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How to accumulate airline miles and points for free
This is a somewhat complicated process for the newbie so I will focus on the fundamentals of playing this game. I will avoid mention of any specific credit cards program as they often change every few months. However, from my experience the fundamentals do not change. If one offers goes away, another one springs up .
In 2007 I accucumulated 200,000 free airline miles, $300 worth of gift cards , and 3 free hotel nights with almost no out of pocket expense. That amounts to nearly $7000 worth of tax-free 'income'. I probably spent a total of 20 hours on this ( which includes the time it takes to read 'nonsense' like this ) which translates to an hourly rate of $350/ hour . That is like paying yourself CEO rates. Plus the more experience you get at this game, the system starts running itself. If you were ever in doubt, knowledge really is power.
The secret is to apply for credit cards and just make the minimum purchase to receive the bonus. Yes, applying for too many cards will hurt your credit score a little. It will lower it 10-30 points. However, this is almost insignificant if you already have good or excellent credit. Your credit score will re-gain the 10-30 points after a few months so it is nothing permanent. If you do not plan to borrow money in the near future, why even care about this?
However, if you don't have good-excellent credit you probably should not be playing this 'credit card' bonus game. Not because it can not be done, but because it means you do not have the financial discipline and responsibility for this to work to your advantage.
Some credit card companies let you receive multiple bonuses for applying for the same card multiple times. This is refererd to as 'churning'. Basically you apply for the card , make the minimum purchase to receive the miles then cancel and reapply for the card. Visit flyertalk.com and do a search for credit card churn and read what comes up. Or send me a note and I will try and respond by email.
For each card you can also apply for a business card as a sole-proprietor and use your social security number as the Tax ID. Even if you do not have a business you can always put employees as 1 and revenue of 0-20,000 or whatever their lowest revenue choice is. Alternatly you do not even have to put down anything for the revenue as often it is not a required field. If you have good credit and a good salary, you will surely be approved.
For all cards you should setup online accounts for them a few days after activating them. I attach my bank account to the online account so I can pay the bills online. This greatly speeds up things and makes things flow a lot smoother. Most cards you can set up to make 'automatic payments' so that your balance is paid in full automatically from the checking account you set it up with. I usually just use the 'Pay Now' links. A few tips about this are:
- Your balance usually can take a week or two to show up in full after you make your last purchase
- Bonuses post after you have made the minimum purchases, they DON'T depend on whether you paid the card off or not!
- Bonuses will post to your account a few days after your next 'Statement date'
One warning about online payments is to triple check your bank account number and routing number are correct. One wrong number and your payment will be returned and you can be charged a $30 returned service fee. Citicards charged me this, but typically you can call and ask them to waive it if it was the first time.
Some cards you should get are American Airline Citi Advantage cards, United Mileageplus cards, American Express Starwood Preferred Guest , Citi Thank You cards, Marriot rewards, Contintental Airlines OnePass ( if you are interested in Amtrak points, Contintental lets you transfer points 1-1 to Amtrak ). Keep in mind these cards are great because of the bonuses they offer. Some are churnable, some are not, please search the flyertalk forums for the latest and greatest details. Also avoid posting specific questions on churning since this is frowned upon as people do not like to let the cat out of the bag so to speak.
If you are just looking for a good card to use for personal spending then you will need to do some more reasearch to see what is best for you. Cards that offer cash-back rewards are typically better than those that offer mile bonuses.
Other offers to consider are opening accounts with Ameritrade and Fidelity. You can get 25,000 bonus miles for opening an account with $50,000 . They also offer 15,000 bonus miles with a $10k investment, however, since these offers are one per lifetime it is recommended to go with the biggest offer. I just put the money into a simple CD which always offer higher rates than I can get locally at my bank.
To get started go to Chase.com and Citicards.com and browse their list of credit cards. Start off with a few that have the annual fee waived the first year. It is best to keep the card for a year, then cancel it immeadiately after the year is up and you are charged the annual fee. When you call to cancel just say you are cancelling because of the annual fee and they will gladly cancel the card for you. The Citicards you can also cancel through your online account by just sending an email requesting them to close/cancel the account.
For specific advice on specific card offers it is best to post your question on FlyerTalk.com. Find the appropriate sub-forum relating to the airline your card belongs to and post your question there. Registering is easy and just takes 2 minutes. Most of my knowledge I have gained from reading and posting questions on FlyerTalk.com . Often Flyertalker's post links to expired offers which are better than current offers, but still work!
One should only use your miles for expensive and complicated international flights. Never use for domestic flights since one can always find cheap tickets using any budget airline. A rule of thumb is you get at least 2-3 cents per mile on your ticket. In other words 30,000 miles should get you a ticket worth at least $600-900. If you can not get 2-3 cents per mile, then better to buy the ticket directly with cash. Also almost all award tickets allow stopovers . So be sure and include that in your ticket to maximize the value of your trip, i.e get two vactions for the price of one! Award tickets also allow open jaws, i.e fly into one city and depart from a different city. You can use the train to bridge the gap which often makes for an adventurous vacation.
One tip I have found is I will first make my itinerary online. Then when I am in my local airport I will ask one of the agents to modify my itinerary to include the stopover of my choice. As long as they are not busy they will be very glad to oblige, and there is no charge as long as you do not ask them to issue the ticket. After they modify your itinerary you can go back to your online account and 'Purchase' the itinerary with your miles. This sure beats explaining your complicated trip to some trained monkey in a call center in who knows what country.
Sign up for an online spreadsheet from Google docs to track all your credit cards. At a minimum have these column/fields in your spreadsheet:
- OWNER - Me, Mom, Wife etc.
- CARD - Citi Aadvantage, Amtrak MC etc.
- RECEIVED - I usually put the applied for date in there till I get it. If your card has first year annual fee waived, it starts from when the cards is issued to you, NOT when you activate it.
- AMOUNT PURCHASED - Something about the minimum required purchase, i.e 250 spend
- STATUS - Paid off, still using , cancellled etc.
- ANNUAL FEE
- ACCOUNT USER - A small hint to remind you what the username/password is for your online account. Obviously use good judegement. I usually use the same for all personal credit cards and a different one for business cards.
- REWARDS - What the bonus is, i.e 20k miles, 10k points. After you receive the rewards, add the word 'received' to it so you do not have to keep checking that anymore and can think about when to cancel that card.
You may also have a concern about Identity theft. The risk is quite small, but there are several tips you can follow to minimize this risk. In fact doing these things will lower your risk compared to someone ignorant of all this who does not apply for many credit cards.
First you are entitled to a free credit report from each of the three reporting agences, Expiran, Equifax and TransUnion every year. So what you can do is pull your free report every four months from a different agency. Checking your report gives you peace of mind everything is in order. You can also take it a step further and place a free 'fraud alert' on your credit which lasts for 90 days. You can do this all online from your free credit report, it is quick and painless.
The fraud alert just tells credit card companies to take a few extra steps to verify you are really who you claim to be before they approve your credit. What this means is you will not be able to walk into a department store like Sears and get instantly approved on the spot for their Sears card. If you apply online ( which I only do ), you will typically get a message saying ' We have received your application but furthur processing is required to approve your application '. Then the card comes in the mail as usual after 10 days. So fraud alert really only prevents instant approvals, which is probably a good thing to prevent.
Also make sure you are running a firewall on your computer and do anti-spyware checks every month or so.
You obviously can not go crazy and apply for cards right left and center! Exercise moderation. Companies like CitiCards have specific policies that limit how many cards and applications they will consider over a 60 day and 90 day period. However, there really is no harm for being denied a card. The only downside is each application generates an inquiry on your credit report. If you have too many recent inquiries you can be denied a credit card. So just give it a rest for a month or two if that happends to you.
I suggest starting small and slowly try applying for more cards unti you get the notice you have overdone it. Since each person has different credit score and income, what works for one person may not work for another person.
In conclusion I will repeat the warning stated before:
If you dont have good-excellent credit you probably should not be playing this 'credit card' bonus game. Not because it can not be done, but because it means you do not have the financial discipline and responsibility for this to work your advantage.
Unfortunately people still try and play this game and lose . That is how the credit cards make their money. Credit card companies have no problems spending several hundered dollars to get one customer. They are glad to give the bonuses as long as you qualify. However when you start to carry a balance that is when the credit card company wins and you lose.
Sadly most people do not have much financial diligence so the credit card company wins more than it loses. I recently told a medical resident friend of mine about this and he got all excited. But he could not be bothered asking about all the details which I told him he needed to consult with me about. So he end up getting two useless cards with not so great bonuses and annual fees. Most likely he will end up maxing them out with his fat physician salary. Since he is young he will be a great source of revenue for the credit card companies for many decades!
I have no scruples about receiving so many bonuses from credit card companies as I promote this to all my friends. Most of them do not play the game correctly and lose by going in debt with the credit cards. So their loss is both the credit card company and our gain.