This post contains links to credit card / bank applications that may earn me a modest referral credit. You don’t have to use these links and if you find a better available offer, by all means, use the better offer. Any opinions expressed in this post are my own.
Why do I bother with miles and points?
Growing up, my family took maybe a small handful of “trips.” We traveled to Utah one winter to see family friends who were living there temporarily, we traveled to Taiwan one winter to visit friends and my grandparents, and, we made small trips to San Diego and to Northern California to visit my brothers, who were attending college away from home. We never took a true vacation – one that didn’t involve visiting family/friends.
The first true vacation I took wasn’t until after I met my husband. At the time, we were unmarried, in school, and had zero money. His parents generously rented a house on the Madison River in Wyoming, and we spent a magical week hiking, fishing, and enjoying the beauty that is Big Sky Country.
Once we graduated from school and were gainfully employed, we could no longer depend on familial charity to subsidize our travel. Unfortunately, we learned the hard way that travel involved significant costs – airplane tickets, accommodations, food, heck, even the taxi ride from our house to Dulles Airport runs $60-80 one-way! When we were first married, we lived in Cleveland and were childless, so given the low cost of living and lack of other expenses, we only slightly dabbled in miles and points. Sure, we had a Starwood Preferred Guest account that accumulated miles for stays, and we had Continental Airlines frequent flier accounts where we banked points for travel. But, we never really explored miles and points until we moved to DC and had kids.
The first trip we took using miles was a babymoon that we booked shortly after finding out I was pregnant with my first child. We went to Paris for one week over Christmas, “paying” for our airfare in coach with points, and “paying” for our hotel with some combination of American Express Membership Rewards points and money. I don’t recall the exact details of that trip, but I do remember being thrilled that we were spending a week in Paris for less than $1,000 out of pocket (for airfare and accommodations, not food and other expenses incurred during the trip).
After my son was born, my husband approached me one evening and said that he was thinking about applying for a credit card that had a large signing bonus. A sign-up bonus is something credit cards offer to entice you to apply – they’re frequently tethered to a minimum spend requirement, so a standard sign up bonus can be something like: 75,000 points after $4,500 in spend in the first three months! Companies may also offer to waive the first year of the annual fee and/or include other benefits, such as credit for Global Entry fees, access to Priority Pass lounges, etc. At the time, we had only one credit card that required an fee – the American Express Gold card that my husband had long before we were married. As someone who obsesses over the details, I didn’t necessarily agree with the idea of applying for credit cards that had annual fees, but I agreed to go along with the experiment to see where it took us.
Where did it take us?
In 2013, our points took us, literally, around the world. For 360,000 United MileagePlus points (transferred from our Chase Ultimate Awards accounts) and $242.10, my husband, son, and I traveled from DC to Japan and back, with an overnight stopover in Munich. We also used points to pay for three day/two night stay in Kyoto in a Japanese style room and we used points to stay at the Hyatt Regency in Tokyo for five days/four nights.
Most recently, in 2017, my husband and I paid for a pair of round trip business class tickets from DC to South Africa with 320,000 United MileagePlus points (again transferred from our Chase Ultimate Rewards accounts) and $150.72.
Those are shining examples of how we have been able to travel on points in style. Without careful and creative use of points, we would not have been able to travel in business class and we likely would have had to cut back on spending during the trip. In addition to those two trips, we have also used points to defray the cost of last minute airline tickets and on numerous hotel stays (including an upcoming one week stay at the Andaz Papayago booked entirely on points. We are staying there for 15,000 points / night versus the average daily rate of $450).
Is it worth it to pay an annual fee?
If you’re like me, the first question you need to ask is: “am I okay with paying an annual fee on a card?” I never had an annual fee card until I married my husband and became an authorized user on his American Express Gold card. Paying an annual fee for a credit card was verboten – so my favorite card was a Discover card that gave me 1% cash back on spend. When my husband first suggested applying for different credit cards, I didn’t actually believe we could do anything with the points accrued. However, that all changed after our trip to Paris and I have done a complete about face since our trip to Japan. As our family has grown and our travels have become more extensive, I’ve also realized that there are benefits to certain credit cards that can reduce the annual fee such that it’s “essentially” free.
Two credit cards that come immediately to mind that I carry in my wallet every day are:
- The Chase Sapphire Reserve – Although this card has an annual fee of $450, there is an automatic $300 annual travel credit. If you book airline tickets the day you get the card, you will receive an automatic $300 credit to your account, thus reducing the fee to $150. The card also includes a Global Entry of TSA Pre-Check application fee credit of up to $100 (once every four years), primary rental car collision coverage (meaning you don’t have to go through your car insurance!), you pay no foreign transaction fees, AND you get free access to Priority Pass lounges. During our recent trip to Africa, we visited six Priority Pass lounges – although not critical, it definitely is much more comfortable than hanging out in the general waiting area – at least there are clean bathrooms and abundant charging stations. These are all the benefits of the card you get on top of the signup bonus and the 3x points on travel and dining.
- The Chase Marriott Rewards Visa – The Chase Marriott Rewards visa is a card that has earned its spot in my wallet for one reason – the annual free night at a Category 1-5 hotel. The card has an $85 annual fee, but the free night is easily worth that. Most recently, I used the free night in Johannesburg, near the airport, as an easy pit stop before our early morning flight to Zimbabwe. Although the hotel rates were *only* in the low $100’s, it was an easy way to use the free night reward and offset some of the cost of our trip. Currently, the card comes with 80,000 points after $3,000 in spend in the first three months and earns you 2x points on airline, car rentals, and dining and 5x points on spending at Marriott hotels.
Another card that we renew every year when the annual fee comes up is the United Mileage Plus Explorer card. Although the card carries a $95 annual fee, it also comes with a free checked bag for you and your companion when traveling on the same reservation, access to priority boarding, and two one-time United Club passes annually. Although these benefits are, in my opinion, decent, they aren’t enough alone to compel me to keep the card. BUT, United now gives cardholders access to additional Saver level award seats. When booking award tickets, there are typically four different award classes: Economy, Saver Economy, Business, Business Saver. Although you get the same seat if you book Economy or Saver Economy, the Saver fares usually require half as many points to redeem. The same goes for the business award seats. As you might expect, the saver fares get snapped up quickly, so having access to more saver fares is definitely a sufficient enticement to hang on to the United card, even with the $95 annual fee.
How do we do it?
With full time jobs and two kids, we aren’t able to take as much advantage of traveling on points as we could, but this is the formula that works for us.
- Hold two accounts of the same credit card. My husband and I each have our own Chase Sapphire Reserve card, our own Alaska Airlines Bank of America Card, etc. We hold separate accounts instead of signing up as authorized users for two simple reasons: the sign-up bonus and the benefits outweigh the costs. When the Chase Sapphire Reserve card launched, it was offering a 100,000 points sign up bonus for 4,000 spend in the first three months sign up for the card during this time, thus netting us 200,000 Chase Ultimate Rewards points, right off the bat. We also each hold the Alaska Airlines card because it includes one companion fare pass per year, which entitles the cardholder to purchase one round-trip coach companion fare on Alaska or Virgin America from $121 when traveling with another passenger on a paid, published coach airfare on the same flight. Because we frequently travel from DC to the West Coast with our family of four, this companion fare has helped us to significantly offset the cost of travel. For example, when my toddler and I flew to Anchorage to meet the rest of the family in July 2016, the base fare for my ticket was $1,544.26. My companion fare son’s ticket, however, was only $99.
- Put all of your spending, that you can, on your credit cards. When I say we use our credit cards for everything, I mean everything. I even pay our water bill on our credit card, even though there is a $1.49 flat fee for all credit card payments. I figure the $1.49 fee is offset by three months of postage stamps, so I simply charge $200-300 every few months and carry a positive balance on the account, refilling it when it gets low. The internet is full of people who have researched the cost/benefits of paying estimated taxes or your mortgage with a credit card, but we haven’t quite reached that level of detail in our household (yet!).
- Put your spending on the card that nets you the most benefits. For instance, we charge all Starwood hotel stays onto our American Express Starwood credit card, all dining and travel onto our Chase Sapphire Reserve card (which offers 3x the points on travel and dining), and we also carry the Chase Freedom card which has different bonus spending categories every quarter. For example, for the third quarter of 2017, Chase Freedom is offering 5x the points on restaurant spending. Thus, although I typically use my Sapphire Reserve card for restaurants because I get 3x the spend, I have been using my Freedom card this quarter instead of my Sapphire for the extra 2% bonus. I try to keep it to a relatively simple set of categories because I only have so much mental bandwidth to spare these days, but if you want to see how detailed the analysis can get, read this article on how a man put a $45,000 car on his credit card for miles but made a big mistake.
- Finally, although we do not accrue points in this way, I do maintain a Charles Schwab checking account which includes free ATMs anywhere. I use this card exclusively for withdrawing cash at ATMs around the world. The fees are automatically credited at the end of the statement closing period and I don’t worry about having our main bank accounts compromised.
Would I recommend this?
Yes! I definitely recommend everyone explore the world of travel and points. Even if you aren’t inclined to carry five different credit cards each (because it does take a lot of work to track!), it is possible that there is a way for you to spend the same amount, but on a different card that nets you significant benefits. The only caveat is this is that I would caution you not to get into this hobby if you are unable to pay your bills on time. If you are carrying a balance on your credit card, you should focus on paying the balance off before you start diving into the world of points.
There are tons of resources online to help you get started if this is something you’re interested in. This New York Times article from 2015 includes links to a number of miles and points bloggers I follow. Do not follow the recommendations in the article, however, as they are outdated. Instead, visit the individual bloggers and search for their most recent posts on “best cards.” I’ve included, below, a few links to the authors I have relied upon most heavily in the past.