Originally posted January 29, 2018. Updated July 26, 2018, Nov 5, 2018, and March 21, 2019.
Let’s not bury the lede: it’s not travel hacking. It’s “signing up for credit cards to get reward point bonuses for free or discounted airfare and hotels.”
Not as sexy, I know, but it’s reality.
Now let me be clear: I love it. I wasn’t able to do it for a few years (my wife and I weren’t living in the US until 2016), but as of June of 2017 I went at it hard.
I Didn’t Travel Hack, But Here Are The Credit Card Bonuses I’ve Earned Since June 2017
- 75,000 United Miles via Chase MileagePlus card (good for 3-4 roundtrip domestic flights; I no longer have this card as I cancelled after 1 year so as not to pay the annual fee)
- $150 cash back via Amex Blue Cash Everyday (this one I regret because I wasn’t aware of Chase’s 5/24 rule at the time; more on that soon)
- 50,000 Chase Ultimate Rewards via the Chase Sapphire Reserve card (good for $750 worth of hotels or airfare; cancelled this card and downgraded to a no annual fee Chase card because the annual fee was only worth it for me for the first year)
- 120,000 Southwest RapidRewards + Southwest Companion Pass (My wife flies with me for free until 12/31/2019! Including when I pay for a flight with points!) via the Chase Southwest Premier and Chase Southwest Plus cards. (120,000 points is good for $1,920 in airfare. Note: I cancelled the Plus card after 1 year, but kept the Premier.)
Added after this article was originally posted:
- 45,000 Wyndham Rewards via the Barclays Wyndham Visa
- $75 annual fee, but was $25 for first year
- Good for 3 free nights (but see bullet point below)
- We used these free nights at The New Yorker and it was a great redemption. I decided to pay the 2nd annual fee of $75, which includes 6,000 points, but I’m not sure if I’ll do it again in 2020. They’re making changes to the rewards program in April and we’ll see if they’re good changes. I suspect hotels like The New Yorker will cost more points than they did for us.
- 100,000 Hilton Honors points via the American Express Hilton Honors Ascend
- $95 annual fee
- 1 weekend night free after first year (no longer available, but they increased the bonus points to 150,000 so it’s a better deal now anyway); I’m mostly alone in this as far as people who gather points is concerned, but this is actually my favorite card right now due to incredible bonus point earning opportunities)
- Update March 21, 2019: They didn’t give me the 1 weekend night certificate after I paid the 2nd annual fee. (I spoke to them on the phone, via text chat, and via twitter.) Very disappointing, borderline fraudulent, and I reported the situation to the Consumer Financial Protection Bureau.
- 64,000 Choice Privileges points via the Barclays Choice Privileges Visa
- No annual fee!
- 32,000 points after first $1,000 spent in 90 days and another 32,000 points with $3,000 total spent in 180 days.
- You also get Gold status, which means you get some kind of gift at check-in. We’re big fans of cheaper hotels like Sleep Inn (a Choice Hotels brand) so I’m happy this is a no annual fee card, even if Choice points aren’t considered as valuable as some other chains.
This puts me over 5/24 — 5 credit cards from any bank in the past 24 months — meaning I can’t get most personal Chase cards for quite some time. (I’ll be eligible again at the end of 2019.)
So, I guess, this is the only part of travel “hacking” that’s actually a “hack.” Get all the best Chase cards first, before getting any other provider. Unless, of course, the other provider is giving away an exceptional bonus. Bonuses change regularly so sometimes it’s just luck, being at the right place at the right time.
- Use the Credit Card Decision Flow Chart provided by /r/churning to figure out which cards to get and when
Onto what this is all really about:
Why Airline and Hotel Miles Valuations Are Miscalculated
If you try to maximize the value of your points you’ll find a lot of well known folks talk about how much 1 point is worth. e.g. Southwest RapidRewards are worth 1.6cpp (cents per point) and Ultimate Rewards are worth 2.1cpp and so on.
Some of these “travel hacking experts” value points based on irregular scenarios.
Southwest RapidRewards are some of the few points that are directly tied to the cash value of a ticket so they are worth 1.6cpp unless you’re using the Companion Pass because then they’re worth a big 3.2cpp. e.g. A $100 Southwest ticket costs 6,250 Southwest RapidRewards points (1.6cpp). If you add a Companion you only pay the $11.20 in taxes and $200 worth of tickets is still 6,250 RapidRewards points (3.2cpp).
But others are not so simple.
Let’s take a look at Ultimate Rewards. The straight value of a UR is 1cpp. Let’s say you want to book a hotel that costs $500. If you use Ultimate Rewards to book the hotel it’ll cost 50,000 UR (through the Ultimate Rewards portal). But! If you have the Chase Sapphire Preferred card you get 1.25cpp and if you have the Chase Sapphire Reserve you get 1.5cpp. (Which is why I got the Reserve. $500 in hotel costs are 33,334 Ultimate Rewards points if you have Reserve.)
Some people who shall remain nameless claim Ultimate Rewards are worth 2.1cpp because you can transfer them to an airline partner and use them for a high value First or Business class ticket that would cost a lot.
The issue with this scenario is you would probably never pay for a First or Business class flight so they’re not actually worth that! In reality, since you usually pay for Economy fares you’ve devalued your points by using double or triple the points to pay for a better fare class.
The popular valuations are based on a sort of straw man. “Well, this First class flight would normally cost me $10k but since I used 120,000 miles I saved $10k and got 12 cents per mile!”
No, no, no. Not at all.
Utility vs Dollar Value: A Different Way To Make Airline Miles Valuations
I suggest you maximize utility and not dollar value.
If you normally pay for Economy fares then you actually lose money when you book a Business or First trip with airline miles. Instead of spending 60,000 points on the economy flights you spent double which means you got one less flight out of the scenario that you now somehow have to pay for.
Which of the following scenarios maximizes utility?
- One (1) Business or First flight for 120,000 miles
- Two (2) Economy flights for 120,000 miles
The answer is obvious. Two flights have greater utility than one.
Let me be clear here in saying I don’t have a problem using lots of points for a fare class upgrade. I’ve done it! It’s amazing flying in the upper fares internationally. Really, it’s a whole different experience. And I’ll probably do it again in the future. I’m just not going to fool myself into thinking I saved money in the process.
My preference at the moment is to maximize utility. I want to get as many flights as possible and I don’t care if I have the privilege of flying in Economy instead of Business or First while doing so.
As an aside: goodness am I tired of hearing people complain about economy airline seats. I’m 6’5″ and somehow I’ve been alright on hundreds of flights even if sometimes my knees are jammed into the seat in front of me. You’re alright too. You know the worst part about flying economy? It’s not the seats. It’s the whiney adult babies. Anyway …
Interestingly, maximizing utility can be a money loser as well if you’re traveling more than you’d normally travel.
How Travel “Hacking” Actually Costs Us Money (and I’m okay with it)
I specifically earned the Southwest Companion Pass so we could be decadent.
We’re flying to New Orleans for a weekend. We’re flying to Las Vegas for a weekend. That is ridiculous. It’s not something I would ever do normally. It’s decadent. Some might even say wasteful.
But my wife has limited vacation time (hence late Friday flights; she doesn’t miss work) and I want to show her as much of the US as possible. The Southwest Companion Pass plus the 125,000 points I earned (signup bonus + normal spending) helps facilitate this goal. I also have $400 in Southwest gift cards acquired via the Amex Platinum card airline credit so even our flight taxes & fees ($11.20 per roundtrip per person) are paid for.
But if we didn’t have the Companion Pass we wouldn’t have the following expenses:
- Roundtrip airport Taxi/Uber/Lyft
- Hotels (We do use points where we can, obviously. But it’s not always possible.)
- Food (We eat out less than a handful of times per year so any eating out done on these trip weekends is extra.)
- Whatever other spending for things we decide to do that we wouldn’t do if we stayed in Raleigh.
This is willful decadence. It’s true that these trips will cost us less than if we had to pay cash, but under normal circumstances we would not be going on these trips at all, so the net result is they cost us money. To be fair, we’re in a position that these trips aren’t going to put us in the poor house, but they are extra and pretending otherwise is Trumping the truth.
OK, cool, you’re convinced. Which cards should you get to maximize utility?
Note: For the cards I have I’m able to get referral links so I’ve used them below for those three relevant cards. I get 10,000 points per referral and your points bonus doesn’t change. Thank you for helping our travels!
If you fly domestic and Southwest flies out of your home airport this is a no brainer. Even if you don’t plan on flying extra like we do. The current point bonuses on the personal cards are 40,000 each, meaning after hitting spending requirements to get said bonuses you’ll have over 84,000 points. You need to earn 110,000 points to get the Companion Pass so you’ll need to spend a lot more before you get the pass. (Or wait until they’re offering better sign up bonuses of 50,000+ again.) The other option is to get one of the personal cards and the Southwest business card because that has a 60,000 points bonus and you’ll get the Companion Pass without extra spending. Get all 3 and you’ll have over 140,000 RapidRewards!
- Chase Southwest Premier ($99 annual fee)
- Chase Southwest Plus ($69 annual fee)
- Chase Southwest Business (If you’re an independent contractor or freelancer you have a a business.)
Note: You can apply for all three of these cards on the same day. I got approved for the two personal cards after applying within minutes of each other, but I did have to call them so they could verify some things. “Why are you applying for 2 more cards when you already have 2 Chase cards?” My answer: “Your bonuses are crazy good and I like Southwest.” They accepted that!
Wait at least 30 days before applying for more Chase cards. They’ll only approve two personal cards within 30 days.
Next, you’re gonna want some hotels. I think the Chase Sapphire Reserve is great, even though it has a $450 annual fee. That fee includes $300 in travel spending credit (airfare, hotels, highway tolls, Uber/Lyft) so it’s effectively a $150 annual fee. There are also some other benefits that may be useful for you. (If you don’t already have it Global Entry is great and you’ll get it free.) You get 50,000 Ultimate Rewards points worth $750 in travel after spending $4,000 within 90 days.
If I hadn’t gotten the Amex card which put me at 5/24 and ineligible for more Chase cards I would have also gotten the Chase Sapphire Preferred card for 50,000 Ultimate Rewards points after $4,000 spending in 90 days and $0 annual fee for the first year.
When you’re done with that I’d start looking at the other available cards and accompanying bonuses (Amex Platinum and hotel cards). But the above is gonna take you a while so get on it.
Need hotels instead? Get the 150,000 Hilton Ascend bonus here.
The Biggest Drawback of Credit Card Signup Bonuses (for us, anyway)
The biggest issue we have with these cards is we don’t have a lot of expenses so meeting the spending requirements sometimes takes some planning. Spending $4k in 90 days on a new card is difficult for us because we don’t eat out, don’t drink, and don’t regularly spend money on anything but groceries and necessities.
I’ve taken to buying Walmart, gas station, and Hotels.com gift cards (all at a discount through Raise, of course) if I need to meet a spending requirement and I’m coming up short because I know I’ll use all of those sooner or later. If your monthly spending is higher than ours then you won’t have this problem. (Although you might want to save money by buying gift cards through Raise anyway. Their 1 year guarantee is legit.)
I use a few other travel saving tactics — optimal Priceline bidding, easy ~15% savings at Hotels.com (couple it with their 11th night free promo and it’s closer to 25% savings), and others — but since this is already nearly 2,000 words I’ll stop here for now. Another time, okay?
Oh, wait, before I forget because I know people wonder: this all has only a small impact on credit score. It does dip down temporarily for a month or so after every credit card application, but whether using FICO or Vantage 3.0 scoring I’m still in excellent range. That said, if you’re planning on getting a mortgage or other loan soon you should hold off until after you do that before you start applying for lots of credit cards.