Pointers for Beginners

(Still under construction) …

Miles and points aren’t a new thing to many of us. We’ve all been offered to sign up for a mileage program shortly after takeoff, or offered a credit card with promises of free flights. While these programs can be lucrative, they can also be downright confusing and difficult to keep track of. My goal for this page is to act as a sort of guide on what you can do to turn your miles and points into journeys and memories. The following steps are things that everyone should do; afterward are some links giving my opinion on certain features of miles and points.

Step 1: Sign up for an online miles tracker

My favorite one is AwardWallet (note: I do get a referral credit for anyone using that link). AwardWallet is a site that supports most airline and hotel programs. The site is free to use and the basic features are plentiful – you can keep track of all your balance and expiration dates. The two main programs missing are American Airlines and Southwest, both of which block outside sites from tracking miles.

You can upgrade to the paid AwardWallet Plus service, which I have enjoyed for over a year now. It’s one of the first pages I open up in the morning and I love seeing my mileage balances grow when I click “refresh” (and get sad when I see miles deducted, until I realize it’s because I’m about to go on a cool trip).

There are other resources, such as GoMiles, if you find AwardWallet to not be for you.

Step 2: Analyze your personal goals for what you want from your miles and points

Everyone has their own idea of how they want to travel. Some people, like myself, like to use miles for international first and business class, since there’s no other way we’d be able to afford those seats. Others merely want to save money on that family vacation to Florida or Hawaii. It’s important to set a goal for what you want to do with miles and points.

Different mileage programs come with different rules and redemption opportunities. It’s good to know the general uses of each airline’s miles. Since mileage programs are free to sign up for, I recommend signing up for ones that look like they might be useful to you. You don’t have to sign up for all of them, but you’d be surprised how earning miles in the program of an airline you’ve never even flown may be helpful. As lucrative bonuses come along, I’ll explain how you can use them to your advantage.

Personally, my goal is to get 2 cents of value for economy class redemptions. Why is that? Because there are several credit cards out there that offer 2% cash back as a baseline reward. Since cash is very liquid (i.e., it can buy more things than miles can buy), I try to make my miles worth more than that, often by using them for aspirational awards (like flying business or first class, something I wouldn’t be able to afford normally). That’s why I won’t redeem 25,000 miles for a domestic ticket that costs $400, but will redeem 100,000 miles for a business class ticket on a flight where a coach ticket is $1000 and a business class ticket is $4000 (even though I value business class at a price somewhere in-between).

Step 3: Take advantage of credit-card signup bonuses

I love to travel, especially if it means taking a flight somewhere. Last year, I earned over 580,000 airline miles just from credit card promotions. There are people who earn even way more than this every year.

*Please note, I do not consider myself a financial adviser, but rather, am writing about my personal experiences when I talk about earning miles from credit cards. I do not consider the following information to trump any information given by a certified financial adviser. I only offer this to people who can stay disciplined with credit and who do not have any major mortgages or loans in the near future.

Of course, this advice is only for those who have a good credit history and can pay off balances each month in full. Mileage earning credit cards come with high interest rates, and leaving a balance after each statement can cost you dearly. I also recommend this only for people with credit scores of 720 or higher, and for those who don’t need their credit report for big loans in the near future (such as a mortgage within the next two years).

You may be thinking, “hey, doesn’t applying for lots of credit cards ruin my credit?” Every time you apply for a credit card, the credit card company performs an inquiry on your credit report, to see how credit-worthy and financially responsible you are. Each inquiry drops your score by about 2-4 points, which isn’t too much, considering a good score ranges from 720 to 850.

Not only that, but if you do open a new credit card, you will receive more credit from the issuing company. This means that your debt-to-credit ratio should go down, as you’ll have the same amount of debt but a higher amount of available credit. This can actually raise your credit score a bit. Not only that, but credit inquiries stay on your account for only 2 years.

There are 3 credit bureaus – Equifax, Experian, and Transunion – each with their own credit score. Last year, my credit score began at about a 741 average. I applied for 5 cards over the year. Now, my credit score is actually 758. Of course, I’m still pacing myself and not going crazy with applications, since those inquiries from last year are still on my credit report for another year.

Before you apply for any credit cards, it’s a good idea to check your credit report.

You are entitled to one free credit report every year at AnnualCreditReport.com. You won’t get a credit score, but you will see what exactly is on your credit report. Make sure to check for anything that seems out of place and might affect your score – perhaps a credit company marked you as delinquent, but you’ve paid off every bill. Fix things like this before applying for any new cards.

I also subscribe to CreditKarma.com (free), and CreditSesame.com (free). I also keep track of my credit for a very low monthly rate thanks to a Citi offer I took advantage of last year. All 3 of these services give me an estimate of where my credit score lies.

To make sure I don’t miss a payment, I also subscribe to the free PageOnce iPhone app, and have a free account on Mint.com. I get notifications whenever I have a bill coming up.

Step 4: Put all of your spending on a miles-earning credit card

There are miles that you earn from credit card bonuses, and there are miles that you earn from everyday spending. I hate using cash and try to use a miles-earning credit card everywhere I go.

Deciding which card to choose can be a doozy, especially with so many different mileage programs. My favorite types of credit card rewards are transferable rewards points. These are points that are earned into a program that allows easy transfer to different mileage program. It’s kind of like the adage, “don’t put all your eggs (miles) into one basket (program).”

Below are my personal favorites for everyday spending.

Chase Ultimate Rewards

American Express Membership Rewards

Starwood Preferred Guest

Step 5: Increase your earnings with gift cards and online shopping portals

Read this post related to gift cards. It’ll set you on course.