Travel Hacking with Rewards Cards (Part 1)

I hope all the Americans had a good Independence Day yesterday. Even if you don’t live in America, now is a good time to reflect that half of 2017 is over. Hmmm, let’s be optimistic about having a whole half of 2017 left!

This week doesn’t feel like a real week. Many people weren’t working the Monday before the 4th and we’re taking a little time off on Friday to celebrate our 10th wedding anniversary. So exciting! It’s the busiest dog sitting time of the year, so I could use a little break.

Today, I’d like to write about rewards cards. I’m presuming readers here have at least a couple. I realize some people are against credit cards and that’s okay too. Personally, I like the opportunity to get some money back on something I was going to buy anyway.

For a long time, I’ve been a fan of Fidelity’s Retirement Rewards card. It’s been a steady 2% statement credit for years (once you reached 25,000 miles). Unfortunately, the last time I tried to redeem for statement credit, they changed the miles so it would only give me 1% of the value back. You can still get 2% if you transfer to a Fidelity Retirement account, which I have. I preferred the immediate statement credit much more.

Travel Hacking: The New Reward Card Strategy

Over the past month or two, I’ve been revamping our credit card rewards strategy. I’m trying to hack as many travel rewards as possible. There are two major reasons why:

1. Our children are 3 and 4, which means we now have to pay for full seats wherever we fly. It’s hard to see our costs to fly double like that.
2. We’ve had a few big expenses come up. For example, those surprise condo assessments. In addition, my wife is going back to school to get her Masters. She can pay that with a credit card. Finally, we’re nearing the last few months of being able to pay for pre-school with a credit card. In September the new school is going to ACH and checks only. We should have been working to earn bonus points the whole time.

For those new to travel hacking with credits cards don’t be ashamed, my hand is raised too. The general idea is to spend a certain in a certain time. Typically you need to spend around $3000 and $5000 in about 3 months. If you complete the requirements, you’ll get a tens of thousands points as a bonus. They can usually be used for cash back, but are best used for travel rewards. The travel cards tend to give you more value when using your points for travel (which is easy to remember because it makes sense!) And if we using the points for cash back, this wouldn’t be a very good travel hacking article.

I’ve found that the rewards for the best cards are worth about $500 (used cash) or $625 (used as travel). Those are rough numbers, but since we need to spend about $3000 a few times, we might as well get 20% back in the form of travel, right? And that’s just the bonus points. We’ll get regular points on the spending of $3000 itself (about 3000 miles/points). So maybe we get around 22% in travel expenses overall. That’s a lot better than 2% in Fidelity rewards. (Sorry Fidelity, it’s not your fault.)

I used to think it was a ton of extra work, but with autopay on the credit cards, I don’t miss any payments. There’s almost zero risk of incurring any extra fees. The money comes out of my bank account just like any other credit card. Setting up auto pay with Chase and Amex are very, very easy. (I haven’t tried other banks.)

The Cards We’re Using

A friend gave me a tip on credit cards which have “hot” rewards now. That said, there are always a few “old standbys” that you can usually count on.

My first card was a Starwood Preferred card. This was directly on that tip from a friend, which I took on blind faith. It looks like this card bumped up the rewards from 25,000 point to 30,000. (I may be off on the exact numbers here, but I see 34,066 points in my account which would be consistent with 30,000.) I’m reading that Starwood points are pretty valuable and worth about 2.2 cents a piece. If true, that’s roughly around $650.

Next, I got a Southwest Preferred Card. They are running a 60,000 point promotion, where it’s usually 40,000. If you fly Southwest, this is the time to get it. My wife had gotten the 40,000 point last year and we cashed in nearly $1000 of travel rewards to go to Aruba later this year. It’s about the half off. That’s conveniently enough for the two kids to fly free. I’m 40,000 points away from a companion pass for next year. I’m hearing that some people sign up for the Southwest Plus card as well, so get that. I might try that in September or October.

I’m seeing that Southwest points can be worth around 1.5 cents, so the 60,000 should be worth around $900.

Lastly, I got the Chase Sapphire Preferred card. I should have gotten the Reserve version when they were doing a 100,000 promotion, but I missed it. Instead, I’ll only get 50,000 worth of Chase Ultimate Reward points. In the travel hacking world, these supposedly have a tremendous value in cashing in with a ton of airlines. With the Preferred card, I’ll get a bonus and the 50,000 points should be worth around $625.

My wife got a Starwood Preferred card to use. That’s another $650.

As the fourth card in a short time, this is enough spending for now!

If you add it all up, we’ll get around 200,000 points on various programs. If we spend them right, I think they’ll be worth around $3000… maybe just a little shy.

Active Duty Bonus Leads to One More Points Card

My wife got a credit card offer in the mail last week. It’s a rare 100,000 American Express Platinum card. I believe this is the highest amount of points that American Express offers. The only downside is a HUGE annual fee. I think it’s around $550. However, the card comes with $200 Uber credits (that are parsed out monthly and expire monthly) and another $200 in airline credits (for things like extra bags, food, or other fees outside of the core cost of the ticket). There are other perks as well such as a few different airline lounges and possibly that speedy pass to cut the long lines at airports. (See how technical I am with all this stuff!)

This wasn’t exciting until I learned that Active Duty get their annual fees waived at most credit card companies (except for Chase it seems). So this American Express looks to be 100,000 points and hundreds of dollars of value… for free! Why thank you for the invite, Mr. Express… or should I just call you American?

One More Card

And of course, there’s always one more thing, right? Steven Jobs wouldn’t have had it any other way.

While I was going through the research of the Fidelity card’s statement credit change, someone in some forum mentioned USAA’s Limitless Cash Back Card that pays 2.5%. That’s another Active Duty benefit (though military and family are likely eligible to join USAA). I take the extra 0.5% and phase out the use of Fidelity card.

A natural question to ask is, “Why have a 2.5% card at all, when I’m getting 22% in travel rewards?” The answer is simple. These are one time bonus rewards. We’ll have to cancel the cards, wait some time, and try to get them back in the future to get the bonus points. (Although I think we’ll just keep the American Express forever.) I’m not sure how that process works. I know that Chase has a limit a 5/24 limit which means that they’ll probably not approve you for a new card if you’ve gotten 5 in the past 24 months. I’m probably going to be close to bumping up against that.

Final Thoughts on Travel Card Hacking

There was a lot of research that went into writing this. However, you can tell that it gets so complex, I “yada yada yada” most of the details. (Although they are minor details in this case.)

I’m just starting to “build a base” of understanding the ins and outs of various programs. I’m a little torn, because there’s something nice about using the USAA Limitless card and getting an easy 2.5%. I think that if there aren’t bonus points to be earned by spending, I’ll just use that card. Then again I carry a few other credit cards such as an Amazon one (5% back for Prime Members) and an American Express Blue Preferred (6% back at grocery stores).

Have you done any travel hacking with credit cards before? What are your favorite cards?