If you’ve done any amount of traveling, you know that airline tickets can constitute a major part of your total expenses. Unless you know a pilot that can put you on standby, you’ll have to book your own flights. They’re expensive and for shorter duration trips, can sometimes cost as much as the rest of the trip combined. But plane tickets don’t have to break your bank or be the difference between you seeing the world and staying at home watching sitcom reruns.
A little over a year ago, I stumbled onto a gold mine, a gold mine of airline miles that is. I was able to accumulate hundreds of thousands of airline miles at little cost to myself. I’ve since saved thousands of dollars on airline tickets. Flying to Asia caused my bank account to, drum roll please, stay exactly the same. You may have already guessed how I was able to do this. I signed up for a hand-full of credit cards with huge sign-up bonuses.
Want to do the same? Here is everything you need to know to get you started:
Credit Score:
You don’t need great credit, but it will effect the quality of card and therefore, the size of the signup bonus, which you are able to receive. I used a free membership sign up on a site called CreditKarma to check and track mine. There are a number of other ways to find out your credit score for free. CreditSesame and Quizzle being others. A good score is above 700 on the FICO scale and above 800 on the VantageScore scale and should give you acceptance on all premium card offers. To give you an idea, I’ve never had a late payment and my scores sits around 775 and 830 respectively. Other factors include the average time each account has been open (longer being better), the number of recent credit inquiries and your debt to available credit ratio. Familiarize yourself with these factors and possibly bring your score up before before applying.
Important Note: Your credit score takes a small hit (2-5 points) after you apply for each card, so don’t apply for all of them at once. However, credit inquiries will become less significant after one year and drop off your record altogether after two years time so unless you’re buying a house soon, don’t let this stop you. It’s also a good idea to spread out applications if you’re applying for multiple cards from the same card issuing companies, Chase or Citi for example.
The Right Card For You:
There are numerous credit cards to choose from. Many are attached to a specific airline, but others are only attached to separate rewards program. Both have their advantages so you’ll have to decide which fits your needs. Obviously, miles earned from cards attached to a specific airline can be used on that airline, but they usually can also be used on any partner airlines which are in the same alliance. Review which alliances go where you’re looking to go before jumping on an offer. Here’s a wiki page summing up the major alliances. Alternatively, some cards have their own rewards programs along with their own program specific flight search. These usually give you a broader range of airlines to choose from, but the miles may not get you as far. I used 50k Citi Thank You Reward miles to pay for my flight to Asia, saving me over $650.
Yearly Fees:
Many of these cards come with quite a few extra perks such as travel insurance, free checked baggage, no foreign transaction fees, etc. These often come at a price in the form of a yearly fee. In my experience, this can range from $90 and up. The sign-up bonus can be worth much more than this and, many times, this fee is waived for the first year. That’s great but when year two rolls around, it’s not so appealing. So what do you do? The answer is sinple. Cancel the card. Wait the year until your account is charged the yearly fee and all it takes a short phone call. It’s best to wait since they may even give you free miles to stay on board. You never know.
Minimum Spends:
A number of the more lucrative bonuses require minimum spends. These range in how much you must spend and in what amount of time. A common amount is $2,500 in 3 months, but they can be more, less or non existent. While this may seem like quite a large sum for many, it may be more attainable than you think. Before leaving on my trip, I used my card for ALL of my purchases including gas, groceries, dining out, drinks, gym, etc. I even got creative and paid for my soccer league, which my teammates eventually reimbursed me for. Basically, I didn’t pay for anything with cash. If that isn’t enough, there are a number of other ways to meet the goal. Some of these include charities, utility and other bills, and buying gift cards at places you normally shop (Grocery Stores). There are even companies which allow you to pay your rent with a card, by sending your landlord a check. Methods like this obviously come with a fee so its best to calculate out exactly how much more it would cost you compared to how much you’re actually gaining from the airline miles. Get creative!
Pay Your Bill Each Month in Full:
Pay your credit card statement in full each month. For one, not doing so in some ways defeats the purpose of this whole process. In my personal opinion, leaving a balance on a card is like throwing money away. Additionally, your good credit score is what allowed you to use this great method in the first place. Paying your statement in full each month insures that your score will not take a hit from a late payment and stay high.
Here is a good list of cards to get started: The Points Guy. As always, just ask if you have any questions.
You are awesome for posting this! I’ve actually been looking into the exact same thing. I’ve managed to not have a credit card here in the US, but I know it will be quite beneficial abroad.
I waited a long time to get my first credit card too, but now I can’t ignore the benefits of getting them. At the very least get one with no foreign transaction fees. It all adds up. Good luck!