Via LearnVest By Annie Nilsson for The Billfold ~
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I am a 30-year-old woman with an arts degree and some geographic commitment issues, so for much of my adult life, I’ve been in situations where I’ve earned unimpressive amounts of money, but have needed (or wanted) to fly to places semi-regularly. As a result, I’ve become a sort of unabashed, salivating fangirl for airline miles, and something of an expert when it comes to accumulating them. I offer here a primer on how you might join me in this rewarding hobby.
Not to be a scold right off the bat, but this method involves credit cards, so it may not be for everyone. You’ll need to have good credit, and pretty high levels of self-discipline for it to work right. If you’re the type who sees access to credit as an invitation to spend recklessly, I’m sorry, but this is not for you. You know that show on TLC about “Extreme Couponing” that is both inspiring and repulsive and you don’t know whether to pity the couponers or to cheer them on? This advice is going to be kind of like that, but for airline miles, so if you’re squeamish, don’t read any further.
The first thing you have to do—if you haven’t already done so years ago—is to sign up for a miles account with all the major airlines. Fast, free, easy-peasy. If you have never bothered to sign up before (I won’t judge you), but have flown recently, most airlines will credit your new account with the miles from those recent trips. But only if you ask them to! Go to their website and find the “request missing miles” tab. You may have to dig around a bit but it’s there and it’s worth it. Every mile is precious.
Now, here’s where it gets more fun (well, I find it fun, but you know).
You are to acquire an airline credit card, and then you are to use it to make all the daily purchases you would normally make. Buying groceries? Use the card. Paying your gas bill? Use the card. Splitting a complicated check at someone’s birthday dinner? Put it all on your card, and then have everyone else pay you in cash. (Haha, just kidding: Never do that, your friends are flakes.)
The thing is, you must think of your card as debit, not credit, and you must pay it off in full at the end of each month. You are never to spend what you don’t have and carry a balance here. Airline cards have very high APRs, and once you start racking up finance charges, you lose the game altogether. If this happens, you’ll have cut up your card and find a new hobby.
Most cards will award you one mile per dollar you spend (some give you more). This means that if during the course of living your normal life you spend $1,000 a month eating, drinking and shopping, filling your car with gas and going to conceptual “happenings,” you will be awarded 1,000 airline miles at the end of each month. Add these to the miles you are getting for any flying you may be doing and you are chugging along. This is easy!
Now, the credit card you choose for this project will depend on several factors: A) whether you actually tend to fly that airline, B) what sort of fancy bonus they offer when signing up, and C) whether or not they offer the first year free.
C is important, as airline cards have annual fees, often between $80 and $95, which is high, but the vast majority of these cards try to hook you by waiving that fee for the first year. This is great, especially since they usually also come with a big sign-on bonus—usually at least the cost of a domestic ticket (25,000 miles), or sometimes a bunch more. So, if you keep the card for two years you will end up paying that $80 dollars, but you’ll be getting at least one round-trip ticket. You’ll probably get more like two round-trip flights (depending on how much you spend that year). That’s a pretty great deal.
But! Here’s a fancy secret that I will share only with you: As your first year with the credit card comes to an end, call them up and tell them you would like to cancel. They will ask you why, and you will say: “The yearly fee is too high!” Every time I have done this, the polite man on the other end has said to me: “Well, how about we waive the fee for another year, would that convince you to stay?” That’s when you say: “Why yes, yes it would.”
I would actually cancel for real after about three years though. At this point, you’ll have had to pay that $80, and though that’s not so bad spread out over three years, it gets tedious once it becomes a regular thing. Plus, there are other cards to explore. And listen, Mike Dang may disagree with me here, but I’ve learned that so long as you keep your oldest credit card open, shutting one down every few years leaves only the faintest ding in your score, a ding that smoothes over quickly since you are a goody-two-shoes about credit, and are never late with your payments.
For advanced techniques, the most lucrative way to use your points, a real-life example and your final takeaway, continue reading at The Billfold.
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