I just returned from a two-week trip around Europe, during which my wife and I visited Ireland, England, Scotland, and Portugal, stayed in 5-star hotels, and enjoyed VIP treatment in airport lounges.
Did I lose my mind and decide to blow all of my FI savings on one extravagant trip? No, not in the slightest. The trip actually didn’t cost much more than it costs to visit my family in Pittsburgh.
How is that possible? Two words…Travel Hacking.
Travel hacking is a term used to describe the use of miles, points, credit cards, elite status, loyalty programs, and other strategies to travel the world as cheaply and comfortably as possible.
Today I’m going to focus on one of the most important and most lucrative aspects of travel hacking: credit cards.
Credit cards generate massive profits for the companies that issue them, so financial institutions, especially those in America, do everything they can to attract new cardholders. This means they will often offer thousands of dollars worth of airline miles just for filling out a 15-minute application. Since we don’t have to use our credit for ridiculous things like car loans, we can accept these free gifts and use them for incredible experiences.
To see how much value miles, points, and travel credit cards can actually provide, let’s use my recent trip as a case study.
To get to Ireland, I used a little-known sweet spot in the British Airways program to get a roundtrip ticket from Boston to Dublin for only 25,000 Avios miles and $121.19 in taxes and fees. Normally, transatlantic flights cost upwards of 50,000 miles so 25,000 miles is an absolute steal.
To avoid the surcharges that normally accompany British Airways redemptions, I booked our flights on the Irish airline, Aer Lingus. Had I booked the flight on British Airways, it would have cost 49,000 miles and over $650 in taxes, per ticket.
Aer Lingus flights don’t show up on BA.com so to book them, I had to call the call center to get an agent to do it for me (since I wasn’t able to book it on the website, I got the agent to waive the $25 phone-booking fee).
Our ultimate destination was Glasgow, to visit my wife’s family, so we needed to find a way to get from Dublin to Glasgow. Before going to Glasgow though, we wanted to stop in London for a few days to visit my sister, who is studying abroad there. We could have paid for a couple of one-way tickets to do this but why pay when you can use miles? Again, we decided to tap into our British Airways Avios balance to get to London and then to Glasgow.
Thanks to a generous stopover rule for intra-European flights, we were able to book a free stopover in London on our one-way award ticket to Glasgow. So for only 4,500 BA Avios miles and $22.50 in taxes and fees each, we were able to fly from Dublin to London, stay there for two nights, and then fly from London to Glasgow. Incredible value!
In London, we decided to tap into our Club Carlson balance to book two nights at the 5-star Radisson Blu Edwardian in Leicester Square. Thanks to a valuable perk of having the Club Carlson Business Visa, I was able to book two nights for the price of one so for 50,000 Club Carlson points and $0 cash, we were able to stay two nights in a magnificent 5* hotel right in the heart of London!
I’ll stop there because I’m sure you don’t want to hear all about my trip but I just want to recap how much value we were able to extract from miles and points.
Two round-trip flights from Boston to Dublin
Total Miles Used: 50,000
Total Cash Paid: $242.38
Total Money Saved: $1,450
Two one-way tickets from Dublin to Glasgow (with a stopover in London)
Total Miles Used: 9,000
Total Cash Paid: $45
Total Money Saved: $335
Two nights in 5* London hotel
Total Points Used: 50,000
Total Cash Paid: $0
Actual Cost of Room: $974
Total Money Saved: $240 (we wouldn’t have paid $974 to stay in a 5* hotel)
So for less than $150 each, we were able to book a round-trip flight from the U.S. to Europe, a flight from Dublin to London, a flight from London to Glasgow, and two nights in a 5* London hotel (a savings of over $2,000)!
Now that you’ve seen how much value can be extracted from miles and points, I’ll show you how easy it is to obtain hundreds of thousands of miles and points for little to no cost.
To build up my British Airways Avios balance, I signed up for an American Express Premier Rewards Gold card during a time when they were offering a 75,000 point signup bonus and no annual fee for the first year. The signup bonus didn’t give me 75,000 British Airways miles but instead gave me 75,000 American Express Membership Rewards points. Membership Rewards points are very valuable because they can be transferred to many different airline and hotel programs.
During the no-fee first year of having the card, Amex ran a promotion where you could transfer Membership Rewards points to British Airways at a 1 to 1.5 ratio. Since I find great value in BA miles, I transferred my entire balance during the transfer promotion, cancelled the card before paying the first annual fee, and then celebrated the fact that I received over 112,000 British Airways miles for free! That’s enough miles for over four round-trip tickets to Europe!
I obtained my Club Carlson points in much the same way. I applied for the Club Carlson Business Visa, received 85,000 points after spending $2,500 on the card within the first three months, and only had to pay a $60 annual fee. Since the card comes with the perk I already mentioned (i.e. the last night on any award booking of two nights or more is free), a $60 annual fee will get me enough points for nearly four nights in a 5* London hotel!
While travel credit cards and their associated signup bonuses can be very valuable, do not apply for a credit card if you don’t think you’ll be able to pay off the balance, in full, every month.
Also, applying for and canceling credit cards can affect your credit score so please do your research and understand the risks before making any decisions that could affect your credit.
So what does this all have to do with financial independence? Quite a lot actually, especially for my wife and I who plan to utilize geographical arbitrage to stretch our savings after FI.
Although it’s fun to stay in a nice hotel every once in a while, it’s not the type of thing we normally do when we travel or plan to do after FI. As I described in The Perfect Life post, we plan to travel to somewhere that is very cheap and interesting (e.g. Thailand, South America, etc.), rent an apartment in a non-touristy part of town, learn the local language, and enjoy life as pseudo-locals. This type of “slow travel” will actually allow us to have lower expenses than we would if we lived in the States full time.
Even though slow travel is cheaper and more efficient than other types of travel, we’ll still need to get to these interesting and faraway places, so that is where travel hacking comes in. We’ll be able to live in cheaper places for the majority of the year and then use miles and points to cheaply travel back home to visit our families and friends.
Travel Hacking Resources
There are some great resources out there that you can check out if you are interested in exploring travel hacking further. I must warn you though, once you dive into this, it’s very easy to get obsessed with it. You should see all the spreadsheets I have to keep track of all my balances, which credit cards I’m going to apply for, how much value I’ve received from the various types of points, etc. It’s a very fun hobby though and one that actually saves you money.
The amount of information on the forums can be very overwhelming though so if you’d like distilled articles about some of the best credit cards and strategies, there are also many good blogs out there to read.
My favorite is MileValue.com. MileValue is an excellent resource for finding ways to extract the most value possible out of the points and miles you have (one of the recent posts, for example, shows how to visit 7 European cities with only 12,500 United miles).
MillionMileSecrets.com is good for learning about travel deals and mile-earning opportunities. The posts offer very clear instructions on how to take advantage of the various opportunities so it’s especially good for people who may be new to the game.
ThePointsGuy.com is also a great blog that will help you stay up-to-date with the latest travel news and offers.
Finally, NeverEndingVoyage.com is a great place to read about how amazing slow travel can be.
When deciding which credit cards to sign up for, I actually use a tool that I created called TravelerPlastic.com. Traveler Plastic allows you to pick which programs you want to accumulate miles/points in and then it displays the most lucrative cards for the selected programs. It even converts flexible points, like the American Express Membership Rewards points that I mentioned above, into the points of the programs that you selected. I just built the site a little while ago so if you have any feedback, I’d definitely be interested to hear it.
AwardWallet.com is a great place to keep track of your point balances and expiry dates. It’s similar to Mint.com in that it logs into your accounts automatically and keeps track of your balances.
As you can see, there are a lot of great resources out there so I definitely recommend you visit some of the sites listed above if you expect to do any serious travelling in the future.