you no longer will earn the miles at such a high rate without the sign-up bonus, but always make sure you won’t lose your miles before cancelling any credit card!
Other creative ways to gain miles are offering to put a bar tab or food bill on your credit card, and have all your friends give you cash, or venmo it to you as the kids are doing these days. Is your friend planning to make a big purchase such as a TV or a washing machine? Go with them and buy it on your card, and have them give you the money. Most airlines rewards programs have online portals with many popular retailers such as iTunes, Best Buy and many others. If you were planning to make a purchase at one of these retailers, you can use the online portal to make your purchase instead and gain bonus miles for doing so. If you need to fly to Florida for a cousin’s wedding, why not book with your airline credit card with the same airline and watch your miles multiply quickly. There are plenty of ways to earn miles, while living within your means and saving up towards your long-term or even short-term travel fund.
We have currently signed up for quite a few credit cards. We spaced out applying to them a few months apart each time. There’s plenty of debate about signing up for credit cards and cancelling them in short periods of time, and whether it has any impact on your credit score. I know that so far my score has not been affected, and I don’t expect it to be. My spending habits give me confidence that my score will not suffer too drastic of a dip, if any at all. Any dip will be well worth the amount of savings we have assured ourselves by following this process over the last number of months. An update on how we redeem these miles will surely come in the future. Stay tuned…