Don’t quit your day dream.-Unknown
David and I absolutely love to travel. We travel for adventure as much as we can and we travel to see our families, who are all spread out and live at least one plane ride away. That said, we live in a tiny town way up in the corner of the country, and getting anywhere is pretty expensive because it almost always involves at least one extra flight.
We used to have to budget a hefty amount for travel costs each year. Then I listened to Episode 9 of the ChooseFI Podcast and my world completely changed. This episode outlines a brilliant strategy for making the most of credit card rewards and earning potentially unlimited travel credits. Using this strategy we have earned $4,326 in free travel this year alone. This has included a total of four plane tickets, five hotel rooms, a rental car for a week, fancypants United Club Lounge passes, and two TSA Precheck approvals. Here’s how we did it.
Many credit cards offer a signup bonus to entice people to apply for their cards. You can find an excellent list on the Motley Fool website. All we did was apply for a credit card from this list and use it until we met the minimum spend amount in order to earn the massive signup bonus. This usually meant spending $3,000 in the first three months or something very similar. After we met that requirement, we set that card aside and applied for a different card. We paid off the balance on time and in full every month and never paid a dime of interest. We did this for a total of three cards each, and voila, we literally accumulated more rewards than we could use in one year.
Making the most of travel rewards (or any other credit card reward, such as cash back) is really simple. And like anything, you can also follow it down the rabbit hole and dial your strategy to the very last penny. Being a busy teacher, I kept things on the simpler end of the continuum and it’s gone quite well. Here are some good-to-know tidbits if you’re interested in giving it a go!
Both of our credit scores were in the 800’s when we started, and they are still there now. They might have fluctuated a point or two, but that’s it. That said, this is not a strategy to get involved in if you’re trying to repair your credit, if you need a big loan soon, are paying off student loans, or already have credit card debt. Only do this if you have good credit and can pay off your balance in full every month!
Most cards have apps now that make managing all of this quite easy. In addition to the apps, I kept a list of our cards, dates we applied for them, and rewards we’d earned. I had to make a handful of calls to make sure I understood when points would post to our account, etc., but all of the companies were really helpful over the phone.
Do NOT add your partner as an authorized user. This is because he or she will then have that card added to their credit history and then can’t get their own version of that card. If you each have separate cards and are not authorized users on each other’s accounts, you can earn more rewards. Also, some banks (such as Chase) have rules about how many new cards you’ve opened in the past 24 months and could deny you a card if you’ve got too many.
Because of the above stated rule, start with a Chase card if you can. Their rule is called the 5/24 rule, and they will not give you a new card if you’ve gotten more than 5 cards in the past 24 months. We each got the Chase Sapphire Preferred for starters. Chase offers some of the most valuable points in the credit card world–they’re a great place to start!
Southwest has an incredible Companion Pass that allows you to take someone with you for FREE on every flight for at least a year. You can earn this using the Southwest Rapid Rewards Visa. Time your qualification for the pass as close as possible to the beginning of the year because it’s valid for the rest of the year in which you qualify AND for the entire next year. Seriously. We don’t have Southwest here so I haven’t used this reward, but heres’ a great link from Southwest to get you started.
Once you’ve got a card, put EVERY expense on it to meet that minimum spend asap. If you’ve got three months to spend $4,000 and earn the bonus that might be a stretch. One way we made this happen was to pay our property taxes with a card (we pay 2x per year and there was a $20 fee–the only fee I paid all year!). We could also do the same with my husband’s quarterly small business income tax payments (our next card will likely be a business card–even bigger bonuses to be earned!). We put our car insurance, groceries, any big expenses, every small expense, literally everything onto whatever card we were working with at the time. Again, it was all very easy to keep track of thanks to the apps and friendly customer service agents.
Another idea if you’re close to a minimum spend and a little short on time is to pay ahead on a bill or buy a gift card to a grocery store that you know you’ll use.
Once you’ve met the minimum spend and earned and used the bonus, it’s up to you what you do with the card. We will be leaving some from this year open and closing others with the intention of reapplying in a couple of years and earning the bonuses again.
There is no reason to feel any guilt in this process, even though as teachers I’m pretty sure it’s part of our DNA. I did not break any rules in our year of free travel. All the banks are doing just fine in their big, fancy buildings. Unfortunately these bonuses lure in a lot of people who end up paying a whole bunch of interest when they don’t pay off their balance in full each month. Earning those same bonuses while preserving your credit is not a crime.
Most cards that offer signup bonuses also include an annual fee. Sometimes this fee is waived for the first year, sometimes not. While I do not enjoy paying an annual fee, a $95 fee is small potatoes when we earned over $600 in travel credits on a card. Just keep track of this factor alongside which cards you have and when you got them. Many companies will let you downgrade a card to avoid paying the fee when the year grace period is over.
If you want to know more, I highly recommend listening to ChooseFI: Episode 009. There’s also a Facebook group called Travel Miles 101, and ChooseFI has an excellent free resource at choosefi.com/travel. That said, you do not need to exhaust these resources to make this strategy work for you. The podcast was all I used to get started, and this article contains all of the major highlights for you!
Finally, here’s the list of the cards that David and I each got this year: Chase Sapphire Preferred, United Explorer Mileage Plus, and Capital One Venture.
That’s it! Where will you go first? Let me know in the comments or find me on Instagram @financiallyfitteacher. We’d also love to have you in our Facebook Group: Financially Fit Teachers. And if you’ve got a teacher friend who needs some free travel in their life, I’d love it if you’d share this article. Thank you!