The Miles and Points Game For Free Travel : Credit Card Bonuses, Part 2

Once you have read part 1 of using credit cards for free travel, you should now be ready to start utilizing credit card bonuses to pad your miles and points travel accounts.  If you already know that your credit score is in good standing (and are already using and paying off at least one credit card) you are good to go.  If not, check out MyFICO's tips for building your credit before jumping into this game.  Because it's such an important step to being successful with this game, and because I'd hate for anyone to get in over their heads just from the prospect of traveling for free, I'm posting my Golden Guidelines once again.  If these are already burned into your brain, give 'em a quick review anyways and continue reading!

  1. Your credit and credit history is an extremely important asset, and should never be jeopardized (i.e. buying things you don't need, going into high-interest debt) merely for the sake of free travel.
  2. Credit cards should be treated like debit cards, paying off balances as you put them on your card (or at least by the end of the month) so that you never incur any interest charges.
  3. You will not sign up for any credit cards (no matter how tempting the sign-up bonuses are) within 1.5-2 years before making a large purchase, such as a house.
  4. You will not buy things you normally wouldn't purchase for the sake of racking up miles on your credit card, but instead will shift your normal daily spending (groceries, gas, bills, etc.) to your miles/points credit cards to meet minimum spends, and pay them off as you do so.

Now, let's get to the "fun" part:  applying for your first travel rewards card with sign-on bonus.  In the miles and points world, a sign-on bonus is generally considered a good deal and "worth it" if it is at least 40,000 to 50,000 points with the first year's fee waived.  

What?! There's a fee to use my credit card!?  Now this makes me a bit suspicious! 

Well, generally if the card is paying out a large amount of miles/points and gives you other travel benefits as well, it will almost always have a yearly fee attached to it.  Usually, the benefits and miles that you receive from the card are well-worth the annual fee, causing the card to more than pay for itself.  However, the yearly fee versus the general benefits and miles-earning opportunities of the card will be something you'll want to consider when it comes time to renew and pay it each year.  Many people will apply for and cancel cards in "churns" before paying the annual fee, but will keep cards in which they can either get the fee waived or paid for through benefits.  In any case, under no circumstances should you cancel a card right after you get your bonus points!  Not only do you run the risk of getting your points revoked, but this is also a great way to destroy your credit and "flag" you on any upcoming credit card applications.

For those of you just starting out, I highly recommend applying for one very lucrative awards card, and just building a credit relationship with it for 8-12 months.  Once you are in the habit of using it for all daily purchases in place of a debit card and paying it off, it will be a lot easier to start balancing more than one card later on.  In addition, having a long and positive relationship with your card will make it easier to be approved for future and multiple applications.

Now, here's where I wish that I received some kind of commission on the following recommendations for your first card, but I don't. The following cards are three that I have and use, and which are currently offering great sign-on bonuses!

1.  If you live in or near any city that is serviced by Southwest, their current card offers 50,000 miles ($832 worth of travel) after spending $2,000 in the first 3 months.  I have both the Plus and Business version of these cards, which netted me 104,000 miles (after putting on the minimum spend).  On Southwest, you get a free companion pass after you earn 110,000 miles, so after another $6,000 worth of spend, a companion can now fly for free with me on any Southwest flight until Dec. 31, 2015.  It's a great card and bonus, even if you only apply for one. 

2.  The Chase Sapphire Preferred card is one of the most valuable cards that miles and points collectors have today!  You can earn 40,000 Ultimate Rewards points, which can be transferred 1:1 to many airlines and hotels.  In addition, it offers 2x points on all travel and restaurant purchases, and a 7% miles bonus each year.

3.  The Aadvantage Citi Mastercard doesn't have the highest payout now at 30,000 miles, but it would be a good introductory card to have and American miles can be used with all of their OneWorld Alliance partners.  Aadvantage miles are generally considered to be fairly valuable because of the extensive partner network within OneWorld.

Of course, choosing the right card depends on what your travel goals are, and which airlines/hotels you will frequent and use.  Other cards in our wallets include SPG,  Alaska Airlines, Capital One Venture, United Mileage Plus, and Chase Freedom, all of which we applied for during a bonus sign-on promotional period.  These promotional periods don't last long, but they also come and go, so wait until the card you want has a fairly lucrative sign-on bonus before applying for it.

The other thing you want to remember is that almost all airlines and most hotels are a part of a bigger alliance, and you can use miles earned through them to book a flight or a room with a different carrier/chain.  For example, we live in Nebraska, so you might question why we would want to go for the Alaska Airlines 50,000 bonus mileage sign-on.  Alaska Airlines is partners with American, Delta, KLM, and others, so they are just as valuable to us as any other pool of miles.

To sum-up, when you are ready for your first rewards card, remember:
  1. Make sure you have an account with the mileage/points program so that you can just enter your account number when you apply for the respective card.  This will ensure that your miles/points are deposited quicker and easier.
  2. Browse through travel reward cards to find current cards with high bonuses that will fit your travel needs/goals.  
  3. Credit card bonuses come and go.  If you don't see a card that appeals to you and has a high bonus, just wait.  On the flip side, if a card has a particularly high bonus (70,000 to 100,000 miles and up), it's probably targeted or limited and won't last long!
  4. Read miles & points blogs such as Mommy PointsMillion Mile Secrets, or The Points Guy for the latest cards with high bonuses.  If you have a Twitter account, follow them so that you can always be updated with the latest mileage deals and bonuses!  Study from them and read up about how they "churn" cards to maximize their mileage bonuses.
  5. Start off small and slow.  Build a relationship and credit history with only one awards card for 8-12 months before delving into more.
  6. Take into consideration all bonuses, benefits, and mile-earning opportunities when it comes time to renew your card and pay the annual fee.
  7. Remember, you won't be a miles & points expert overnight!  It takes patience, trial & error, and constant learning and revamping to stay in the game, BUT the benefits of free travel are so worth it.  Once you start paying next to nothing to reach your travel goals, I'm sure you'll be just as addicted to it, and the research that goes into the game will actually start to be fun rather than work!

If you are now in the game with your first awards card (or have decided to abstain from the lucrative world of credit card bonuses altogether), stay tuned for the next part of this series, which will cover earning miles and points on everyday spending!  Happy (free) traveling!!