January 3, 2014

Getting Started: Credit Card Bonuses

2013 was a great travel year for us.  Emily and I took trips to Thailand, Hong Kong, Singapore, Dubai, Istanbul, Hawaii, and London!  Many of you have asked us how we afford to go on all these trips.  The answer is pretty simple…we don't usually pay for them.

I started looking into ways to save money on our honeymoon in early 2012.  We both wanted to go somewhere really special but didn’t want to completely break the bank.  So I started researching ways to use our existing miles and points, build on those balances, and then redeem them for our honeymoon.  There is a ton of information online (favorite blogs coming soon) that I consumed early on and blogs that I read on a regular basis.

Over the past 18 months or so, I’ve built up our point balances, redeemed for several ridiculous trips, and managed to train Emily to use the “right” credit card when going out to dinner, buying gas, or shopping online.  Since so many people have asked us about our trips, I’ve put together a top five list of sorts for those of you that are interested in learning more.  Here is the first post.

In the past two years, I’ve signed up (and been approved for) over twenty credit cards.  Every 90 days, I sit down and make a list of the best 3-5 cards that I don’t currently have.  Then I apply for them all at once!  When I tell people this, they often have dozens of questions about my credit score, outstanding debt, annual fees, etc…”  So here are a few answers to those questions:

  • My credit score is almost 800…in fact, my score has gone up about 30 points over the last couple years as I acquired more open credit and lowered my overall credit utilization percentage
  • I pay all of my credit card bills on time and never carry a balance…this is not a game to be playing if you can’t afford to pay off your bills each month or are planning on applying for a car loan, mortgage, etc...
  • While there are several cards that I renew each year that carry an annual fee, as a general rule I usually cancel cards with a fee before the fee is due (most cards are first year free)
  • Bonuses have ranged from two free nights at any Hyatt in the world (we've used ours at the Park Hyatt in Istanbul and Andaz New York) to 100,000 points for meeting a specific spend threshold
This is the number one way to earn a ton of points and miles quickly.  While I wouldn’t recommend this strategy for everyone, it does make sense if you are financially savvy and organized.  With just a few hours every few months, you can easily rack up hundreds of thousands of points/miles to go on your dream vacation.  Here’s a quick example to illustrate the point:

A couple each sign up for the following credit cards (four of my favorites) over two “churn cycles” and meet the required spend to receive the bonuses:

Amex Starwood Preferred Guest:      25,000 points after spending $5K in 6 months
Chase Sapphire Preferred:                40,000 points after spending $3K in 90 days
Hilton Citi Reserve:                           2 free nights after spending $3K in 90 days
United MileagePlus Explorer:            30,000 after spending $1K in 90 days

 This would require $24K in total spend across 9 months which is a lot but doable if you’re able to put things like utilities, car insurance, health expenses, and all everyday expenses on your cards.    All of these cards carry annual fees ranging from $65 to $95 but they are waived for the first year with the exception of the Hilton Citi Reserve Card.  When the annual fees come due in year two, you can either keep the card and pay the fee if you find value in the product, cancel the card, or ask for some sort of reduction in the fee to keep it.  More on this later.

      Doing so would yield:
  • 4 free weekend nights at any Hilton (including Conrad and Waldorf Astoria) in the world
  • 60,000 Starwood points good for 6 free nights at an upscale Westin/W hotel
  • 86,000 Ultimate Rewards points which could be transferred to United
  • 62,000 United miles which (when combined with the Ultimate Rewards points above) puts you pretty darn close to redeeming for 2 round trip business class tickets to Europe.

Essentially, you would have enough points for a 10 night “free” trip to Europe including hotels and flights!  I will have more on my strategy around acquiring credit cards, spending tricks, cards to keep and cards to cancel, etc...in future posts.

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