TAKEOFF - How To Travel The World For Next To Nothing by Marty Nelson

TAKEOFF HOW TO TRAVEL THE WORLD FOR NEXT TO NOTHING BY BRYCE CONWAY

TABLE OF CONTENTS TABLE OF CONTENTS Forward Author Introduction Overview SECTION ONE Chapter One: Why Travel Hack? Chapter Two: Extreme vs. Casual Travelers Chapter Three: Where To? SECTION TWO Chapter Four: Travel Hacking 101 SECTION THREE Chapter Five: Frequent Flyer Miles Overview Chapter Six: The Value of a “Mile” SECTION FOUR Earning Frequent Flyer Miles Chapter Seven: Earning Miles Overview Chapter Eight: Credit Card Sign-up Chapter Nine: Meeting the Minimum Spending Requirement Chapter Ten: Shopping Portals Chapter Eleven: Dining Programs Chapter Twelve: Flying Chapter Thirteen: Buying or Transferring Miles Chapter Fourteen: Other Promotions SECTION FIVE Chapter Fifteen: How to Redeem Miles Chapter Sixteen: How Many Miles Will Your Flight Cost? Chapter Seventeen: Zone-Based Vs. Distance-Based

Chapter Eighteen: Airline Alliances Chapter Nineteen: Picking Which Class to Fly SECTION SIX Chapter Twenty: Earning and Redeeming Hotel Points SECTION SEVEN Chapter Twenty-One: The 30,000 Foot View Chapter Twenty-Two: Common Mistakes SECTION EIGHT Chapter Twenty-Three: Reconsideration Calls Chapter Twenty-Four: The Chase 5/24 Rule Chapter Twenty-Five: Hidden Sign-up Bonuses Chapter Twenty-Six: Earning Sign-up Bonuses Multiple Times Chapter Twenty-Seven: Open-Jaws and Stopovers Chapter Twenty-Eight: Hidden City Ticketing Chapter Twenty-Nine: The Southwest Companion Pass Chapter Thirty: Travel Hacking With A Partner (2 Player Mode) SECTION NINE Chapter Thirty-One: The First Step SECTION TEN Resources Thank You! Appendices Appendix A: Insiderâ&#x20AC;&#x2122;s Guide to Credit Appendix B: Business Credit Card Overview Appendix C: Other Benefits of Credit Cards Appendix D: Acronym List

Forward This book has been updated as of February 2019. The original was published in August of 2013 and has been read by thousands of people all over the world. A lot has changed, so I figured it was time to change the book as well. Enjoy.

Author Introduction Hello and thank you for picking up my book, Takeoff: How to Travel the World for Next to Nothing. Let me be the first to congratulate you on taking the first step to exploring the world and making tons of memories along the way. I began my own travel journey during my senior year of college in Ohio. Graduation was fast approaching and my friends and I were scrambling to make plans for our last spring break. While going to school in the Midwest is great, it certainly makes it difficult to take a beach vacation on a college budget. Most people decide to road trip it, but the idea of driving 14 hours each way with five people in a compact car did not sound too appealing to me. With airfare prices way out of our budget, it was beginning to look like we would spend spring break sitting on a couch at home. Motivated by the allure of white sand and warm ocean water, I set out to find a solution. While researching methods of booking cheap travel I noticed a flurry of advertisements for airline credit cards on every website that I visited. The words free flight and sign-up bonus commanded my attention and I decided to go for it. After doing some quick research on which card had the best promotion, I signed up for my first travel credit card. I jumped on the airline’s website the day my sign-up bonus points hit my account, eager to see if they would be enough to get me a flight for spring break. Much to my surprise, I had enough points to fly there and back twice! Unbelievable! Feeling ambitious, I explored other destinations to see how far my points could take me. I ended up booking multiple flights so that I could spend the first half of spring break in Florida before flying to Las Vegas for the rest of the week. And I was able to do all of it for less than the price of a tank of gas. After returning from my trip I did some research on credit and credit cards to try to understand why everyone didn’t pay attention to points and miles to take advantage of their value. This led me to discover the world of points/miles and accumulate over 1,000,000 frequent flier miles in my first year. I have since taken dozens of trips to a variety of different destinations and spent next to nothing doing it. Now it’s your turn. Anyone can follow the same path to free travel that I have if they are given the right directions. This book is a great place to start. So sit back, relax, and enjoy your flight to a better life.

Overview In this book, I will show you how you can use frequent flyer miles to travel the world for next to nothing. I will combine my own experiences with my research to show you how the process works and how you can get started. It is important to note that the biggest obstacle most people face on their journey to traveling the world with reward points is their skepticism. Some of the components of travel hacking will go against pieces of conventional wisdom that you have likely been told. To overcome this obstacle, I will use personal examples from my own travel hacking as well as of a few readers who have followed my advice. I will also attempt to explain the “why” of travel hacking in addition to the “how.” While it may seem tedious at times, understanding how and why the system works is half the battle of becoming a travel hacker.

My Approach It’s no secret that there are a lot of books out there about traveling for cheap (thanks for choosing mine!). Many of them are great resources that have helped me to develop the knowledge that I have today. With that in mind, I am taking an approach that is somewhat different than most of them. Here’s how: 1. I approach travel hacking with the mindset of an investor. The advice that you will read in this book will help you save a ton of money on travel without compromising any of your personal financial goals. Having spent my entire career in financial services, I use my education and experience to ensure that everything that I recommend is in your economic best interests. 2. I keep things simple. Many other books and websites skip over the basics and rush straight into some of the more advanced topics in travel hacking. I take the time to explain how everything works before showing you how to take your cheap travel to the next level. 3. I focus all of my efforts on the “big hits.” There are a number of opportunities to earn small amounts of travel points by taking surveys, signing up for email lists, posting on social media, etc. While these opportunities can provide some value, they generally are not worth the amount of time that you put into them. For that reason, I have chosen to limit the scope of this book to opportunities that I believe to be worthwhile to you.

Other Services In addition to the knowledge found in this book, I offer a few other services to help you get the most out of your travel hacking experiences.

1. Periodic Updates: You can follow me on Twitter (@10xTravel, Instagram (10xTravelBlog), and visit my website (www.10xTravel.com) to get information on the best deals, promotional offers, and trends occurring in the world of travel hacking. Also be sure to check out my Insider’s Facebook Group, which features 25,000+ readers sharing the best tips and tricks available anywhere. 2. Q&A. Have a quick question about anything discussed in my book? Feel free to email it to me at bryce@10xtravel.com. I always love to hear the stories that others have to share and am happy to answer any questions that you may have. I read every single email I receive. 3. Consulting – Love traveling but don’t want to take the time to become a travel hacking expert? I can do all of the work for you. From building a customized plan to booking your trips for you, I can help you through the entire process. I am also available to guide you through complicated hacking methods discussed in this book to accumulate hundreds of thousands of airline miles. To learn more about my consulting services you can email me at bryce@10xtravel.com.

What’s in it For Me? I also want to take a second to explain to you why I am giving away all of my material for free. Surely I could generate more income by charging for my e-book and related services, right? In fact, that is exactly what I used to do. I sold many copies of this very book for upwards of $40 apiece. But today I don’t have to do that thanks to my affiliate relationships with banks and credit card companies. Which means YOU get access to all of my best material, absolutely free. It’s a win-win for everyone. All I ask in return is that you submit any future credit card applications by clicking the banner or links at 10xTravel.com/credit-cards. When you do this you’ll be redirected to one of our partner sites, where you will be able to apply for just about any credit card on earth. They’re the exact same deals that you’ll find publicly, but when you go through my website I receive a small affiliate commission that allows me to give away all of my time and knowledge at no charge to you. Just a couple of extra clicks by you allow us to give away this book and run our site completely free of charge. Sound good? Great, and thank you in advance! Let’s keep moving along.

Important Disclaimers Many travel hacking resources neglect to spell out the risks associated with travel hacking before jumping into how it works. As I mentioned earlier, I believe it is important that you understand the “how” and “why” of travel hacking before getting too deep into it. While travel hacking is pretty easy to do (especially with a guide like this book), straying from the established principles can have serious consequences. The most common and possibly the most dangerous mistake that I see people make in the world of travel hacking is letting their spending get out of control. Travel hacking relies heavily on credit card promotions to amass travel points and therefore requires you to build up sizeable credit limits. If you are the type of person who struggles to keep your spending levels in check, I would highly advise you to stop reading right now and work on addressing that issue first. Your credit is one of the most valuable assets that you own and no amount of travel points will ever make up for the damage that can be done by a low credit score. Another risk associated with travel hacking is credit score risk. If you consistently do not pay your credit card bills on time your credit score could drop significantly in a short period of time. As I mentioned, your credit is one of the most valuable assets that you own and ruining it will have lasting effects on your financial well-being. Because of this, I have built a number of failsafe measures into my program to make sure that your score stays safe. I also have to tell you that I am not a licensed financial advisor, lawyer, or accountant. None of the advice contained in this book should be substituted for the advice offered by any of these professionals. And finally, it is important to note that none of these risks will be significant if you generally follow the advice presented in this guide. These risks are only applicable to individuals who purposely stray from established travel hacking principles. Now that we have all of that out of the way, let’s get started.

SECTION ONE Getting Started

Chapter One: Why Travel Hack? Before we get into the meat of this book, letâ&#x20AC;&#x2122;s start with the most important question on your mind: Why should I care about travel hacking? After all, there are millions of other things that you could spend your time and money on. Travel hacking offers three major benefits.

1. It Allows You to Explore the World Travel hacking gives you the opportunity to explore parts of the world that you would never see otherwise. Destinations that you thought were previously unreachable are now available for you to visit when you please. There is a lot to see and do in this world and travel hacking can take you there.

2. It Can Help You Save Money Travel hacking can help you save a lot of money by allowing you to book flights, hotels, and other types of travel for next to nothing. The amount of money that you save will depend on how involved you want to be, ranging from a few hundred to multiple thousands of dollars.

3. It Offers You Freedom Lastly, travel hacking gives you the opportunity to enjoy a new lifestyle of freedom that comes with the ability to travel frequently. You can say goodbye to the days saving diligently for one vacation a year and hello to a world of new cultures, exotic foods, and spontaneous trips to the other side of the world. Your travels will allow you to make lifelong memories while learning to see the world in a whole new way. The amount of time you put in determines the degree to which you will benefit from travel hacking, and it is completely up to you.

Chapter Two: Extreme vs. Casual Travelers When it comes to the time commitment of travel hacking, I have found that people generally fall into one of two groups. “Extreme Travelers” are people who take advantage of every frequent flyer mile opportunity available to them. They utilize sign-up bonuses, one-off promotions, and optimize their credit spending to earn every frequent flyer mile possible. They typically earn more miles than they know what to do with and take multiple exotic vacations each year. These individuals also spend a good deal of time posting and engaging in my Insider’s Facebook Group. “Casual Travelers” are individuals who take advantage of the larger frequent flyer mile opportunities and don’t bother with the smaller ones. They enjoy the discounted traveling but are not interested in pursuing some of the more complex or tedious opportunities to earn frequent flyer miles. Simply earning enough frequent flyer miles to take a couple free trips each year is more than enough for casual hackers. As I mentioned, one of the best things about travel hacking is that the time commitment is completely up to you. Even a very minimal effort could help you book three or four free flights every year. Whether you want to dive in head first and travel to as many places as possible, or take the more casual route and book free flight here and there, you will find the material to help you in this book. I have done my best to explain everything simply while also including enough advanced material for even the most hard-core travelers. It’s important that you do what works best for you, so don’t feel like you have to pick your level of involvement right now. You may even find yourself jumping back and forth between the two as your other commitments in life come and go. With that in mind, let’s move on to the most exciting chapter of the book. Choosing the destination you want to visit.

Chapter Three: Where To? If you could leave tomorrow for any destination in the world, where would you go? I have always found this to be a great icebreaker question because it is something that most people have thought about. After all, who doesn’t dream of dropping everything and flying off into the sunset? Maybe you have always wanted to swim in the Mediterranean Ocean or reconnect with that old friend who you haven’t seen in years. Or maybe you just want to escape from the day to day grind for a while (I hear that Bali is beautiful in the spring). Regardless of where you want to go, I want you to keep that destination in the back of your mind as we journey through this book. Write it down, print out a picture, or even tweet it if you have to. Do anything that will help you remain focused on that goal. I will even give you a space to write it down just in case you printed this book out. My dream destination is __________________________________________________________. Take a minute and think about it if you need to. There are a lot of great places to see in the world and I would hate to rush you. Did you pick a destination? And did you write it down, print a picture, or tweet where you want to go? If so, then congratulations! You have taken the first step to reaching that goal. Unfortunately, picking a dream destination is as far as most people go in their journey to become travel hackers. Many give up because they think that travel hacking is “confusing” or “time-consuming,” and are left with only a well thought out answer to the question above. But with a goal in your mind (one that you hopefully wrote down) and the guidance provided by this book, I am confident you will be heading to your dream destination in no time! Oh, and don’t forget to pack your swimsuit!

SECTION TWO Intro to Travel Hacking

Chapter Four: Travel Hacking 101 What is Travel Hacking? Now that you understand what travel hacking can do for you, let’s start from the beginning. What exactly is travel hacking? Here is a technical definition:

Or put more simply, travel hacking is a continuous process of obtaining frequent flyer miles and redeeming them for travel. Here is a simple visual of how it works:

Looking at this, we can determine that travel hackers have two main goals. Goals of a travel hacker: 1. Earn as many frequent flyer miles as possible 2. Redeem those frequent flyer miles to book as much travel as possible That’s it! The entire world of travel hacking revolves around the desire to accomplish those two simple goals.

Where travel hacking becomes more advanced is in the strategies used to accomplish these goals. There are dozens of tactics ranging from simple promotions to complex financial transactions that are used to earn and redeem frequent flyer miles. We will talk about a few of these strategies as we move further into the book. In the meantime, just remember to always refer back to this model when you don’t quite understand something. No matter how advanced a travel hacking strategy is it will always be some sort of method of earning frequent flyer miles or redeeming them for travel.

Is This Legal? This all sounds great, but is it legal? In one word, yes! Travel hacking is 100% legal and is done by thousands of people all over the world. There are hundreds of blogs, online communities, and even meet-ups for people who are interested in the subject. And don’t worry, there are no secret passwords, knocks, or handshakes required. These resources are open to anyone and everyone who is interested in participating. The main reason that travel hacking gets a bad reputation is its name. The word “hacking” is commonly associated with criminal activity related to computers or phones. For this reason, it is important to make the distinction that travel hacking is in no way related to computer hacking, phone hacking, or any other sort of criminal activity.

So why do they call it travel hacking? The word “hacking” is commonly used to refer to anything that is “done in a clever and non-obvious way,” which is a great description for how travel hacking is done. By using clever and non-obvious ways to amass frequent flyer miles and redeem them for travel, travel hackers are able to travel the world for pennies on the dollar. With that in mind, let’s start looking at how travel hacking works. The first step is learning what frequent flyer miles are.

SECTION THREE The Basics of Frequent Flyer Miles

Chapter Five: Frequent Flyer Miles Overview What Are Frequent Flyer Miles? Frequent flyer miles are the currency that pays for your free travel. They can be earned in a variety of different ways (which we will cover a little later) and redeemed for free travel. Just like we did with travel hacking, let’s start with a technical definition.

(As a quick side note, I will use the terms “miles” and “points” somewhat interchangeably throughout the rest of the book. So, for example, don’t get confused if I say “Southwest miles” and “Southwest points” in back to back paragraphs. I am referring to the exact same thing.) The more frequent flyer miles you have, the more free travel you can book. Pretty easy so far! Most companies have their own frequent flyer program, so frequent flyer miles can’t always be used interchangeably between different airlines. For example, if you have 50,000 United Airlines miles and 50,000 Delta miles you cannot combine them to have 100,000 miles. We will cover this in more detail a little later when we talk about redeeming frequent flyer miles. And although they are called frequent flyer miles, airline companies are not the only ones who use them. You can also earn and redeem miles with hotels, banks, credit card companies, and even rental car companies. (This is where they are typically referred to as “points” or “rewards.”) Frequent flyer miles are used by hundreds of businesses today, but that wasn’t always the case. To help you understand how and why travel hacking works we need to take a look at how frequent flyer miles came to be.

A Brief History on Frequent Flyer Miles The first airline rewards program was created by Western Airlines in 1979 and was called the “Travel Pass Program.” It rewarded the company’s best customers by giving them a $50 travel certificate after they completed five one way flights. How the times have changed! In May 1981, American Airlines launched their own rewards program, called AAdvantage (which it is still called today). AAdvantage introduced the concept of earning “miles” instead of travel certificates, making it the first modern frequent flyer program in the world. Other airlines and hotels followed suit shortly after and the frequent flyer miles industry was born.

As more and more frequent flyer programs were created, companies started exploring new ways of using frequent flyer miles to attract customers. They began to offer frequent flyer miles for things like credit card sign-ups, online shopping, and other special promotions. These practices opened the door for savvy individuals to game the system and thus created the concept of travel hacking. Today over 180 million people are enrolled in some sort of frequent flyer program and have earned more than 14 trillion miles. The value of those points is greater than $700 billion and continues to grow by about 11% annually. Here are a few more statistics on frequent flyer programs: ● ● ● ● ●

54% of frequent flyer miles are earned from non-flying activities 15-20% of frequent flyer miles are never redeemed Credit card promotions are the leading source of frequent flyer miles The average person earns just over 11,000 miles per year Over 300,000 people have earned 1 million points or more in their lifetimes

Source: Frequent Flyer Services

Why Do Companies Use Frequent Flyer Programs? Companies use frequent flyer programs to encourage you to do business with them instead of their competitors. When you receive frequent flyer miles from a company you feel loyal to them and are much more likely to continue buying their products. This is called brand loyalty, and it is very valuable to companies such as airlines and banks because of how competitive their industries have become. The more brand loyalty that these programs can create, the more profit they will make. This is no different than why Starbucks has Starbucks rewards, or why your local grocery store has a fuel perks program. Put simply, companies use frequent flyer programs to make more money. So if these loyalty programs are so important, why do airlines and banks create systems that can be so easily manipulated to get free flights? That question can be answered by taking another look at the statistics above. The average person only earns about 11,000 frequent flyer miles per year, which is less than half of the roughly 25,000 miles needed to book a free flight. On top of that, only about 80% of those miles will ever be redeemed.

This means that many people will never cash in on the miles they earn because they are unaware of how to make good use of them. The profits that airlines make off of individuals like that far outweigh the costs of the free flights that are obtained by travel hackers. But isn’t travel hacking essentially a way of ripping off the airline companies? It is important to remember that frequent flyer programs are a source of profit for airline and credit card companies due to the large number of people who don’t utilize them efficiently. They are essentially counting on you to not pay attention to how their frequent flyer programs work! If they weren’t making money by offering large amounts of frequent flyer miles for promotions then they wouldn’t continue to do it. Travel hacking is simply a way of beating the airline and credit card companies at their own game. As long as there are frequent flyer programs, there will be opportunities to travel around the world for free. So how do you get started? Step one is to sign up for frequent flyer programs.

How to Sign Up For Frequent Flyer Programs Before you can earn miles with an airline company you have to become a member of their frequent flyer program. Signing up is incredibly easy and it is always free. Simply go to the website of the airline that you would like to join and look for the frequent flyer miles area. Click on “join now” and enter your information. After completing the sign-up process you will be given a frequent flyer number and will likely receive a frequent flyer card in the mail. Be sure to save your frequent flyer numbers on your Frequent Flyer Miles Spreadsheet so that you don’t lose them. It is also a good idea to save this spreadsheet somewhere where you can find it. If you have a smartphone it is easiest to keep your spreadsheet in a cloud account like Dropbox so that you can access it on the go. This will certainly come in handy as you rush through an airport to catch your flight. Always make sure that you have your frequent flyer information squared away before taking any flight. Whether you have to join as a new member or verify that you are receiving frequent flyer credit for your flight, it is important to do it before you check in. While some airlines will let you go back and claim points for flights you have already taken, most of them will not. Now that you know how frequent flyer miles work, let’s take a look at what a “mile” really means. 17

Chapter Six: The Value of a “Mile” Determining the value of a “mile” is where frequent flyer miles can get tricky. Let’s start with the most basic concept. A frequent flyer mile does not always equate to the physical distance of a mile. As we discussed earlier, frequent flyer miles are a currency and are earned and spent just like any other form of money. Then why do we call them “miles”? Here’s why: ▪

When earning miles you typically earn one mile for each mile that you fly. (e.g. a trip from New York to Los Angeles, a distance of about 2,400 miles, will earn you roughly 2,400 frequent flyer miles).

▪

When redeeming miles, however, the redemption amount does not reflect the distance traveled. Standard round-trip domestic flights cost about 25,000 miles, which is roughly the distance around the equator of the earth. So having 25,000 frequent flyer miles does not mean that you can actually travel 25,000 geographical miles.

Miles vs. Miles Another important thing to remember is that not all frequent flyer miles have the same economic value. As I mentioned, frequent flyer miles are a currency (think dollars vs pesos). And like any currency, the only way to determine their value is to see what you can buy with them. Let’s look at an example to see how this works. Note: This example reflects two actual card offers I have received. Let’s say that you have just received two credit card offers in the mail. The first offer is for a travel rewards credit card and the second is for a local bank credit card. Both cards offer a sign-up bonus of 25,000 “points.”

Which one do you choose? 25,000 points is 25,000 points, right? Not exactly. In order to make an accurate decision, we have to calculate the â&#x20AC;&#x2039;Value per Mileâ&#x20AC;&#x2039;, which is done by dividing the cash value of the reward by the number of miles redeemed. $ Value of Award Value per mile = Total Miles Redeemed The first step to solving this equation is to see what you can get when you redeem your 25,000 miles/points. I took a look at the rewards website for each credit card and here is what I found:

Knowing this, we can now calculate the value per mile of each award:

So the travel credit card offers you almost 9x more value than the local bank card! The travel card is clearly the better choice in this situation. From an economic standpoint, the sign-up bonus is worth roughly â&#x20AC;&#x2039;$265â&#x20AC;&#x2039; more than the card offered by the local bank. This method can be used to determine the value of any frequent flyer miles offer and is commonly used by the experts. I highly recommend that you use this simple calculation when deciding which credit cards or promotions to sign up for.

Keep this in mind when evaluating credit card offers! I can’t tell you how many emails I get from people who are incredibly excited to have received an offer for “100,000 bonus miles,” only to find that the value of said miles is less than most cards offering just 40,000 bonus miles. This is the grown-up equivalent of the old “Hey kid, want to trade 2 pennies for 1 dollar? 2 is greater than 1 so this is a great deal,” that plays out on playgrounds all over the world. Don’t fall for it. You can also email me (bryce@10xtravel.com) any time you want to know if a particular offer is worth grabbing. It takes me ~10 seconds to spot which offers are great and which are traps, and I am always happy to help my readers make the best choice for their particular situations.

Transferable Points/Miles The most valuable types of points/miles are ones that can be transferred to a number of different airlines and hotel program, often referred to as “transferable points/miles.” The ability to transfer these points to multiple travel partners gives you a ton of options on how to use them, which makes them more valuable than points/miles that are tied to a specific airline. Think of it like this: Would you rather have a gift card to Chipotle or a gift card that works at Chipotle, KFC, Arby’s, Wendy’s, Taco Bell, Starbucks, and McDonalds? Exactly. The most widely known transferable points/miles programs are Chase Ultimate Rewards, American Express Membership Rewards, and Citi ThankYou points. Let’s look at Chase Ultimate Rewards (“UR”) as an example. Chase UR points can be transferred to the following travel partners at a rate of 1:1: ● Southwest Airlines ● United Airlines ● British Airways ● Singapore Airlines ● Iberia Plus ● Air France/KLM ● Aer Lingus ● Virgin Atlantic ● Hyatt ● Ritz-Carlton ● Marriott ● IHG 21

Meaning that any point earned with Chase Ultimate Rewards is potentially a point with Southwest, United, British Airways, Hyatt, or any of the other 13 transfer partners listed above. So, for example, if you are evaluating 50,000 United miles vs 50,000 Chase Ultimate Rewards points there really is no comparison. The Ultimate Rewards points are significantly more valuable becuase they can be used with so many different hotels and airlines (and can be transferred to become 50,000 United miles anyway). Taking that one step further, the same can be said for spend put on the United credit card vs spend put on a card such as Chase Sapphire Preferred (which earns Chase Ultimate Reward Points). Why would you want to earn points that are tied only to United Airlines when you could earn points that can be used with United and 12 other travel partners? You wouldn’t. Transferable points are often overlooked by new travel hackers because they don’t immediately associate them with specific airlines/hotels. It’s not like you have ever been sitting in an airport and seen a “Chase Ultimate Rewards” plane taxi past the window. But when you dig a little deeper into how transferrable points/miles work it becomes clear why they are so coveted in the points and miles world. Now that you know the ins and outs of frequent flyer miles, let’s take a look at some of the best ways to earn them.

SECTION FOUR Earning Frequent Flyer Miles

Chapter Seven: Earning Miles Overview As I mentioned in Travel Hacking 101, the first goal of any travel hacker is to earn as many frequent flyer miles as possible. After all, more frequent flyer miles means more free travel and more dream destinations.

And as you are about to discover, earning frequent flyer miles is not rocket science. There are dozens of ways to earn miles that can be taught to just about anyone. With just a little bit of time and effort, you could earn hundreds of thousands of frequent flyer miles each year. The tricky part about earning frequent flyer miles, however, is doing it in a way that does not require you to increase the amount of money that you are spending.â&#x20AC;&#x2039; â&#x20AC;&#x2039;An increase in spending would eliminate any savings that you may earn from travel hacking and would be no different than paying for travel with cash. So before we go any farther, we need to add a third goal to our list. Goals of a travel hacker: 1. Earn as many frequent flyer miles as possible 2. Redeem those frequent flyer miles to book as much travel as possible

3. Accomplish goals 1 and 2 with as little spending as possible Keep this concept in the forefront of your mind as you finish this book and embark on your own travel hacking journey. We will talk about how to apply it to each situation as we continue to move through the book.

Now that we have that covered, letâ&#x20AC;&#x2122;s get started on earning those miles. In this section, we are going to look at the 6 best ways to earn frequent flyer miles. 1. 2. 3. 4. 5. 6.

Credit Card Sign-ups Shopping Portals Dining Programs Flying Buying or Transferring Miles Other Promotions

Chapter Eight: Credit Card Sign-ups Credit card sign-up bonuses are by far the fastest and most effective way of earning frequent flyer miles. A large portion of the points I have earned in my lifetime have come from credit card sign-ups and that is unlikely to change anytime soon. In order to earn the more than 1,000,000 frequent flyer miles I earned from credit card sign-ups in my first year, you would have to book enough airline tickets to fly around the world about 40 times. While that may sound like fun to some people, I prefer to earn my miles from the comfort of my couch.

Aren’t Credit Cards Dangerous? Using credit cards to earn frequent flyer miles is a difficult concept for many people to grasp because it goes against conventional credit card wisdom. You have probably been told numerous times that credit cards are dangerous and should be avoided when possible. While it is well-intentioned, this advice is completely false. Applying for and using credit cards responsibly will actually help to improve your credit profile over time. This will result in a higher credit score, a better chance of being approved for credit cards or loans, and lower interest rates on any existing and future debt. The key is to use the credit cards responsibly! If you do not pay off your balance each month this strategy can backfire very quickly. Your credit score could fall, making it difficult for you to qualify for any sort of credit card or loan. As I mentioned in the disclaimer, your credit is one of the most valuable assets that you own and ruining it can have lasting effects on your financial well-being. So be careful! Because this is such an important topic, I have put together an Insider’s Guide to Credit to give you an idea of how it all works. You can find it in Appendix A of this book. The Insider’s Guide to Credit will give you a better understanding of how credit cards and credit scores work as well as provide a few tips for how to build and maintain a solid score. We will also revisit this topic a little later when we talk about bringing it all together.

Did you get a chance to read the Insider’s Guide to Credit? It only takes 5 minutes and it is an important step to getting you to your dream destination. If so, you are ready to learn how to use credit card sign-ups to earn frequent flyer miles. Let’s take a look at how the process works.

Checking Your Credit Score The first step to earning miles with credit card sign-ups is to check your credit score. While that might not sound like the most fun thing to do, it is crucial to know where you stand before you get started. If your credit score is not high enough to qualify for travel credit cards, it’s probably best to not even apply for one. Even just applying could slightly ding your credit score. This would \make it even harder for you to travel the world for free and would delay your plans to reach your dream destination! So in the interest of getting you to the beach, mountains, or wherever your dream destination may be, please be sure not to skip this step. There are two credit checking websites that are widely used in the travel hacking world: Credit Karma and Credit Sesame. Unlike most other credit score sites, they are completely free. You will never be asked for your credit card information in order to see your score. Simply click on the links above and sign up for an account. You will be asked for some personal info, which may seem like a red flag, but it is necessary in order to obtain your credit score. Rest assured these sites are reputable and safe. I have been using them for years and have never encountered any problems. In the interest of full-disclosure I need to tell you that Credit Karma and Credit Sesame don’t provide your actual credit score. They are only approximations. And while they are relatively accurate for folks who are just getting started, they can be incredibly inaccurate as you get deeper in to this hobby. I get at least a dozen emails per week that basically say “Help! My credit score just dropped and I don’t know why,” and every single one of them is due to Credit Karma or Credit Sesame miscalculating a credit score. Which is why I recommend also using Discover Scorecard to check your real FICO credit score. You don’t need a Discover account to use this service, but be aware that they are going to market to you like crazy. Just always check the value of any Discover offer (or any offer for that matter) before applying. In general, their cards are not as great as most others when it comes to travel.

The same goes for Credit Karma and Credit Sesame. They are great tools for keeping an eye on your credit metrics, but their advice on credit cards and other financial products is usually terrible. Ok, hopefully now you know what your credit score is (or how you can check it in the future). Before we go any further I need to introduce you to an important travel hacking rule.

If your score is lower than a 700 you will likely not be approved for many travel cards. While this will delay your plans for getting to your dream destination, it doesn’t mean you have to quit! Take a look at the Improving Your Credit Score section in the appendix and start working on raising that score. You will be amazed how fast it can improve. You’ll be on a plane in no time! I also wrote a book on how to repair your credit for anyone who needs more substantial help. It’s not free, but it’s the best guide ever created on the subject and we will literally pay you if it doesn’t work for you. If your score is above a 700 then great, you can move on to the next step.

Picking Which Credit Cards to Sign Up For There are a ton of credit cards to choose from and picking the right one is important. As we saw in Miles vs. Miles, many offers can appear to be the same at first but can have very different values. So how do you choose the right one? That choice can be made by looking at the 6 characteristics of a credit card: 1. 2. 3. 4. 5. 6.

Sign-Up Bonus Spending Rewards Annual Fee Minimum Spend Card Affiliation Other Benefits

Let’s take a look at them one at a time.

1. Sign-Up Bonus The sign-up bonus is the number of points/miles that the card offers as an incentive to sign up. Most credit cards will offer between 25,000 and 50,000 miles with occasional offers up to 100,000 miles. In

general, the more miles offered the better the deal (though again there are some major exceptions to this rule). Don’t forget to calculate the Value per Mile just to be sure. Just like sales at your favorite store, most credit card sign-up bonuses will come and go throughout the year. Because you can only sign up for most credit cards once in a ~24 month period, be sure to only sign up when you can get the highest bonus. After all, you wouldn’t want to spend a fortune on a new TV when it is about to go on sale. In general, you should avoid signing up for cards that are offering less than 35,000 miles as a sign-up bonus. Chances are good that a higher offer will come along at some point. Before signing up for any credit cards I recommend that you check out the Credit Cards page on my website. There you can see all of the most up to date information on the credit card offers I recommend. I also publish a list every month of what I believe are the best offers available at any given time. Simply go to www.10xTravel.com/best-credit-cards to see it. You can also shoot me an email (bryce@10xtravel.com) and I’ll happily help you pick out the card that is best for you.

2. Spending Rewards In addition to the points you receive as a sign-up bonus, many credit cards will give you points for every dollar you spend on them. Most cards offer 1 point per dollar spent but some will offer higher amounts for certain spending categories, stores, or promotional periods. For example, Chase Sapphire Preferred (one of my personal favorites) offers 2x points on all dining and travel spend. While spending rewards are valuable, it is important that their value is kept in perspective when compared to sign-up bonuses. You would have to spend $25,000 on dining and travel with the Chase Sapphire Preferred to earn the amount of points (50,000) that you get with the sign-up bonus. So while spending rewards should be considered before signing up for a credit card, they are still secondary to the sign-up bonus that is offered by the card.

3. Annual Fee The third thing you need to look for before selecting a credit card is the annual fee. Most travel cards have an annual fee between $40 and $450, but many of them waive the fee for the first year. This means that you can “test drive” the card for free, even earning the bonus, before having to pay an annual fee.

In most cases, once you earn the miles they are yours so you don’t have to worry about losing them should you decide to cancel the card. Here’s a good general rule to determine if you lose your points/miles when closing a card: Does the credit card company/bank own your points? If yes, you will lose them. If no, they are safe. For Example: Chase Ultimate Rewards Points: You’ll lose them because they are owned by Chase. American Airlines Miles: You keep them because they are owned by American Airlines. Hyatt Rewards Points: You keep them, they are owned by Hyatt. Capital One Venture Points: You’ll lose them. They’re owned by Capital One. Hopefully, this is starting to make sense. The best way to answer this question is to ask yourself which website you use to log in and redeem your points. If you log in to the same website that you use to manage your credit card account, the points will almost certainly be forfeited when you close the card. Anyway, back to the concept of open credit cards and potentially closing them in the near future. This is another concept that goes against traditional credit card logic. L ike me, I am sure you have probably heard that opening and closing credit cards just for the sign-up promotion will hurt your credit. This is entirely false. You can read about them in my Insider’s Guide to Credit if you haven’t already. While you always have the option to cancel a credit card if you would like, there are some occasions where you may want to keep it and pay the annual fee. There are three main reasons why you might want to do this: 1. The card offers you an anniversary bonus, (like 5,000 - 10,000 frequent flyer miles) that is more valuable than the price of the annual fee 2. The card has great spending rewards 3. The card has no annual fee Another thing to keep in mind is liquidity. Liquidity is a concept that is usually applied to finance but it is also relevant in the world of frequent flyer miles. We will talk more about liquidity in the Common Mistakes section.

4. Minimum Spend

Many credit cards will require you to meet a minimum spending amount before you are given the miles offered by the sign-up bonus. These amounts typically range between $500 and $5,000 and you usually have 2-6 months to meet them. The most important thing to remember about this characteristic is that you should never sign up for a credit card if you cannot meet the minimum spending requirement. If you don’t meet the minimum spend you won’t be able to receive the sign-up bonus miles. You also will also likely be unable to apply for the card again in the future. This is a good time to remind you of the third rule of travel hacking that we covered at the beginning of this section. It can be very easy to justify spending money simply to meet your minimum spending limits. This is incredibly dangerous and can lead to some serious consequences if you are not careful. Luckily, I have a number of tricks to help you meet the minimum spend that we will cover in the next chapter. Although most cards have some sort of minimum spending requirement, some cards will give you your sign-up bonus “after first purchase.” Your first purchase can be absolutely anything, even something as small as a cup of coffee. These cards are easy to add to your portfolio so always keep an eye out for them.

5. Card Affiliation Every credit card is affiliated with an airline, hotel, or some sort of financial company such as a bank. This affiliation determines what type of points you will earn with each specific card. Affiliations are easy to determine because they are usually stated in the name of the credit card. The Delta Skymiles card will earn you frequent flyer miles with Delta, the Hilton HHonors Credit Card will earn you hotel points with Hilton, etc. Credit cards that are affiliated with financial companies (banks, credit card companies, etc.) are generally the best because the points can be transferred to that company’s partners, which include multiple airlines, hotels, and other travel companies. This gives you more ways to redeem your miles, making them more valuable than miles that are tied to a specific airline. When choosing a card, try to pick one that is affiliated with an airline that you typically fly with or that flies to the location that you would like to visit. The same concept applies to hotel points. Frequent flyer miles are only valuable if you are able to use them in a way that is beneficial to you. I also want to remind you one more time to look past the card names and dig into what the points can do. Many people never consider cards like the Chase Sapphire Preferred or the Citi ThankYou Premier because they have never seen a “Sapphire Airlines” or “ThankYou Hotel.” But both of these cards earn points that can transfer to dozens of airlines and hotels that you have heard of and will likely use.

6. Other Benefits 31

The last thing to consider before signing up for a credit card is the other benefits that it offers. The most common benefit to look for is no foreign transaction fees. Foreign transaction fees are additional fees (typically 3%) on all purchases made outside of the United States. While most cards have foreign transaction fees, there are a few major travel cards that do not. I always try to keep at least one card with no foreign transaction fees in my wallet at all times just in case I want to book a spontaneous trip to a foreign country. You never know when the urge to plan an international trip will sneak up on you. Some other benefits to look for are airline/hotel status, extended warranties on purchases, rotating category bonuses, and specific store discounts. You can find a more detailed overview of these features in the appendix. Although these benefits are not as vital as the other characteristics of a credit card they are still important to note before applying for a new card. We will talk about credit card strategy a little later in the book so please hold off on applying for cards for now.

Business Credit Cards Another way to take advantage of credit card signups is to apply for business credit cards. Business credit cards are very similar to personal credit cards with the exception that they are designed to be used by small businesses. However, there is no legal requirement that you own a “traditional small business” in order to qualify for a business credit card and business credit cards have zero impact on your taxes. Many people are able to qualify for business cards with their side hustles or even their day jobs. Business cards have the same six characteristics of a credit card that we just discussed and can be a great source of frequent flyer miles when used correctly. Applying for and using business credit cards is a bit more complicated than doing so with personal credit cards. I don’t recommend trying this as a beginner. If it is something that you are interested in, however, I have included an overview in the appendix. You can also shoot me a quick email (bryce@10xtravel.com) to discuss if business cards might be an option for you.

Final Thoughts on Credit Cards For those of you who wish to take a casual approach to travel hacking, credit card sign-ups might be the only method that you use to earn frequent flyer miles. Remember that each one will earn you roughly 40,000 to 60,000 points, enough to book a free flight or two. And for those of you who are not comfortable with this strategy, please don’t feel like you have to use it! You can still earn tons of frequent flyer miles with the other methods discussed in this book.

And finally, I want to remind you one more time to please be careful! If you are in any way uncomfortable with how this process works then please contact me before getting started.

Chapter Nine: Meeting the Minimum Spending Requirement As we discussed in the previous chapter, the minimum spending requirement is one of the six characteristics of a credit card that you need to consider before applying for a card. Failing to meet the minimum spend means that you won’t receive the sign-up bonus. Without the bonus, you can’t book that trip to your dream destination. Minimum spending amounts typically range from $500 to $5,000 and usually have to be reached within 2 to 6 months of opening the card. While I can’t speak for everyone’s spending habits, I know that my typical monthly spend is not enough to reach some of those higher minimum requirements. This is especially true when I am trying to meet 2 or 3 minimum spends at the same time. Like me, I am sure you could find things to buy that would help you meet the minimum spend if you had to. After all, who wouldn’t want a new 60-inch flat screen and a giant leather couch to go with it? But as we discussed earlier, travel hacking is only effective when you’re able to earn frequent flyer miles without increasing the amount of money you spend. Lucky for you, there are a number ways to spend money on your credit card that you might not be aware of just yet. Here are a couple additional options to help meet minimum spending requirements.

Plastiq Plastiq is a website that allows you to pay many bills using a credit card for a ~2.5% fee. This is a great way to meet minimum spending requirements without having to leave your house and for very little money out of pocket. To get started, visit Plastiq.com and create an account + add the credit card that you would like to put spend on. The entire process should take about 5 minutes. Next, contact the bank that issues your credit card and ask them to lower your cash advance limit to the lowest possible amount. This is important, as on some rare occasions a charge from Plastiq.com will code as a cash advance. By lowering your cash advance limit you are protecting yourself from the fees and interest associated with these charges. Once you have that all squared away you are ready to make your first payment.

Go back to Plastiq and click “Start a Payment”, then “add new recipient”, and search for the entity that you would like to pay. Note that not every bill can be paid via Plastiq, so there is a chance that you won’t find the specific biller you are looking for. Then simply fill out the payment amount and due date before hitting submit. You’re done! Couple more things to know about Plastiq: ● ● ● ●

● ●

Sometimes it can take a few days for bills to be processed, so leave plenty of time before your due date. 7-10 business days is a good bet. Don’t use Plastiq to try to pay a friend just to generate spend on your credit card. They are quick to catch on to this and ban you. Plastiq will occasionally ask for an invoice or other proof of payment due, so again don’t try to falsify anything. You get $1,000 of fee-free dollars (basically $1,000 of bills paid through Plastiq at no fee) for each friend you refer to Plastiq (they get $500 FFDs), so be sure to tell your other travel hacking friends about it. You generally cannot use Visa cards to pay rent/mortgages with Plastiq. With a ~2.5% fee, Plastiq is probably not worth using to generate ongoing points. Only use it to meet minimum spending requirements on new credit cards.

Here are a few ideas of bills that you can pay with Plastiq: ● ● ● ● ● ●

Your rent/mortgage payment (not with Visa cards) Student loan payments Car loan payments Tuition Insurance Daycare

Gift Cards Buying gift cards can be another great way to add spend to your card and get the money back over a period of time. You can use your credit card to buy gift cards to your favorite retail stores, restaurants, and gas stations and it will count toward your spend. Most of these gift cards don’t have any additional costs so a $50 gift card to Starbucks will get you $50 worth of coffee, lattes, or whatever your drink of choice might be. Buying gift cards also gives you a good opportunity to take advantage of any category bonuses offered by your credit card. For example, if your credit card offers 2x points on all grocery purchases then you should buy your gift cards from your grocery store to maximize your frequent flyer earnings. That would allow you to earn double points while chipping away at that minimum spend!

Be careful! While they can provide a great opportunity to reach your minimum spending requirement, gift cards can be dangerous if they are not used carefully. There are two common ways in which this occurs. 1. Carrying around gift cards will likely cause you to spend more money. This is because people tend to view gift cards as “free money” and therefore spend it more quickly. After all, it is much harder to continue bringing your coffee from home when you know that you have a $50 Starbucks gift card in your wallet. 2. Gift cards can be lost or stolen. So be careful not to carry around hundreds of dollars of gift cards at all times.

Monthly Bills As annoying as they might be, monthly bills such as your cable, cell phone, internet, or even rent can be paid with your credit card. Switching these bills to your new credit card would allow you to accumulate spend without adding to the amount that you would normally spend. This is a great strategy to use if all of the other ones are still coming up short of that minimum spending requirement.

Other Less Conventional Options In the process of hacking over 1,000,000 points in less than a year, I was forced to come up with some pretty creative ways of meeting 3 to 4 minimum spends at once. Here are a few less conventional methods that I have successfully used. These should only be used as last ditch options after you have already used all of the previous possibilities.

Buying and Selling Concert Tickets Believe it or not, buying and selling concert tickets can be an effective way to meet minimum spending requirements. This works because tickets have relatively stable prices in the short run and popular concerts almost always have more demand than supply. The best method for doing this is to buy tickets the moment that they go on sale and immediately sell them in a secondary market for the same price that you purchased them for. This allows you to get cash back almost immediately and eliminates your risk of getting stuck with the tickets.

Buying and Selling Other Goods If you are really desperate to generate additional spend, you can also try buying and selling other goods such as office supplies, clothing, and electronics. This practice can be pretty risky and should only be used as a last resort.

Buying and selling goods in order to generate credit card spend really only works when you have access to a sale that most other people are not able to take advantage of. For example, many people buy items from office supply stores when they go on sale with the plan of reselling them online. Again, I do not recommend this for beginners. Be sure to do your homework before getting started. Congrats! You now know how to take advantage of credit card sign-up bonuses and how to meet the minimum spending requirements. Now letâ&#x20AC;&#x2122;s take a look at how you can earn frequent flyer miles by shopping.

Chapter Ten: Shopping Portals Shopping portals provide an opportunity to earn bonus frequent flyer miles on purchases that you make with many popular retailers. This is possible because many retailers will offer point bonuses on any purchases that you make through a credit card company’s online shopping portal. These bonuses typically offer 2 to 5x bonus points per $1 spent but can go as high as 25x for special promotions. To access a shopping portal simply log in to your credit card website (Chase, Amex, etc.) and look for the rewards section. Click on “shopping” and search for your favorite retailers. You can also check out the best deals to see which retailers are offering the highest promotions at the time. To demonstrate how this works we will use the Chase Ultimate Rewards Mall as an example. The Ultimate Rewards Mall is the most popular shopping portal on the market and is used frequently by most travel hackers. Let’s use J. Crew as the example retailer. Let’s say that I am in the market for a new pair of jeans. Because I’m pretty brand loyal to J. Crew, I already know where I’ll make my purchase. If I buy the jeans directly from a J. Crew store or on jcrew.com I would only receive the standard spending rewards that are offered by my credit card. So assuming that I earn a standard 1 point per $1 spent, a $70 pair of jeans would get me 70 points. But If I access jcrew.com through the Chase Ultimate Rewards Mall I will receive an additional 5 points for every $1 that I spend (the current J. Crew promo is 5 bonus points per $1 spent). Now my $70 pair of jeans will net me 420 points instead of just 70. So by using a shopping portal, I can earn an additional 350 frequent flyer miles with my purchase. I don’t know about you, but earning an additional 350 frequent flyer miles is definitely worth the extra two minutes of time that it takes for me to log in to a shopping portal. Now before you get too excited about the possibility of earning millions of points with shopping portals, I want to again remind you of what we talked about in the earning frequent flyer miles overview. Buying things just to earn points is no different than just paying for travel with cash. So please do not try to justify a shopping spree by calculating the number of frequent flyer miles that you will earn. I always decide exactly what I am going to buy before logging in to the shopping portal to make the purchase. This strategy has helped me avoid excessive spending and I would recommend it to anyone.

Chapter Eleven: Dining Programs Dining programs are very similar to shopping portals, the only exception being that they involve restaurants instead of retailers. â&#x20AC;&#x2039;Like shopping portals, dining programs provide an opportunity to earn bonus points on any money spent at participating locations.â&#x20AC;&#x2039; Bonuses are typically 3 to 5 points per $1 spent at any of the hundreds of participating restaurants across the country. To participate in dining programs you have to register your credit card online with the program that you would like to join. Every major airline has a dining program so I would recommend that you register with all of them. You can only register for one dining program on each of your credit cards so it is a good idea to spread your cards across as many dining programs as you can. I register every card that I have with a dining program just to be sure that I donâ&#x20AC;&#x2122;t miss out on potential earnings. While this is not a particularly fast way to rack up frequent flyer miles, the miles can certainly add up over time. But like any other method of earning miles, it is important to keep the potential earnings of dining programs in perspective. Assuming that you receive a bonus of 3 points per dollar spent, a typical $50 meal would earn you an additional 150 frequent flyer miles on top of your normal spending rewards. At a value of 1 cent per mile (which is a good benchmark), that is worth $1.50 in travel. At that rate, you would have to spend about $7,000 at restaurants in that one particular dining program to earn enough points for a free flight. So while these miles can add up over time, be careful not to justify going out to dinner just because of the potential earnings offered by dining programs.

Chapter Twelve: Flying While many of the miles earned by travel hacking can be earned from the ground, remember that you can actually earn frequent flyer points by flying. Unfortunately for most people, this is where their knowledge of frequent flyer miles starts and stops. (If you happen to know people who think like this, my book would make a great gift!) As we discussed in the Frequent Flyer Miles chapter, you should be a member of any airline’s frequent flyer program that you plan on earning miles in. If you don’t sign up before your flight then you might miss the chance to get credit for those miles. You will also want to verify that your frequent flyer miles number is linked to your itinerary before takeoff. You can do this by entering it when you purchase the plane ticket or when you check in at the airport. Don’t forget to keep track of all of your frequent flyer numbers in the Frequent F lyer Spreadsheet so that you don’t have to carry around a bunch of cards. For the tech-savvy folks, remember to save it to a cloud-based server for access on the go. So how many miles will you earn by flying? Let’s start with an important caveat to that question. You can only earn frequent flyer miles when you actually purchase your plane ticket. That’s right; you cannot earn frequent flyer miles if you book your flight with points. For that reason, flying is not a significant source of frequent flyer miles for most travel hackers. But just in case you happen to have paid for your flight, let’s take a look at what you can earn. As we discussed in T he Value of a Mile, you will earn about 1 mile for every mile that you fly. This amount will be closer to 1.5 miles per mile flown if you decide to book a Business or First Class ticket but it will generally not be more than 2 miles per mile flown. You can also earn frequent flyer miles for a different airline than the one that you are flying on as long as they are in the same airline alliance. Just make sure to specify which type of miles you would like to earn before takeoff. We will talk about how airline alliances work in the redeeming frequent flyer miles section.

Chapter Thirteen: Buying or Transferring Miles While you can technically “earn” frequent flyer miles by buying them, this is almost always a bad idea. The price that you will pay per mile is incredibly high and there are a number of other hidden fees that you will have to pay. Many times it is actually cheaper to just pay for the flight with cash. The only time that I would recommend buying miles is if you are just a few miles short of booking a trip and have no other way of getting them. I have only purchased miles one time in my life and it was because I was 3,000 points short of booking a weekend stay at a 5-star hotel in Paris. By paying another $21 to buy the miles I was able to book a $1,400 hotel stay for free. You can also transfer miles from one person’s account to another but this is also subject to a number of hidden fees and a terrible conversion rate. Like buying miles, this should only be used in situations where you need a small number of points and have no other way of getting them. At some point, you are going to see an ad or get an email saying something like “buy X airline miles now and get a 50% bonus”! It’s going to look tempting, but again I do not recommend doing this unless you have a specific and immediate use for said miles. Even when accounting for these bonuses, buying miles is almost always a bad move.

Chapter Fourteen: Other Promotions Airlines, hotels, and credit card companies will offer promotions from time to time that provide an easy opportunity to earn frequent flyer miles. These opportunities will typically arrive via email and fall into one of two categories.

Free Promotions Free promotions are usually small and involve some sort of social media activity or survey. These promotions occur pretty frequently and typically offer between 100 and 1,000 frequent flyer miles. Like purchasing miles, the only time that I would recommend pursuing these opportunities is when you find yourself just a few miles short of being able to book a trip. Otherwise, they are typically not worth the time and hassle it takes to pursue them.

Spending Promotions The other type of promotion that you will encounter is a spending promotion. Spending promotions are essentially sign-up bonuses that are offered on cards that you already have. They typically offer 5,000 to 10,000 miles when you meet a spending requirement in a certain amount of time. Spending promotions provide a great opportunity to use your new skills to do a quick Value per Mile calculation and determine if the promotion is worth your time. If you are able to reach the minimum spend without increasing your overall spending then I would encourage you to pursue it. Congrats! You now have the knowledge to start earning boatloads of frequent flyer miles. The next step is to learn how to redeem them for travel. In the next section, we will take a look at a few methods that will help you to get the most value out of your miles.

SECTION FIVE Redeeming Frequent Flyer Miles

Chapter Fifteen: How to Redeem Miles Before we dive into the ins and outs of how to get the most out of your frequent flyer miles, let’s start with what is likely the most basic question on your mind. How do I redeem my miles? Redeeming frequent flyer miles is very similar to booking a flight with cash. While the specific steps may vary by airline, it is generally a very simple and straightforward process. Let’s take a look at a step-by-step guide to see how it works. Step 1: Go to the website of the airline with whom you have miles that you want to use. Look for the frequent flyer area and sign in to your account with your frequent flyer miles number and password (hopefully you saved these on the Frequent Flyer Miles Spreadsheet). Step 2: Navigate to the booking page by clicking “Book Travel” or “Book flight.” This should bring up a page or tab that asks for the details of your desired itinerary. Step 3: Input your origin, destination, and the desired date of your travel. Then specify that you want to pay with frequent flyer miles by selecting “Award Travel” (also referred to as “Book Flight with Miles,” “Redeem Miles,” “Pay with Miles,” etc.). Step 4: You should now see a list of flights and the number of miles required to book them. Take a look at the options that are displayed and select the flight that you would like to book. Many airlines also have a calendar feature that shows you the prices on dates close to your travel. Step 5: After making your selections, click on “Book Flight” and enter any other information that is required to book the ticket. Be sure to write down the confirmation number for future reference. You will also likely receive an email with all of the details of your booking. That’s it! After a couple times you should be able to complete the entire process in less than 10 minutes. You can also book flights over the phone by calling the airline reservation hotline. Some airlines charge a fee for this service (usually $25 to $50) so be sure to check before calling.

Redeeming Transferable Points Another very common sticking point for new travel hackers is how to redeem transferable points such as Chase Ultimate Rewards, American Express Membership Rewards, and Citi ThankYou Points. It’s easy to be intimidated by them but the process is quite simple.

The thing to remember is this: Search every option, compare the prices, and select the best option for you. For example, let’s say you have 100,000 Chase Ultimate Rewards Points and need to book two flights from Chicago to Tokyo. Chase Ultimate Rewards Points can be redeemed via the Chase Portal or transfer to the following airlines: ● ● ● ● ● ● ● ● ●

Aer Lingus Air France British Airways Iberia JetBlue Singapore Airlines KrisFlyer Southwest United Virgin Atlantic

So simply start working your way down the list, making sure to write down each result. Then choose which is best for you and book! As you become more experienced with points/miles this process will become much faster and easier. For example, you’ll know that Southwest and JetBlue (or any of their partners) do not fly to Asia, so you can immediately scratch them off the list. You’ll also learn that British Airways Avios are almost always a bad choice for long-haul flights, saving you the time required to run that search. Again, the key to redeeming transferable points and miles is to simply search for each option and choose the best one for you.

Chapter Sixteen: How Many Miles Will Your Flight Cost? Now that you know how to redeem frequent flyer miles, let’s take a look at what you can get with them. Again, we will start by addressing the most basic question that is probably on your mind. How many miles does a flight cost? And more specifically, how many miles will a flight to your dream destination cost? While I can’t answer either of those questions exactly, I can teach you how to find the answer for yourself. There are two ways of doing this. The quickest and easiest way is to determine how many miles your flight will cost is to use a website called AwardHacker. AwardHacker is a website that allows you to view typical award redemption amounts for every major airline between any two destinations in the world. This allows you to quickly compare the amounts required by different airlines and pick which one is best for you.

A sample search on AwardHacker for Columbus, OH to Paris. Note that AwardHacker does not show you real time results.

I’ll say it again because this is a common sticking point. AwardHacker does not show you real time results. It simply tells you how many miles you can expect to pay based on each airline’s award chart. So you cannot actually book your award flight on AwardHacker. The best way to use AwardHacker is as a guide to tell you where to look. Then run a search on the specific airline’s website to see the actual price in miles. AwardHacker will tell you where to look, but you still have to do the actual looking part yourself. The other method to determine the cost of an award flight is to look at the award chart of the airline that you wish to fly on. Every major airline has an award chart that will tell you how many miles are required to book a flight between any two destinations. You can usually find these charts on their website. To show you how this works, let’s take a look at the American Airlines/OneWorld award chart for flights originating in the contiguous 48 states. *All prices reflect one-way fares

AA/OneWorld Award Chart as of May 2018. Looking at this chart, you can see that standard round-trip economy class flights on American Airlines flights have the following mileage costs. -Round Trip Within the US: 25,000 miles -Round Trip to Europe/South America: 60,000 miles -Round Trip to Asia: 70,000 to 75,000 miles These prices are somewhat consistent across all major airlines and serve as good benchmarks for determining how much your flight will cost. We will refer back to these numbers throughout the rest of the book so it might be helpful to make a quick note. Another important thing to note is that all award tickets are subject to availability. These prices that you see above are not guaranteed to be available on every American Airlines flight. Sometimes you will run an award search and find that there are no seats available, or that the price has gone up (in miles) due to high demand. So don’t expect to open your laptop on Thanksgiving and book a flight to Hawaii for Christmas for just 45,000 American Airlines miles round-trip. The best way to beat this is to book your trips as early as possible. Most airline schedules open for booking 11 months in advance, so try to book then if you can. Otherwise just keep checking back as often as you can to see if prices fall to a level that you can afford.

Chapter Seventeen: Zone-Based Vs. Distance-Based When it comes to redeeming frequent flyer miles there are two different types of models that airlines use. They are called “Zone-based” and “Distance-based” and each has advantages and disadvantages when compared to the other. Let’s take a look at how they work.

Zone-Based Zone-based models are the most common and are used by the majority of US airlines including American, Delta, and United. Pricing for zone-based models is consistent and pretty simple to understand. The world is split up into “zones” that generally reflect regions of the world (Europe, Middle East, North America, etc.) and you pay a certain amount of miles to fly from one zone to another. Let’s look at an example. As we just saw on the American Airlines/OneWorld award chart, flights between the North American zone and the European zone cost 60,000 miles roundtrip. So a flight from New York (North American Zone) to Paris (European Zone), a distance of about 3,600 miles, would cost 60,000 points. A flight from Los Angeles (North American Zone) to Moscow (European Zone), a distance of about 6,000 miles, would also cost 60,000 points. So regardless of the distance that you fly between zones the amount of points will not change. Think of zone-based pricing like a public bus fare. You pay a flat rate to get on the bus and can ride it as far as the line goes. The prices may change by bus line but are in no way related to the amount of distance you travel.

Distance-Based Distance-based awards work on a tier system that charges a set amount of points for each distance tier traveled. Let’s take a look at the British Airways award chart to see how this works.

Using this chart, you can determine the amount of points needed for your flight by adding up the total distance traveled. Keep in mind that the distance of your flight is the total amount of distance that you fly, including any connecting flights. So if you are flying from Los Angeles to New York, but connecting through Atlanta, you need to add the distance of each of those flights. Distance-based award charts are less common, with British Airways being the only major international airline to use one. Going back to my previous analogy, if zone-based awards are public bus fares then distance-based awards are taxi fares. The amount that you pay is based on the distance that you travel, regardless of your origin or destination.

When to Use Each Type of Reward When deciding which type of rewards system to use, remember this one simple rule: Use zone-based rewards for long flights and use distance-based rewards for short flights. Distance-based awards are best used for “short hop” flights such as Los Angeles to San Francisco, Columbus to Chicago, etc. These flights can cost as little as 10,000 frequent flyer miles round trip instead of the flat 25,000-mile price that you would pay with a zone-based airline. This is also a great reason why it’s important to have both types of points in your bank of frequent flyer miles. We will discuss ways to optimize your frequent flyer mile collection a little later in the book.

Chapter Eighteen: Airline Alliances Another way to maximize the value of your frequent flyer miles is to take advantage of airline alliances. Airline alliances are groups of airlines that have partnered together to allow you to use frequent flyer miles from one airline on any airline in the alliance. So instead of being restricted to flying on just one airline, you can now choose from over 20 of them. The airline industry has consolidated over the past few years, making airline alliances more prominent. This is great news for travel hackers because it gives you the opportunity to use your frequent flyer miles on more airlines around the world. There are currently three major airline alliances; Star Alliance, SkyTeam, and OneWorld. Here is a list of the airlines in each alliance: Star Alliance: United Airlines, Turkish Airlines, Thai Airways International, TAP Portugal, Swiss International, South African Airways, Singapore Airlines, Shenzhen Airlines, SAS, Lufthansa, LOT Polish Airlines, Juneyao Airlines, EVA Air, Ethiopian Airlines, EgyptAir, Croatia Airlines, Copa Airlines, Brussels Airlines, Avianca, Austrian Airlines, Asiana, All Nippon Airways, Air New Zealand, Air China, Air Canada, Aegean Airlines, Adria Airways Sky Team: Delta, KLM, Korea Air, Aeroflot, Aerolineas Argentinas, Aeromexico, Air Europa, Air France, Alitalia, China Airlines, China Easter Airlines, China Southern Airlines, Czech Airlines, Garuda Indonesia, Kenya Airways, Korean Air, MEA, Saudia, Taron, Vietnam Airlines, Xiamen Air OneWorld: American Airlines, British Airways, Cathay Pacific, Finnair, Iberia Airlines, Japan Airlines, LATAM Airlines, Malaysia Airlines, Qantas, Royal Jordanian, S7Airlines, SriLankan Airlines Here are some of the major advantages that airline alliances can provide: ●

You can use frequent flyer miles from one airline on any other airline in the alliance. So if you have United Airlines MileagePlus miles, for example, you can use them to book a flight on Air Canada or any of the other 28 airlines in the Star Alliance. Note that the price (in miles) when doing this is always determined by which airline’s miles you are using, not which airline you are actually flying.

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You can fly on one airline and earn miles for any other airline in the alliance. So if you are flying on Air Canada, you can choose to earn United Airlines MileagePlus miles instead of Air Canada’s Aeroplan Miles.

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You can fly on multiple airlines on one ticket. So if you are flying from New York to Moscow, you could fly from New York to Paris on Delta and then connect to Moscow on Air France.

While you are able to use your frequent flyer miles to book flights on any airline in the alliance, you cannot transfer your miles between airlines. So if you have 15,000 United MileagePlus Miles and 20,000 Air Canada miles, you cannot combine them to have 35,000 United MileagePlus Miles. Airline alliances can be a bit confusing to anyone who is new to the world of frequent flyer miles, so don’t worry if you don’t fully grasp their value yet. As you become a more experienced traveler you will find that they can be incredibly advantageous when you are planning international trips.

Chapter Nineteen: Picking Which Class to Fly Every airline has two to three different classes of tickets, depending on which route that they are flying and the length of the flight. Those classes are typically called “First Class,” “Business Class,” and “Economy/Coach” and each has a different price and level of service. First Class is the highest class and therefore is the most expensive. These passengers get to sit in the front of the plane and typically have access to the finest amenities available. First class tickets are usually two to three times more expensive than economy/coach tickets and only represent about 10-15% of the seats on the plane. Business Class is the second highest class of ticket but it’s considered to be the top class on airlines that only offer two types of tickets. The amenities of Business Class vary greatly by airline and the type of plane that you are flying on. Sometimes it’s just a little more leg room and other times you get a personal entertainment system, full meals, and a lay-flat bed. Economy/Coach is the lowest class available and is the one that most people are familiar with. About 75% of the plane is economy/coach and the amenities are usually limited to free non-alcoholic beverages and light snacks. There are a couple points I want to make here. The first is that first/business class on international flights is often dramatically different than first/business class on domestic flights. There’s no way that any sane person would pay 2-3x for a slightly bigger seat and complimentary food and drinks (at least the ones that are served on domestic airlines).

Typical business class on a domestic flight

Typical business class on an international flight The second is that many people who are new to the hobby have the mindset of â&#x20AC;&#x153;Paying more for first/business class is crazy! What a waste of points when you could use them to take multiple trips in economy!â&#x20AC;? Even I thought that way for a long time. And while that is not necessarily wrong, I can tell you that many people who try first/business class on an international long-haul flight find that it is worth every extra penny (or in our case, point).

Sometimes it is absolutely worth splurging to book a business or first class ticket Left: American Airlines First Class Chicago to London Right: Lufthansa Business Class Washington D.C. to Frankfurt

Again, this is different for everyone and depends on a number of other factors. But I just wanted to share a common discovery among many points/miles enthusiasts. Don’t knock business/first class until you try it. So which class should you choose? The answer to that question depends on your personal preferences. If you want to be pampered while you travel in style then first class is your best option. If you’d prefer to stretch your miles to travel to as many places as possible then Economy/Coach is your best bet. I tend to go with economy for shorter flights and business/first anytime I am crossing an ocean. Regardless of your preference, I would highly encourage you to do your homework on the amenities offered for each class before booking your ticket. You would be pretty disappointed if you splurged on a business class ticket and were only given a slightly larger seat and the opportunity to board the plane before the other passengers. When in doubt google “X Airline Y Service Type Z Plane Review” (e.g. United Airlines First Class Boeing 777-300 review) to see what you can expect. And there you have it! You now know how to use your frequent flyer miles to book cheap travel. Next, we’re going to take a look at how you can take advantage of hotel points to find a cheap place to stay.

SECTION SIX Hotel Points

Chapter Twenty: Earning and Redeeming Hotel Points Hotel points are very similar to frequent flyer miles and the two are often discussed interchangeably in the world of travel hacking. Hotel points do however have a few minor differences, which is why I decided to give them their own (albeit brief) section of the book.

Earning Hotel Points Hotel points are earned in many of the same ways as frequent flyer miles. You earn them mainly from credit card sign-ups, using your hotel credit card, and staying at the hotel. Like frequent flyer miles, the best way to earn hotel points is through credit card sign-up promotions. These promotions either offer a sum of hotel points or a specific number of free nights after you meet all of the requirements.

Redeeming Hotel Points Like airlines, most hotels have an award chart to show how many points are required to book a free room. The amount of points required differs by the hotel category, which is based on the quality of the hotel. Higher categories are assigned to nicer, more expensive hotels. Let’s look at the Marriott Bonvoy Award Chart to see how this works.

Marriott Award Chart As you can see, Marriott has 8 categories of hotels that range from 7,500 to 85,000 points per night. This gives you a lot of options when choosing the type of hotel that you would like to stay at. 56

If you are just looking for a place to crash, choose a hotel from one of the lower categories. However, if you want to be treated like royalty at some of the nicest hotels in the world, those in the higher categories are your best bet. When looking at hotel points it is important to remember our earlier discussion on miles vs. miles. Each hotel chain has a different reward chart and the redemption values tend to be quite different from one another. Letâ&#x20AC;&#x2122;s compare the Marriott Award Chart from above to the Hyatt Award Chart to see what I mean.

Hyatt Award Chart According to the chart, it costs 40,000 points to book a free night at a category 7 Hyatt hotel, the highest category they offer. A similar quality hotel would cost 85,000 points per night when booked with Marriott. So be careful not to get caught up in the number of hotel points that you are earning or redeeming and remember to calculate the value per point. Hilton, in particular, is a notorious offender with this trick. Many of their best properties can cost upwards of 75,000 points per night. Which also makes their credit card a common â&#x20AC;&#x153;beginner trap,â&#x20AC;? as new folks jump at the opportunity to earn 100,000 bonus points only to discover that they are significantly less valuable than say 30,000 Hyatt points.

Hotel Status The best way to get the most value out of your hotel points is to qualify for membership in higher status levels. Higher status members receive perks such as room upgrades, free internet in the room, and even free meals at the hotel’s restaurant. There are three main ways to earn status with hotel chains. 1. The first and easiest way is to sign up for the hotel’s credit card. Many hotel cards offer upgraded statues to cardholders for as long as they keep the card. For example, the Hyatt credit card offers Discoverist status for as long as you are a card member. This gives you access to available room upgrades, free wifi, and expedited check-in. 2. Another way to earn status is to stay a certain number of nights at one hotel chain in a calendar year. Low-end statuses will typically require 8-12 nights a year while the top statuses require 40+ nights a year. Like with airlines, you do not receive credit for any hotel stays that are booked with points. Achieving status with this method is pretty difficult for anyone who is not a frequent traveler. 3. The final way to earn status with a hotel is to earn a certain number of points with their rewards program/hit an annual spending goal on their card. This is generally difficult to do for anyone who does not travel substantially for work, but an option nonetheless.

A Quick Word on Hotel Points One common mistake I see with folks who are new to points/miles is the desire to “get some hotel points because I don’t have any yet.” Just be careful to always look for the offers that will save you the most money, even if you don’t have any hotel points yet. Many times I won’t even focus on earning hotel points until I have booked a flight to wherever I am hoping to travel. This allows me to pick a specific hotel that I would like to stay at, earn the exact points I need, and book it before I leave for my trip. In general, hotel points tend to be slightly less valuable than points that can be used to book flights. So again, make sure to earn the points that have the most value to you.

SECTION SEVEN Bringing it All Together â&#x20AC;&#x2039;

Chapter Twenty-One: The 30,000 Foot View I’m going to try to condense the entire concept of travel hacking (and therefore everything we have discussed in this book so far) into a single page. You might want to make a note to refer back to this page anytime you have questions about how travel hacking (as a general concept) works.

The Points/Miles Game Boiled Down to One Page It’s easy to earn a large number of frequent flyer miles + hotel points without actually traveling. These points/miles have significant value and can be used to book a substantial amount of travel for next to nothing. The fastest way to earn frequent flyer miles is to use credit cards to earn their signup bonuses and points from ongoing spend. Many of the bonuses alone are worth 1-2 free flights. No, this does not negatively impact your credit score. In fact, most people will see their credit score rise, provided they don’t use the cards to develop bad habits (overspending, missing payments, etc.). This is counterintuitive to everything you’ve been told about credit cards but it is a mathematical fact. Most of these credit cards require you to spend a certain amount of money in the first 3-4 months in order to earn the bonus. While this can be done organically, it is significantly easier/faster to use the methods outlined in this book (Plastiq, monthly bills, etc.). This will allow you to earn more points in a shorter period of time. In most cases, you keep your points when closing a credit card. So if you no longer have a need for a card it is ok to consider closing it. But be sure to research the ongoing perks of a card before making that decision. Or simply ask the experts for help. There is quite a bit of strategy in choosing which cards to open/use, as well as how to redeem your points/miles for maximum value. It is important to research which offers are best for you or to ask for help from the experts. Being impulsive with points/miles will almost certainly backfire. Redeeming points and miles looks complicated but is generally quite simple. Simply search each airline/hotel that you have points with, compare your options, and book the best one. It’s really that simple. Next, let’s look at some common mistakes.

Chapter Twenty-Two: Common Mistakes Now that you are well on your way to becoming a travel hacking expert, let’s take a look at a few common mistakes that travel hackers make.

1. Increased Spending As I mentioned in the disclaimer, the most common mistake that people make with travel hacking is letting their spending get out of control. Increased credit limits, access to special promotions, and a desire to amass frequent flyer miles can cause your spending levels to increase rapidly if you are not careful. A significant increase in spending as a result of travel hacking will cancel out any savings that you earn on travel and leave you in a worse financial position than when you started. To prevent this from occurring I would recommend that you keep track of the amount of money that you spend for the 3 months prior to travel hacking and 3 months after getting started. Simply write down the total amount of money that you spent on your credit cards and compare it on a month by month basis. Don’t forget to subtract any “manufactured spending” such as Amazon Payments transactions or gift card purchases. If you notice that your spending is starting to increase then you should review your purchase history and take steps to reduce your spending. Always remember to avoid justifying a purchase by thinking of the frequent flyer miles that you could earn. This is a dangerous habit that will almost certainly cause you to spend more money than you would otherwise.

2. Not Earning Points Until You Have a Trip in Mind I can’t tell you how many emails I get from readers that basically say, “So I need to go to X destination (Hawaii, Europe, whatever) in 3 months but I don’t have any points yet. How do I do it?” My answer is always the same. “You can’t.” The reason this happens is because many people don’t actively try to earn points until they have a specific trip on the horizon. At that point, it’s almost always too late. Doing this is like not saving money for a house until you see one that you want to buy. So if you have big travel goals, it is absolutely vital that you earn as many points as you can. Even before you decide where you want to go or when. Remember also that trips will often pop up out of nowhere. Weddings, family emergencies, spontaneous getaways, etc. Always better to have points/miles ready vs trying to scramble and earn them last minute.

3. Trying to Tie Points Earning to Immediate Need Somewhat related to mistake #2, many people make the mistake of trying to tie their points earning to their immediate travel needs. This mistake often shows up when choosing which credit cards to apply for next. Readers will look to fill a need in a trip that they have in the near future instead of selecting the card with the best overall value. Let me show you a recent example. I recently had a reader email me asking which credit card/points to earn to cover a hotel stay for an upcoming wedding that was ~2 months away. He was staying at a low-end Hilton property and was considering applying for a Hilton credit card which offered the exact number of points required to book his two night stay. This reader could book the hotel for $115 a night in cash, meaning that opening the Hilton card would have saved him $230. I pointed this out and suggested he look in to other more rewarding credit cards with bonuses worth $500+ of free travel, even though they wouldn’t apply to this specific trip. But ultimately he ended up going with the Hilton card anyway. I wasn’t able to convince him to look past his immediate need in order to save even more money long term. This is a bit like an NFL team drafting a kicker in the first round because they don’t currently have one on the team. Better to focus on overall value vs. immediate need.

4. Avoiding Any and All Fees Stop me if you have heard this before: Fees suck. This is universally accepted by almost every human being on earth. But having been in this hobby for 7+ years now I can tell you that there are a number of situations in which paying a fee is in your best interests. This is most prevalent when it comes to annual fees on credit cards that are not waived in the first year. Cards like Amex Platinum, Chase Sapphire Reserve, Citi Prestige, and others charge annual fees of $450+ that are billed in the first month of receiving the card. Many people see the huge fee number and don’t even bother to read in to the card benefits. Which is penny wise but pound foolish.

These premium credit cards offer bonuses and perks that are worth well over $1,500 in the first year. Resulting in a net “profit” of $1,000+ on the card when accounting for the fee. So let me ask you this. Would you rather be given $200 for free, or pay $450 and get $1,500 in return? This is essentially the question being asked by most premium credit cards. Always be sure to do the math and be open to the idea of paying fees that make sense.

5. Choosing the Wrong Credit Cards Many credit cards trick uninformed consumers with half-truths that are hard to spot. Here are a few quick examples to show you what I mean. Capital One Venture promotes the fact that you earn double miles on every purchase, every day. What they don’t tell you is that their miles are generally less valuable than most others. This is the old “I’ll trade you 2 pennies for one dollar” trick that is used on playgrounds everywhere. Delta SkyMiles cards often trick people with their signup bonuses of 50,000 to 70,000 miles. Overall Delta points are considered to be less valuable than most other airline miles because of their lack of transparency and flexibility. Don’t be tempted by the high number on the signup bonus. Hilton HHonors Credit Cards pull the same trick as Delta but with hotel points. The signup bonuses look big (usually 80,000 to 100,000) and Hilton is a very recognizable brand, but the value of these points is significantly less than just about any other hotel or airline rewards program. That’s not to say that you should never get any of these cards. I’ve had all of them multiple times myself. But starting with them before the other major cards (Chase Ultimate Rewards cards, Amex Membership Rewards cards, etc.) is a bad move.

6. Failing to Understand the Value of Liquidity Throughout the book I’ve made multiple references to the financial principle of liquidity and how it plays a role in travel hacking. Before we discuss how liquidity applies to travel hacking, let’s start with a very basic overview of what liquidity is. Here is a definition:

Let’s look at a quick example to see how liquidity works. Imagine that you have won a drawing and are eligible to choose from a group of prizes. The only two prizes left are $100 cash and a $100 gift card to J. Crew. Which one would you choose? Hopefully you went with the cash. But why? 63

If you have $100 in cash you can purchase just about anything you want (provided it costs less than $100 that is). Maybe you go out to a fancy dinner, pay some bills, or even use it to shop at J.Crew. As long as you have cash the choice is completely up to you. If you chose the gift card on the other hand your options would be much more limited. You could either spend it at J.Crew or try to sell it for a sum of cash, which would almost certainly be less than $100. So despite the fact that both prizes are theoretically “worth” $100, the cash is more valuable to you. This is because the cash is more liquid than the gift card. Now let’s take a look at how this concept applies to travel hacking.

Liquidity in Travel Hacking When it comes to travel hacking it is important to think of frequent flyer miles in the same way that you think of gift cards. While you can assign a value to frequent flyer miles by calculating their value per mile, that value will always be less than the equivalent amount of cash. So when comparing frequent flyer miles to cash, remember that $1 worth of frequent flyer miles will always be worth less than $1 of cash. The most common situation where this comes into play is when you are given an opportunity to buy frequent flyer miles. Airlines will run promotions from time to time that offer mileage bonuses on top of any miles that you purchase. This reduces the cost of each mile purchased, essentially creating a “sale” on frequent flyer miles. Many people convince themselves that they are saving money because they are able to purchase frequent flyer miles for a cheaper price than what they can be redeemed for. While that may be true at times, it is often not the case. Going back to our previous example, this would be like purchasing $100 J. Crew gift cards simply because they are on sale $95. While you are technically “saving” $5, the $95 in cash is more valuable than the $100 gift cards because of the liquidity that it offers. This is especially true if you do not frequently shop at J. Crew, or in the case of frequent flyer miles, you do not often fly with that specific airline. The only time that I would recommend taking advantage of a sale like this is when you have an immediate use for the frequent flyer miles. Otherwise it would be better to hold on to your cash and wait for a better opportunity.

7. Not Negotiating with Credit Card Companies Have you ever tried cancelling your cable TV service, only to be offered a reduced rate and upgraded features if you decide to keep it? This is a common practice with cable companies that is highly effective

in keeping customers from switching to another provider. It has become so common that many people now pretend to want to switch providers just to get their monthly bill lowered. The same practice is used frequently by most credit card companies. While they have a reputation for being evil, unapproachable institutions the truth is that they are quite the opposite. Most credit card companies are willing to waive fees, reduce interest rates, and even give you frequent flyer miles in order to prevent you from cancelling your card. Here are some common items that you should always try to negotiate. ● ● ● ● ●

To have a late fee waived To have a credit card denial overturned To qualify for a higher sign-up bonus To challenge a credit card application decision To request that an annual fee be deferred or waived

So how do you go about doing this? I have found that the most effective strategy is to call them and ask politely. Be sure to mention that you have been a loyal customer for a while and have never missed a payment (if this is true). Many times your request will be granted instantly with no questions asked. If asking politely doesn’t work then the next step is to mention that you are thinking about switching to another company’s credit card. Be sure to say the actual name of another credit card company (Chase, Citi, American Express, etc.), as the customer service representatives are often unable to offer you anything until you say one of these “trigger words.” This strategy will usually bring out the best offer that the credit card company is able to provide. If you are still unable to be granted your request, politely hang up and try again. I can’t tell you how many times I have been told “no,” only to have another customer service representative grant my request immediately. While this strategy is relatively easy to use, your ability to negotiate with credit card companies is dependent on your history as a customer. If you frequently miss payments or carry a balance on your card then you are unlikely to have any of your requests granted. This is just another reason why you should always try to make your credit card payments on time.

8. Closing Credit Accounts Too Quickly Many people are in a hurry to cancel their credit card after they receive the sign-up bonus, pay off their debt or switch to another credit card. After all, if you are not using a credit card any more then why keep it open?

This is another mistake caused by adhering to conventional credit card wisdom. You have probably been told that having a bunch of credit card accounts open, especially ones that you do not use, is bad for your credit score. Generally speaking, this is not correct. In fact, it is quite the opposite. Having lots of unused credit is generally good for your credit score. Also, closing cards too quickly can jeopardize your relationship with a bank. If you open a credit card, earn the bonus a month later, and close it one month after that there is a chance that the bank will take some sort of adverse action against you. This could come in the form of trying to revoke your points, closing other accounts you have with them, etc. Again, closing credit cards is fine and can be strategic in some cases. Just don’t do so within ~3 months of opening a card.

9. Being Impulsive Travel hacking is a bit like chess. There are many moving pieces, each with their own strengths and weaknesses, and a lot of strategy behind how you use each of them. A chess player who simply moves pieces around without thinking is doomed to fail. The same goes for an aspiring travel hacker. Don’t choose credit cards simply because you were presented with a “special offer”, don’t redeem points without checking all of your options, etc. Take your time. Think it through. And don’t hesitate to reach out for help if you need it. Now that you know the basics and some of the common mistakes, let’s take a look at a few advanced strategies used by expert hackers around the world.

SECTION EIGHT Advanced Strategies

Chapter Twenty-Three: Reconsideration Calls I hate to break it to you, but at some point in this hobby you are going to apply for a credit card and be denied. It’s just part and parcel of what we do. Banks deny credit card applications for a variety of different reasons. I get denied for ~5-10 credit cards a year despite having outstanding credit and a steady income. My first tip is not take it personally! Many folks who are new to this hobby get upset over their first denial, incorrectly assuming it’s some sort of reflection of their credit or income. In many cases it has nothing to do with either of those things. It’s simply a business decision made by the bank. Sometimes it’s because they think you have enough credit with them already. Other times it’s because they think you have applied for too many credit cards lately, or simply that they cannot verify your home address. Thankfully we have a strategy to deal with this situation called a reconsideration call (“recon call”). A recon call is basically just an appeal of the bank’s decision to deny your credit card application. You call the bank and ask them to reconsider their decision, often making your case as to why you think you should be approved. Let’s talk about how to do this. The first step is to find the best number to call. The best way to do this is to simply google “X Bank reconsideration number” (i.e. “Chase Bank Reconsideration number”). These numbers change somewhat often so trying to maintain an accurate list in this book would be impossible. Call that number and ask to speak to someone about reconsideration of your credit card application. At this point they’ll likely transfer you to a credit analyst who can help. Next, the credit analyst will verify your basic information (name, address, etc.) and share the reason for the credit card denial. This is where it is your time to shine. Treat everything from this point forward as a sales call; your goal is to sell the credit analyst on why you should be approved for the card. Here’s a walk-through of how these calls usually go: Credit Analyst: “I see here your card was denied for X reason on Y date.”

You: “Yes I totally understand. But I am very interested in this credit card and would like to ask you to reconsider this decision. Next, you’ll need to come up with a reason why you want the card. Let me first say that the reason should never be “I am interested in the signup bonus.” In fact, I would avoid mentioning the signup bonus altogether.

Here are a few good reasons to choose from: ●

●

● ●

“I have recently discovered the value of rewards points and am hoping to move all of my day-to-day spending to this card. My family is hoping to take a trip to X location soon and I was excited to learn that putting spend on this card can help us get there.” “I have quite a bit of travel booked on X airline in the near future and am interested in the free checked bags/priority boarding/etc. perks offered by this card.” (This is best used for airline specific cards.) “My friend has this card and cannot stop raving about how great it is! Having seen how much he/she loves it I was very excited to try it myself.” “I saw an ad for this card and the benefits seem to fit my lifestyle perfectly.” (Bonus points if you can mention specific perks, other than the signup bonus, that you hope to use)

And then follow up with a few statements about your credit and value as a customer: ● ● ● ●

“I have been a customer of your bank for X years and have always made my payments on time and used my card responsibly.” (Obviously, only use this if it is true.) “I am not currently a customer of your bank but have heard only good things about you from my friends and am excited to give you a try.” “You’ll see that I have an excellent credit score and have demonstrated that I can be trusted with credit.” “If I am approved for the card I plan to use it regularly and hopefully become a customer for life.”

You can even use a couple of these together. At this point the credit analyst will likely ask to put you on hold to reconsider the application. After a couple of minutes they will come back with a decision. If the decision is a “yes” you have successfully completed a reconsideration call! Your card will come in the mail in a few short days. If it’s a no your best bet is to politely thank them for their time, hang up, and call again (commonly referred to in the points/miles world as “HUCA”). I recommend that you HUCA immediately. As in hit hang up and redial the number right away. 69

Repeat this process a minimum of 3 times before fully giving up. I’ve done as many as 7 calls before finally getting a yes. Of course you want to avoid mentioning that you have called before. Treat each call as if it is your first. And if you are getting a bad vibe or the customer service rep seems to be in a bad mood just say that you have to run, thank them for their time, and HUCA. Now let’s put it all together.

Here’s a sample scenario of how the entire call will go: Credit Analyst: “I see here your application for the Chase Sapphire Preferred card was denied due to the fact that you have made too many requests for credit in the past few months.” You: “Yes, I totally understand. But I am very interested in this credit card and would like to ask you to reconsider this decision. I have made a number of requests for credit in the past few months because I have recently discovered the importance of credit card rewards and have been moving my spending to more rewarding credit cards. I am actually planning a trip with my family to Cancun this fall and am excited to know that any points earned with this card can be used on a number of different airlines that fly there. You’ll also see that I have been a Chase card member for 3 years now and have never missed a payment. My credit score is excellent and I hope to use the Chase Sapphire Preferred for most of my day-to-day spending. So what do you think? Would you be able to approve me today?” Credit Analyst: “Let me put you on a brief hold while I review the application.” (~2 minutes later) Credit Analyst: “After reviewing the application I am pleased to inform you that you have been approved for the card with a $X limit. Your card will be mailed to you in 5-10 business days.” You: “Thank you so much for your time. Have a great day!” A couple more things to note: 1. You need to complete this process within 30 days of the application date. Generally, after 30 days have passed your application will not be available for reconsideration. 2. Sometimes it makes sense to offer to move credit from some of your other cards (with the same bank) to make room for your new credit card. For example, if you have a Chase Freedom card with a $20,000 credit limit and were denied for the Chase Sapphire Preferred, you can ask the credit analyst if they would be able to move $10,000 of your credit limit from your Chase

Freedom to the Chase Sapphire Preferred in order to approve your application. This isnâ&#x20AC;&#x2122;t always guaranteed to work but many times it does the trick. 3. Most importantly, you must be polite and courteous to everyone you speak with regardless of the outcome. M â&#x20AC;&#x2039; any times these people hold the power to approve or deny your application and belittling them will almost certainly result in a denial. Remember, this is a sales call. Being friendly is your best strategy for success.

Chapter Twenty-Four: The Chase 5/24 Rule Generally I’ve tried to write this book to be “evergreen” in the sense that it abstains from talking about specific rules that could possibly change, but the Chase 5/24 rule is important enough to discuss here. Let’s start with the definition. The Chase 5/24 rule (commonly referred to as “5/24”) is a rule that basically states that anyone who has opened 5 or more credit cards (with any bank) in the last 24 months will not be approved for a new credit card with Chase. Note that this counts all new credit cards, not just those issued by Chase. If you open 2 cards with American Express, 2 cards with Citi, and 1 card with Capital One in a 24-month period you will be at 5/24. Even if you have never had a Chase card in your life. The 5/24 rule also counts cards on which you are an authorized user. I f you are added as an authorized user on someone else’s account, that card will show up on your credit report and therefore count toward your 5/24 status. The good news is that you can reverse this by having yourself removed as an authorized user and asking the issuing bank to remove the account from your credit report.

Why Does the 5/24 Rule Exist? I find it is easiest to understand this rule if you understand why Chase put it in place. Chase essentially implemented 5/24 to screen out potential customers who are just chasing the signup bonuses. It’s a countermeasure to what we are trying to do in the world of travel hacking. Banks such as Chase use signup bonuses to attract new customers with the hope that these customers will continue to use their cards indefinitely. Anyone who has opened 5+ credit cards in the last 24 months is probably not going to be a lifelong customer, and therefore Chase doesn’t want their business. Think of it this way. If you were interviewing someone who has had 5+ jobs in the past 24 months, would you expect that they are likely to stick around long if you hire them? Probably not. Same thinking here. Chase is simply trying to protect their investment.

Business Cards and the 5/24 Rule

If you have read the Business Card Appendix you may recall that business credit cards (except those issued by Discover and Capital One) do not show up on your personal credit report. And because they do not show up on your personal credit report, they cannot be counted toward 5/24. Even business credit cards issued by Chase follow this rule. So if you have opened 3 credit cards in the last 24 months (making you 3/24), and are approved for a business card with American Express, you will still be at 3/24. Note, however, that you need to be under 5/24 to be approved for Chase Business Cards. This is a common area of confusion for many people.

How This Impacts Card Strategy The Chase 5/24 rule effectively creates a “now or never” scenario when it comes to earning Chase card bonuses. This is because once you are over 5/24 you will not able to be approved for most of the best Chase card offers. Which means it is absolutely vital that you consider getting the following credit cards before any others: ● Chase Sapphire Preferred ● Chase Sapphire Reserve ● Chase Ink Preferred ● Chase Ink Cash ● Chase Southwest Cards (Plus, Premier, Business) ● United MileagePlus Explorer ● Chase Marriott Card ● World of Hyatt Card ● IHG Credit Card ● Etc. But once you are over 5/24 it is not worth waiting around to get these cards a second time. You’ll earn way more free travel by simply moving on to cards issued by other banks, knowing that you will not be able to be approved for most Chase cards ever again. So in a sentence my recommendation for your 5/24 strategy is this: Open the high-value Chase cards first, keep many of them forever, and move on to other cards/banks once you are over 5/24.

A Quick Example Just to finish this section off and drive home the point, let’s look at a quick example. If I opened the following cards in the last 24 months, what would my 5/24 count be? ●

Chase Sapphire Preferred 73

● ● ● ● ●

Citi American Airlines Platinum Chase Ink Business Preferred American Express Delta Card (I am an authorized user on this one) Macy’s Credit Card Bank of America Alaska Airlines Business Card

The correct answer is 4/24. Here is the breakdown, with cards highlighted in orange counting toward 5/24. ● ● ● ● ● ●

Chase Sapphire Preferred (1/24) Citi American Airlines Platinum (2/24) Chase Ink Business Preferred (2/24) American Express Delta Card (I am an authorized user on this one) (3/24) Macy’s Credit Card (4/24) Bank of America Alaska Airlines Business Card (4/24)

The Chase Ink Business Preferred and Bank of America Alaska Business Cards do not count because they are business cards. The Amex Delta card does count even though I am just an authorized user, and every other card also counts toward 5/24.

Bottom Line ● ● ●

The Chase 5/24 rule prevents you from getting a Chase credit card if you have opened 5+ credit cards (with any bank) in the last 24 months* Business cards do not add to your 5/24 count, but you need to be below 5/24 to be approved for a Chase Business Card For this reason it is absolutely vital that you consider starting with the high-value Chase cards.

Chapter Twenty-Five: Hidden Sign-up Bonuses As we discussed earlier, credit card sign-up bonuses are by far the fastest and easiest way to earn frequent flyer miles. Most credit cards will offer 25,000 to 50,000 frequent flyer miles with occasional offers up to 100,000 miles. While these sign-up bonuses are open to anyone, expert travel hackers are able to find “hidden” offers that are generally more lucrative than the offers that are available to the public. These offers fall in to one of two groups – targeted offers or expired offer links.

Targeted Offers Targeted offers are credit card offers that are only sent to a select group of people. They are used as a marketing tool by credit card companies and typically offer sign-up bonuses that are 50-100% higher than the published offers. These offers can be invaluable to travel hackers and should be pursued when possible. There are two ways that you can take advantage of targeted offers. 1. The first is to try to be included in the group that is selected to receive the targeted offer. This often requires more luck than skill, but you can improve your chances by maintaining a solid credit profile, opting to receive promotional offers from your credit card company, and even contacting your credit card company and asking to be included in any future targeted offers. You can also use the Card Match Tool from CreditCards.com to check for any offers that you are already being targeted for. 2. The second is to negotiate with your credit card company to try to receive the same offer that was sent to the targeted customers. As I mentioned in the book, the best way to do this is to simply ask. Be sure to let them know that you are aware of the targeted offer and the specific bonus that is being offered. Many times they will grant your request and allow you to qualify for the same offer that was sent to the target group. Just be careful to always evaluate every offer. M any people get overly excited by targeted offers because they feel exclusives/special and end up grabbing cards that are significantly less valuable than others on the market. Always do the math.

Hidden Offer Links The other type of hidden sign-up bonus is called an “hidden offer link.” Hidden offer links are links to credit card applications that offer a sign-up bonus or other perks that are no longer widely available to

the publicâ&#x20AC;&#x2039;.â&#x20AC;&#x2039; Credit card companies occasionally leave these sorts of offer links out on the web, leaving the door open for anyone to receive the higher sign-up bonus after being approved for the card. Hidden offer links can be found on travel hacking forums (i.e. Flyertalk or Milepoint), blogs, or even by searching Google. I would recommend searching for them before applying for any credit card just to make sure you are getting the best deal possible.

Chapter Twenty-Six: Earning Sign-up Bonuses Multiple Times On the Same Card In some cases you can earn a second signup bonus on a card you have previously had. Just make sure to read each bankâ&#x20AC;&#x2122;s specific bonus policy before giving it a shot. Chase Bonus and Application Rules American Express Bonus and Application Rules Citi Bonus and Application Rules Bank of America Bonus and Application Rules Or simply email me if you want to double check your particular situation.

Chapter Twenty-Seven: Open-Jaws and Stopovers Open-jaws and stopovers are two booking strategies that help you get more value out of your miles when you redeem them. When used correctly, these two strategies can help you take multiple vacations for the price of one. Let’s take a look at how they work.

Open-Jaws An open-jaw ticket is a round-trip ticket where you fly into one city and depart from another. So you can fly from Point A to Point B, then from Point C back to Point A. Points B and C are typically airports in the same general area, such as London and Paris. An open-jaw is ideal for travelers who are planning on covering a lot of ground during their trip and don’t want to waste time returning to their original airport. For example, if you want to fly into Rome and make the scenic drive along the Mediterranean Coast to Northern Italy, an open-jaw ticket will allow you to fly home from Milan rather than making your way back down to Rome. Most airlines treat open-jaw tickets the same as round-trip tickets and price them accordingly. This usually results in a considerable savings over the cost of 2 separate one-way flights. The only general restriction on an open-jaw ticket is that the two open-jaw cities have to be in the same region. So you can’t book an open-jaw ticket from New York to London and then Hong Kong to New York. This restriction varies by airline so it is best to check before booking your ticket. To book an open-jaw ticket just look for the “multi-city” or “multiple-destination” option and input your desired itinerary. The search should recognize that you are booking an open-jaw ticket and price the flights accordingly. If the prices seem high, I would recommend you call the airline and ask if there are any minor adjustments that you can make to your itinerary that would help you qualify for an open-jaw rate.

Stopover A stopover is any stop of more than 24 hours in a city between your origin and final destination. Think of it like a very long layover, one you have elected to add to your itinerary. An example of a stopover itinerary would look like this: New York – Paris (stopover, stay in Paris for 3 days) – Rome.

Stopovers are completely free on any airline that allows them. So adding one to your trip will not cost you any additional frequent flyer miles. On many award tickets you are given 1 whole year to make it from your origin to your final destination. This means that you could stay at your stopover destination for up to 364 days before continuing on to your final destination! Stopovers are one of the best ways to maximize your frequent flyer miles because they essentially allow you to visit two destinations for the price of one. So what’s the catch? First, not every airline allows you to book a stopover. Each airline has its own set of rules so be sure to check them before attempting to book a stopover ticket. Trying to maintain an updated list in this book would never work, so simply google “X Airline stopover policy” for whichever airline you plan on flying. They are usually spelled out pretty clearly. Note also that stopover policy is determined by the airline with whom you are booking/using points, not the airline you are actually flying on. For example if you are using United miles to book a flight to Europe on Lufthansa (they are both Star Alliance partners), your ability to book a stopover would be determined by United’s stopover policy. Not Lufthansa. Stopovers also have to fit logically into your itinerary. So you probably won’t be able to book a stopover in India for a flight that goes from New York to Rome. There is some flexibility in these rules however, so feel free to get creative. So how do you book a stopover? There are 2 ways to add a stopover to your itinerary. 1. The first is to book it online using the “multi destination” option. This option only works for a few airlines and usually does not show any partner flight availability. I recommend only using it when booking flights with United/Star Alliance. 2. The second is to book your ticket over the phone. This is definitely the easiest way to book a stopover ticket, as many airlines do not allow you to book stopovers online. Simply tell the booking representative your origin, destination, and the city in which you would like to book a stopover. Note that there is usually a ~$25 fee for phone bookings but you can often get out of it by asking. Just mention that your specific itinerary was not showing up online.

Chapter Twenty-Eight: Hidden City Ticketing Airlines often charge less for flights that go through a hub from one city to another than flights that terminate at that hub. This occurs because the airline is trying to compete with cheaper options between the two cities that are being offered by other airlines This presents an opportunity called “hidden city ticketing” – you buy the flight to the cheaper destination, connecting where you really want to go, and just get off the plane at your “true” arrival point. Let’s look at an example to see how this works. If you wanted to fly from Des Moines to Dallas/Fort Worth (DFW), a typical one-way flight would cost about $375. The flight is incredibly expensive because the Des Moines airport is primarily serviced by American Airlines, which has a major hub in Dallas/Fort Worth. A one-way flight from Des Moines to Los Angeles that routes through DFW on the other hand is only about $185. So by booking a flight from Des Moines to Los Angeles and getting off the plane in DFW, you could save about $190 on your ticket. While hidden city ticketing is not against the law, it does violate most airlines’ contract of carriage. So airlines could take action by suspending your frequent flyer account or even banning you from flying with them. This is something that could happen only through repeated and frequent use of this technique, so be careful not to abuse it. Here are a few other things that you need to remember when using this strategy. ●

Don’t check luggage

If you check bags, your bags will go to the final destination on your ticket without you. So this technique only works when you are able to fit all of your things in to a carry-on. You also need to be careful with gate checked luggage. If you are unable to find overhead space for your bag then you may be asked to gate check the bag to your final destination. Again, this will not work for you so you need to come up with some sort of reason why you need your bag. As a last resort, simply tell the airline staff that your final destination is where the aircraft is landing. Chances are good that they are not aware of any future connections that you are scheduled to make and they will accommodate your request. ●

Do not attach your frequent flyer number to your ticket

Even though I said that you should always have your frequent flyer information squared away before taking any flight, hidden city tickets are the one exception to that rule. Not attaching your frequent flyer

miles number to your ticket will make it harder for the airlines to track your history of using hidden city tickets. This reduces the chance of them taking any action against you for using this strategy. ●

Be aware of irregular operations

If your flight gets delayed or cancelled the airline might offer to send you to your final destination via some other connecting city. This obviously will not work for you. I would suggest that you say that the connecting city is important because you are meeting someone there or have some sort of other business that requires you to be there. Airline agents are usually pretty accommodating during irregular operations and will give you an itinerary that works for you. ●

Only do this on the last segment of your reservation

If you miss a flight, the airline is likely to cancel the rest of your itinerary. So this strategy can only be used to skip the final leg of your reservation.

How to Book Hidden City Tickets The best way to book hidden city tickets is to use a service that allows you to search for flights by connecting city. My personal favorite is Hipmunk.com but there are a number of other options that you can use. Simply put in your starting city and let the system search for fares to cities that connect through your “true” destination city. As you become more experienced with this technique you will begin to learn which cities are the cheapest to fly to through your desired connection city.

Chapter Twenty-Nine: The Southwest Companion Pass One of the most lucrative travel hacks on the market is the Southwest Companion Pass. While I typically refrain from recommending credit cards or strategies that apply to specific airlines, this strategy is too lucrative to omit. Let’s take a look at how it works.

What is the Southwest Companion Pass? The Southwest Companion Pass is a pass that allows you to take a companion on any Southwest flight that you fly for free. There is no limit to how often it can be used and there are no blackout dates. The only fee that the companion needs to pay is the taxes and fees, which are usually just $5.60 each way. Once earned, the companion pass is valid for the rest of the calendar year plus the entire next calendar year. So if you earn the companion pass in September of 2018, it would be valid for the rest of 2018 and would expire on December 31, 2019. All companion flights would have to be completed by that date, so you would not be able to book any companion flights for 2020 and beyond. Of course this means that the Companion Pass is ideally earned early in the calendar year. More on this in a moment. You have to designate who your companion is so you cannot take a different person every time. You can however change your companion three times per calendar year, meaning that you can use it with up to 4 people (start with person A, then switch to B, C, and D). You can also switch the name back to someone who was already listed as your companion (start with person A, then switch to B, C, and back to A) but that does count as one of your 3 changes. Your companion has to travel on the same itinerary as you do, so they can’t fly anywhere without you. This includes any connecting flights, even if your companion is traveling to the same destination as you.

Getting the Companion Pass To earn the Southwest Companion pass you must complete 100 qualifying one-way flights or earn 110,000 qualifying points in one calendar year. Qualifying points can be earned through credit card sign-ups, credit card spending, and by flying on Southwest. The easiest way to get the companion pass is to take advantage of the Southwest Credit Card sign-up promotions. Southwest offers three credit cards through Chase (Personal Premier, Personal Plus, and Business Premier) and each of them offers a sign-up bonus of 40,000 to 60,000 miles. By signing up for two of the cards and meeting the minimum spend you will be able to earn more than 100,000 Qualifying mile, which gets you more than 90% of the way to the required 110,000 miles.

The remaining miles can be earned with credit card spending or by actually flying on Southwest. One key thing to note is that Chase will no longer allow you to earn a bonus on more than one Southwest personal card in a period of 24 months. Meaning that they only way to do this is to open one personal version of the Southwest card (either Plus or Premier) as well as the business version.

Companion Pass Strategy To get the most value out of a companion pass it is best to try to qualify for it as early in the year as possible. The earlier you earn it, the more months you will be able to use it. So by earning one in January instead of September for example, you can get an additional 8 months of use out of it. To do this it is best to sign up for two of the Southwest cards within the last 3 months of the calendar year and meet the minimum spending requirements immediately after January 1 of the following year. The points that you earn from the sign-up bonus would count toward the next year’s total and you could earn the companion pass in January. This strategy would allow you to get a full 24 months of use out of the companion pass before it expires. Let’s take a look at a few frequently asked questions.

Companion Pass FAQs -How much is the Southwest Companion Pass “worth”? While it is difficult to assign a specific value to the Companion Pass, you can come up with a rough number by looking at the value of Southwest points. 110,000 Southwest points is worth roughly $1,600 in free flights on a Southwest “Wanna Getaway Fare.” If you bring your companion on all the flights that you book with those points, you would be getting an additional $1,600 of free airfare for a total of $3,200.

-Do I have to buy the Companion Pass with the points I earned? Nope. Once you earn the 110,000 points the pass is yours for free. You still have those points to redeem for free flights on Southwest.

-Can I use my points to book flights for people other than my companion? Yes. Your points can be used to book flights for anyone you’d like. Remember, however, that your companion can only fly with you.

-Can the Companion Pass be used on Southwest flights that are booked with points? Yes. The companion pass can be used on any type of ticket except for another companion ticket. So you can’t bring a companion with you if you are already booked as someone else’s companion.

-How quickly does my designated companion go into effect? When selecting or changing your companion the new name goes into effect immediately. You do not have to wait for the new companion pass card to arrive by mail. To change the name of your companion, call Southwest Customer Service and they can change it immediately. Remember that this can only be done three times per calendar year.

-Do points transferred from other loyalty programs count toward the Companion Pass? No. This loophole was closed in early 2018. So please don’t transfer 110,000 Chase Ultimate Rewards points to Southwest and expect to earn a Companion Pass.

-Couldn’t I just earn 109,999 Southwest points in 2018 and earn 1 point in 2019, allowing me to earn Companion Pass for all of 2019 and 2020? No. We get this question a lot so please read closely. Remember you have to earn all 110,000 Southwest points in a single calendar year. In the scenario above you would have earned 109,999 points in 2018 and 1 point in 2019. Meaning you wouldn’t earn Companion Pass for either year.

Chapter Thirty: Travel Hacking With A Partner (2 Player Mode) Speaking of traveling with a companion, let’s take a moment to talk about how travel hacking would work when you are doing it together with a partner (such as a spouse/significant other/friend/etc.). This is often referred to as “2 player mode” in the points/miles world and there are some additional considerations that you need to be aware of with regard to strategy. Let’s take a moment to talk about those. 1.

You and your partner should generally always copy each other’s moves.

For example, if you open a Chase Sapphire Preferred card you should have your partner do the same. Ideally within days of you opening your own. This is important because it will result in each of you having the same stash of points to work with when it comes time to book a trip. Trying to book travel together otherwise is virtually impossible. I can’t tell you how many emails I get saying, “I have X number of American Airlines miles and my wife has Y United points. How can we fly together to Paris?” Simple answer, you can’t. Those points are almost completely incompatible. So always copy each other’s moves when possible. The only exception to this would be with something like Southwest Companion Pass, where each of you earning one at the same time would be somewhat wasteful. 2.

There is no connection between being an authorized user on a credit card

and applying for your own card. Adding someone as an authorized user on your credit card is a bit like giving them a second hotel key to your room. They can use the room as they please, but at the end of the day it is not “their” hotel room. It will always default to one person. So your spouse could be both an authorized user on your credit card as well as getting his/her own if they choose. Also note that being added as an authorized user will add to your Chase 5/24 count, so only add someone when it is absolutely necessary. 3.

Points/miles accounts are always treated individually.

There is generally no such thing as a “joint” points account so everything that you and your partner do is treated individually. This means you cannot team up to earn things such as the Southwest Companion Pass and you generally cannot combine your points together in one account. The answer to “I have 10,000 United points and my wife has 10,000 United points, can we combine to have 20,000 points?” is no (at least not without paying a prohibitively large fee to do so). The only exception to this rule is with most transferable reward currencies such as Chase Ultimate Rewards, American Express Membership Rewards, etc. These points can usually be combined between members living in the same household. I would strongly advise that you not try to bend these rules and transfer points to a friend. Doing so could result in the bank closing your rewards account and voiding all of your points. And finally, you cannot “trick” these systems by listing your partner’s rewards account number with your credit card application. I’ve seen this attempted many times and it is always caught. 4.

You can almost always use your points to book travel for someone else.

So don’t worry if you happen to run into a situation where one of you has to use points for both. Or if you want to use points to book travel for friends and family. 5.

Having one person earn points to pay for multiple people’s travel is very difficult

Another common question I get is, “My husband/wife is not really in to this points stuff, can I just earn all the points for both of us?” Yes, you can. But of course this is half as effective as both of you earning points. So don’t expect to be able to put together the type of elaborate trips that other “2 player mode” participants are able to do. It’s also very difficult to travel together when one person is using points and the other person is using cash. Often times the cheapest flights (points wise) are significantly more expensive than the cheapest cash flights. The one-skeptical-partner issue is one that we see incredibly often and is often resolved by taking your first free trip together. So be sure to show your partner how everything works with the hope that they will hop on board soon. 6.

In some cases, both of you can use your joint income on credit card applications

Many times I talk with partners who have an arrangement where one of them doesn’t work (stay at home spouse, retired, etc.). “But how can my husband/wife get approved for a credit card if they have no income”? is a common question they ask. 86

Thanks to the 2009 CARD Act, you might be able to claim your partner’s income as your own on any credit card applications. Who does and does not qualify for this is a bit of a grey area, so the general rule is that “if you have access to your partner’s financial accounts” you can claim their income. Married couples, domestic partners, etc. easily meet this requirement. So if you make say $20,000 a year, but your spouse/partner makes $50,000 per year (and you have access to their financial accounts), you can each list $70,000 as your annual income on any credit card applications.

SECTION NINE Takeoff!

Chapter Thirty-One: The First Step “A journey of a thousand miles begins with a single step” -Lao Tzu Over the previous 30 chapters we have covered everything from the basics of travel hacking to some of the more advanced strategies used by the experts. Hopefully by now you have a basic idea of what travel hacking is, how frequent flyer miles work, and how you can earn and redeem them for free travel. With this information, you are now ready to begin your journey to travel the world for free. We covered a lot of material, so don’t worry if you don’t quite understand everything yet. Unlike some of my college professors, I don’t expect you to know everything after reading this book just once. To help get you started, I want to give you a simple first step that will begin your journey to traveling the world for next to nothing. It is the same first step that I took on my own journey and I would recommend it to anyone who aspires to become a travel hacker.

That’s it! It only takes about 5 minutes and it is completely free. Remember to check out my monthly list of the best ones to choose from by visiting 10xTravel.com/best-credit-cards. Please also be sure to apply via our credit cards page when you decide on a card. You can also email me (bryce@10xtravel.com) to discuss which card will be best for your particular situation. Once you get the card and use the points, the rest of the advice in this book seems to spread like wildfire. You will get to experience firsthand how easy travel hacking can be and you will be well on your way to booking trips to destinations that you have always wanted to visit. With the experience of booking your first free flight, the knowledge found in this book, and the desire to travel the world, you will be left with just one more question to answer. If you could leave tomorrow for any destination in the world, where would you go?

SECTION TEN Resources

Resources There are a ton of resources that are available to help you keep up with what is going on in the travel hacking world. Here are a few of my favorites: -Blogs BoardingArea.com One Mile at a Time -Forums 10xTravel.com Insiders Group – I might be biased, but I think our Insiders Facebook group is the best points/miles resource in the world. Join 25,000+ readers sharing the best tips and strategies on the web. Flyertalk – By far the largest frequent flyer community on the web, Flyertalk is full of information on everything from the best credit card offers to hotel reviews. I would recommend that you check it frequently to keep up with what is going on in travel hacking and don’t be afraid to ask questions. Just be aware that Flyertalk is not the friendliest place for people who are new to the hobby. Milepoint – Very similar to Flyertalk but with fewer users and more basic information. Milepoint tends to feature topics that are geared toward individuals with less travel hacking experience. 10xTravel.com - And of course, don’t forget to take advantage of all of the resources that can be found on my own site. You can check out my favorite credit cards, read my blog, email me any questions that you have, follow me on Twitter, and explore some of the other services that I offer to travel hackers.

Thank You! Congratulations! We covered a ton of information in this book and you should be proud of making it all the way through. You are now ready to start your journey to a better life by traveling the world for next to nothing. Before you go I wanted to share a few final thoughts.

Go Explore the World! Now that you know how to travel for free you have no excuse not to get out and see the world! Traveling will afford you some of your life’s richest experiences while opening your eyes to see the world in ways that you never thought possible. There are few things more exciting in life than meeting new people, seeing new places, and experiencing new cultures.

Remember to Have Fun Remember that above all, traveling and travel hacking should be fun. Whether this book is your first step to becoming an extreme traveler or just a way to earn a free flight, always make sure you enjoy the ride.

Hang on to this Book This book will undoubtedly come in handy as you continue to refine your travel hacking skills. Keep it somewhere you can find it and refer back to it when you have questions. Also, don’t be afraid to ask for help if you need it! Even with a resource like this book, there will be times where you don’t understand something. Don’t hesitate to contact me or anyone else who might be able to help you.

Stay in Touch I always love hearing from people who share my passion for traveling and travel hacking. If you haven’t already, please follow me on Twitter (@10xTravel) and contact me with any stories or questions that you might have. Also, don’t hesitate to say hello if we happen to cross paths somewhere! And finally, come hang out in the 10xTravel Insider’s Facebook Group! This is perhaps the best way to get in touch with me.

Thank You Thank you for your support of this book and 10XTravel. I hope that you enjoyed reading it as much as I enjoyed writing it. I am truly grateful that so many people have taken the time to listen to what I have to say and am humbled by the opportunity to share my knowledge with you.

Please stay in touch and tell your friends about the wonderful opportunities that await in the world of travel hacking. Happy Travels,

Appendices

Appendix A: Insider’s Guide to Credit This is a 5,000+ word guide on how to become a master of all things credit and credit scoring. Yup, you read that right. 5,000+ words. I am not a big fan of using 5,000 words when 500 will do, but a topic this important demands a thorough write up. Why? First, because your credit score is a vital part of your financial health, and therefore your overall well-being. Bad credit = more stress, more frustration, and more money needed to buy things like houses and cars. And secondly, because 90% of the things that you read and hear about credit scores are completely false. Everybody thinks they understand credit scores when in truth, less than 10% of these people have any idea what they’re talking about. (10% figure based on my own experiences. Scientific accuracy be damned!) Today you become a part of that educated minority. Over the next 5,000+ words you’ll learn everything you’ll ever need to know about credit and credit scoring. Go ahead and bookmark this page because you’ll probably want to refer back to it a time or two. At the very least it will help you diffuse your friend/roommate/coworker/neighbor who keeps telling you that credit cards are evil and to be avoided at all costs. (*Face palm*) Ready? Let’s get started. Here’s what we will be covering today: ● ● ● ● ● ● ● ●

Why Should You Care About Your Credit Score? What is a Credit Report? What is a Credit Score? How Your Credit Score is Calculated What is a Good Credit Score? How Do You Check Your Credit Score? How to Build and Maintain a Good Credit Score Common Credit Myths

Why Should You Care About Your Credit Score? Let’s start by addressing the elephant in the room. Why should you care about your credit score (and therefore keep reading this 5,000+ word guide)? I was actually having dinner with some friends the other day when this very question came up. I know, we’re quite the conversationalists. My response was cut off mid-sentence by the question, “Credit scores? What are you, 50 years old now?” It’s that kind of ignorance that causes years and years of financial stress. The fact of the matter is that your credit score will dictate how much money you pay for the largest purchases you’ll make in your lifetime. The $250,000 home that you want to buy someday? It’ll cost you an extra $31,000+ in interest if your credit score is less than ideal. Which is more than enough money to buy a large pepperoni pizza every single day for 7 years … 7 years!

The same effect can be seen with auto loans. You can play with the numbers here if you like. So unless you aren’t a fan of pizza, or saving thousands of dollars on life’s biggest purchases, you should probably listen up. Step one: understanding your credit report. This is where it all begins.

What Is A Credit Report? A credit report is a detailed report that contains information about your credit history.

Some things that are included are the status of your credit accounts, loans, bankruptcies, late payments, credit inquiries, public records, and even some personal information such as your address, social security number, and date of birth. This information is collected by the three major credit reporting agencies (Equifax, Experian, and TransUnion) and each one compiles it in to their own single credit report. Although each reporting agency has their own credit report, the information that each of them collects is very similar. The credit reporting agencies then sell this information to businesses such as banks, credit card companies, insurance companies, and even landlords, where it is used to determine your creditworthiness. Still with me? Great. Let me make a quick analogy. Think of your credit report like a transcript or report card from school. It is simply a record that shows what classes (or in this case credit accounts) you have taken and what grade you received in each of them.

Think of your credit report like a report card from school.

Like a school transcript, your credit report does not explicitly state whether you are a “good” or “bad” student (or credit). It simply presents the historical information that has been gathered.

What Is A Credit Score? Your credit score, on the other hand, is a numerical assessment that quantifies the risk that you present as a credit. It is used by lenders to answer the question “How much risk am I taking by lending money to this person?” So if your credit report is your report card, your credit score would be your grade point average (GPA).

Think of your credit score like a GPA from school. Your credit score is calculated by taking information from one of your credit reports and running it through an algorithm created by a company called FICO (formerly called Fair Isaac Corporation). The algorithm uses the information found on your credit report to generate a number between 300 and 850 that represents the risk you present as a credit. The higher your score, the less risk you present as a credit, and therefore the more likely you are to qualify for lower interest rates on any form of debt. While there are a variety of different credit scores that are used by lenders, the FICO credit score is by far the most common. Let’s take a look at how it is calculated.

How Your Credit Score Is Calculated Your credit score is calculated using the following 5 criteria:

1. Payment History (35%) The most important factor in determining your credit score is your payment history. This measure reflects the number of times that you have paid your credit bills on time. The more on-time payments you make, the higher your score will be. It is important to note that bills such as rent and utilities do not contribute to your payment history. FICO does not consider these types of bills to be credit accounts, so they do not include them when calculating your score. These items can however have a negative impact on your score if you fail to pay them and they are turned over to a collections agency. Not only is your payment history the most heavily weighted metric, but it is also the most volatile. Miss just a couple payments and you could drop over 100 points off your score (Ouch!). That big of a drop will limit your ability to qualify for any sort of credit card or loan. Tl;dr (Too long, didn’t read): Make all of your payments on time, every time.

Always make your payments on time.

2. Amounts Owed (30%) The second largest factor in determining your credit score is the amount of debt you owe. This metric is broken down into a few subcategories. Total Amount Owed: This is the total amount of debt that you owe on all of your credit cards, loans, etc. Generally speaking, the less debt that you have the better your score will be. Having zero debt however does not guarantee a good credit score. More on that later. Total Amount Owed by Account: This is a measure of how much debt you have on each of your accounts. Creditors commonly refer to this as your credit utilization,which is expressed as a percentage of your credit limit that you are using. For example, if you have a $1,000 limit on a credit card and have a balance of $500, then your utilization for that card would be ($500/$1000=) 50%. Generally speaking, the lower your utilization, the higher your credit score will be. The exception to this rule is having 0% utilization. 0% utilization indicates you don’t use credit, which research has shown is riskier than using some c redit. So 0% credit utilization could have a negative effect on your credit score. It’s also important to note that your credit utilization is not tracked historically. Only your current utilization counts, so don’t worry about what it was last month/year/etc. How Many Accounts Have Balances: Carrying a balance on a large number of your credit lines indicates that you may be a high risk borrower and can lower your credit score. Original Amount of Installment Loans vs. Current Balances: Paying down installment loans (mortgages, car payments, etc.) is a good sign that you are able to manage and repay debt. Like credit card payments, you always want to make your installment debt payments on time and in full. Tl;dr: Don’t max out your credit accounts, even if you’re paying the bills on time. Lower utilization is better, except if it’s 0%.

Don’t max out your credit accounts, even if you pay them off in time.

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3. Length of Credit History (15%) Length of credit history is a measure of the amount of time that you have been using credit. This metric takes into account the age of your oldest account, the age of your newest account, and the average age of all of your accounts. In general, a longer credit history will lead to a higher credit score. All trade lines, whether opened or closed, will contribute to your average age of accounts until they fall off of your credit report at the 10 year mark. Tl;dr: Don’t close old accounts just for convenience. More on this later.

4. New Credit (10%) New credit is a measure of your credit seeking activity. By applying for and opening a lot of new accounts in a short period of time you are indicating that you might be a risky borrower, which will cause your credit score to fall. Tl;dr: Don’t apply for a ton of credit accounts at once.

Don’t apply for too many credit cards at once.

5. Types of Credit Used (10%) This factor looks at your mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. You ideally want to have a healthy balance of credit card debt and installment loans to show that you know how to manage both types of debt. Tl;dr: Having mortgages, car loans, etc. can be beneficial for your credit score. But don’t ever take out a loan just to improve your credit score. More on that later.

Now that you know how your credit score is calculated, let’s take look at how your score is evaluated by creditors.

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What Is A Good Credit Score? As we discussed earlier, FICO credit scores range from 300 to 850, with 300 being the absolute lowest and 850 being an almost unattainable maximum. Chances are good that your score will fall somewhere between the two, so let’s take a look at what that means. Here is a chart that shows how credit scores are typically graded:

As you can see, credit scores are put into ranges when being evaluated by creditors. While different creditors might use different ranges, they are generally pretty close to the ones you see above. A quick google search will show you some of the different variations. Scores within each range are typically treated equally, so there is no need to obsess over minor fluctuations in your score. As long as you stay within your desired range you will not see any major change in interest rates/approvals for credit cards or loans. So continuing with our report card analogy, an A is an A, a B is a B, etc. Regardless of where you may fall within the range. So don’t be that guy who freaks out about your credit score dropping 5 points. It is also important to note that there is a diminishing return in having a credit score that is higher than the mid 700’s. Creditors typically treat scores in the “excellent” range equally, so you do not need to worry about trying to reach the maximum score.

How Do You Check Your Credit Score? There are dozens of websites that promise to give you a free credit score (one particular TV jingle comes to mind), but very few of them actually do. Most of these sites require you to purchase some sort of credit monitoring package before showing you your score. These packages typically cost $10 to $20 a month. Do not sign up for these services. They are a total waste of money.

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Do not sign up for any site that requires a credit card. Instead, I recommend that you use websites such as CreditKarma.com or CreditSesame.com. These are 100% free websites that show you a credit score as soon as you sign up. You’ll never be asked to provide credit card information or submit any form of payment. You will have to provide some personal information, including your social security number to verify your identity and pull your credit, but rest assured you will never be charged a dime to use these services. Websites like Credit Karma and Credit Sesame make money by advertising credit products based on your credit report or credit score. Always do your own research, as they have a financial incentive to recommend some products over others. In full disclosure, the scores that are provided by these sites are not your actual credit score. They are simply approximations (called “FAKO” scores). They are, however, pretty accurate (I check them frequently against my actual FICO score) and good enough for our purposes. If you want to see your actual FICO score you have a few options: 1. Pay a monthly fee to check it on myfico.com (don’t do this) 2. Have your friend at the car dealership/bank/check cashing place pull your credit (punch yourself in the face if you do this) 3. Use Discover Scorecard (Bingo, do this) A quick google search for “Discover Scorecard” should bring up the site (the URL has changed a few times so I omitted a link here). This service is totally free and has no impact on your credit. Best of all, it shows you your real FICO score. Just be aware that Discover is going to try to market their cards to you after you sign up. In general, their products are inferior to just every other bank out there so don’t sign up for one without doing some research.

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Finally, you are entitled to one free copy of your credit report every 12 months from each of the major credit bureaus. You can make this request at www.annualcreditreport.com. Remember, your credit report doesn’t show you your credit score. But reviewing it annually is a great way to make sure that everything is in order. Be careful, there are a number of websites out there that try to mimic this site and charge you for your reports. Again, you should never have to provide credit card information to view your reports.

How to Build and Maintain A Good Score Ok, so you now know what a credit score is, how it is calculated, how credit scores are viewed by lenders, and how to check it (for free). But how do you make sure that you are able to build and maintain a good score? Here’s my best advice condensed into one single sentence: Never miss a payment, get way more credit than you need, keep your oldest accounts open, and nothing else will have a significant impact. Here are 4 tips that will help:

1. Understand How Your Credit Score Works Your credit is one of the most valuable assets that you own and ruining it will have lasting effects on your financial well-being. For this reason, it is important that you take the time to learn how it works. This will help you make informed credit decisions and take the necessary steps to maintain a good credit score. By taking the time to read this overview you are already taking the first step. It may help to review it a couple times to make sure that you didn’t miss anything. In addition to understanding how your score works, it is also important to check it regularly to avoid issues such as account errors or fraud. Remember that you should never pay to do this.

2. Always Make Your Payments on Time Put simply, missing credit payments has the potential to wreak havoc on your credit score. Having just one or two missed payments can drop your score by more than 100 points and make it very difficult for you to qualify for any sort of loan. You absolutely have to make all of your payments on time and in full if you want to maintain a good credit score. If you’re worried about missing payments I highly suggest you take advantage of “auto pay” features offered by banks/credit card companies.

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3. Build a Solid Credit History The more credit history you have, the more evidence there is that you are a responsible borrower. This will help to boost your score and insulate it against minor ups and downs that can be caused by things like new credit inquiries or accounts. The best way to build a solid credit history is to continually stick to the first two tips that you just read. If you continue to monitor your credit score and make your payments on time you will be able to build a solid credit history of being a responsible borrower. It is also a good idea to keep your older credit accounts open and in good standing. Although it can be tempting to close credit accounts that you no longer use, keeping them open helps to build your credit history and thus boost your credit score. As a general rule, I would suggest that you never close any credit accounts that do not have an annual fee.

4. Keep Your Credit Card Balances Low The last tip for maintaining a good credit score is to keep your credit card balances low. Generally speaking, the higher your credit card balance is, the lower your credit score will be. To prevent this from occurring it is best to keep your credit utilization below 20% at all times (That’s $200 on a credit card with a $1,000 credit limit). Going above 20% could cause your score to fall, even if you are paying your balance every month. By understanding how your score works, always making your payments on time, building a solid credit history, and keeping your balances low, you will easily maintain a good credit score. Now let’s tackle a few common credit myths.

Common Credit Myths Credit Myth #1: Paying cash for everything will help your credit score

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The thinking behind this myth is pretty simple. Paying cash = no missed/late payments = good credit score. The assumption being that “good” credit is the default, which is completely false. Paying cash (or using debit cards, gift cards, checks, etc.) for everything prevents you from building credit history, which means you will likely have a low credit score. In some cases, you might not have a credit score at all (referred to as a “thin file”). Again with the report card analogy, you cannot have a great GPA if you never take any classes. And if you are still using a debit card for your day-to-day purchases you need to switch to using a credit card, provided that you trust yourself to do so.

Credit Myth #2: Having too many credit cards will hurt your credit score This is the age-old question of credit cards. What is the right number of cards to have? I hate the answer “it depends,” but in this case, it seems appropriate. Allow me to elaborate. As we discussed above, 30% of your credit score is based on the amount of debt that you owe with respect to your total available credit (called “credit utilization”). In an ideal world, you would always keep your utilization below 20% (i.e. $200 on a credit limit of $1,000). Below 10% would be even better, but 20% is a good benchmark. So take the amount of money that you spend in a typical month, multiply it by 5, and that’s the minimum amount of credit that you should have available at any given time. If your credit limit is any lower than that then you should probably apply for another credit card or two. But if 20% is the minimum, what is the maximum? Will having a bunch of credit cards hurt your score? Nope, in fact, that will likely help your credit score by reducing your credit card utilization and increasing your number of on-time payments. Generally speaking, there is no such thing as having “too much credit.” As long as you are making all of your payments on time, extra available credit will actually help your score.

Credit Myth #3: Checking your credit will hurt your score 106

In the world of credit scores, there are two types of credit checks, “hard inquiries” and “soft inquiries.” A “hard inquiry” occurs when your credit report is pulled as a result of some sort of application for credit (credit cards, mortgages, car loans, etc.). Each hard inquiry dings your credit score by roughly 2-5 points, depending on a variety of other factors. A “soft inquiry” occurs when you pull your own credit report or when a company pulls your report for a non-credit use such as a background check. Unlike a hard inquiry, a soft inquiry has no effect on your credit score. So how do you go about checking your score (and not hurting it)? I personally recommend that you use Credit Karma or Credit Sesame (or both). These two sites are very user-friendly and completely free. You will never be asked for your credit card information in order to see your score. Don’t bother with sites like freecreditreport.com that ask for your credit card info. They will end up charging you a monthly fee for a bunch of credit monitoring services that you probably don’t need.

Credit Myth #4: You should close accounts after paying them off This myth is related to the number of credit cards myth, but the number of questions I receive about it on a weekly basis justifies a separate question. Generally speaking, you should never close a credit account unless you have a reason to. Common reasons include avoiding an annual fee, transferring your credit to another card, etc. Never close an account just for convenience. But why? Closing accounts reduces your total available credit, causing your credit card utilization to increase and therefore your credit score to fall. Closing accounts also prevents you from building additional credit history, which makes up 15% of your score. This myth persists because people think that closing an account will remove it from their credit report, therefore hiding any bad history from future lenders. Unlike bad relationships, you can’t just delete all of the evidence of a bad credit account and forget that it ever happened. The account will remain on your credit report for up to 10 years.

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Unlike bad relationships, you can’t just delete any evidence of bad credit accounts and forget about them. The best course of action is to keep the account open and in good standing, allowing you to build credit history and maintain a good credit utilization ratio.

Credit Myth #5: You need to carry a balance to build your credit score I have never really understood this myth. I’m supposed to believe that by not making all of my payments on time I am somehow improving a metric that measures my likelihood of making my payments on time? Conventional credit card wisdom continues to baffle me. The most common justification for this practice is the belief that carrying a balance on your credit card is the only way to build credit history, which makes up 15% of your score. After all, having no balance means you have no credit history right? This is completely false. You are building credit history regardless of whether or not you carry a balance on your card. Carrying a balance will only leave you with tons of late fees and interest charges. If anyone tries to tell you to follow this advice please do us all a favor and punch them squarely in the face.

Credit Myth #6: Paying all of your debts will instantly fix your credit score This is like believing that starting a diet will instantly make you fit.

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The truth is that your credit report reflects your history of using credit, not just a snapshot of your current situation. Even after being paid off, it can take as many as 7-10 years for a debt to fall off of your credit report. So if you are looking for a quick fix for your credit score, this is not it.

Credit Myth #7: You only have one credit score This myth is perpetuated by all of the advertisements that encourage you to “check your credit score,” as if there is only one score that is used for everyone. I wish it were that simple. The truth is that there are dozens of credit scoring models that are used to predict your likelihood of default. Each of them is a little different and at times can produce drastically different scores. While I would love to discuss each of them with you (actually, that sounds awful), I’ll save us both the time and cut to the chase. The most widely used credit score is the FICO Score, which ranges from 300-850. This is the score that you want to pay attention to. Your FICO Score is calculated from several different pieces of data in your credit report that are grouped into 5 basic categories. We just talked about how this works above. Other credit scoring models are often referred to as “FAKO” scores. While these scores can be useful for getting a basic idea of where you stand, the FICO score is the one that really counts.

Credit Myth #8: Once a credit score is bad it can’t be fixed I have found that this is more of an excuse than a myth. People with bad credit tend to bring this up when they are confronted with the idea of repairing their credit score. In reality, they are simply trying to justify their laziness. While there are certainly no “quick fixes” for a credit score, it can be rebuilt with a little bit of patience and discipline. The key is start making your payments on time and building a history of responsible credit use.

Credit Myth #9: Income/education/net worth can affect a credit score Your income, education, net worth, etc. have absolutely zero effect on your credit score.

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Your credit score is a reflection of your ability to pay your bills on time, not your current financial standing. It cannot be improved simply by earning or saving a lot of money.

Credit Myth #10: Credit reports are only used for financial purposes In addition to being used in credit decisions, credit reports can be used by current and potential employers to aid in employment decisions. While they cannot see your actual credit score, employers are able to view a modified version of your credit report that includes information about loans and credit cards listed in your credit report. This practice is especially common in industries such as banking or finance, where employees are responsible for dealing with a client’s personal finances. This is just another reason why your credit score is such a crucial component of your overall financial well-being.

How to Improve Your Credit Score

Don’t be discouraged if you happen to find yourself with a credit score that is lower than you would like it to be. Your credit score is never permanent and it can be improved with a little bit of patience and the right advice. With that said, let’s take a look five steps that you can take to improve your credit score.

1. Check for Errors on Your Credit Report The first step to improving your credit score is to check for any errors on your credit report. Errors are relatively common and can have serious effects on your credit score if they are not addressed quickly. Make sure to only request a copy of your report from www.annualcreditreport.com, as we discussed above. You will not have to provide credit card information to do this. If they ask for any sort of payment then you are on the wrong website.

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Common errors to look for are duplicate account listings, inaccurate personal information, or identity theft. Look over the entire report for any inaccuracies and send any disputes to the credit bureaus in writing. The bureaus are required to investigate any information that you dispute and will make corrections where needed. Make sure to continually follow up with the credit bureaus until any mistakes are corrected.

2. Try to Pay Your Bills on Time The next step is to do everything you can to start paying your credit bills on time. This is pretty obvious, as your payment history is the biggest factor in calculating your credit score, but it is crucial to improving your score. Continuing to miss payments will not only prevent you from improving your score, but it could also cause it to fall even further. We definitely do not want that. Start by targeting the accounts that are in collections first, as these are the most harmful to your score. You might even be able to negotiate a lower debt by offering to do a “pay for delete” (google how to do this), but this is not as common as it used to be. Make sure to document all of your correspondence with your debtors and to request a “paid in full” letter when your debt has been paid. Things can get pretty dicey when you are disputing debts so you’ll want to make sure to cover all of the bases. Phone conversations should be avoided if possible. Then work your way up to more recent debts, focusing on the ones that are close to your credit limits first.

3. Reduce Your Spending This step requires you to be brutally honest with yourself. Sometimes things like medical emergencies, unexpected job loss, unforeseen car/home repairs, etc. occur suddenly and cause financial distress. I get that. But most times bad credit is caused simply by spending beyond your means. Regardless of what caused your credit to be damaged, you are going to have to make sacrifices to fix it. That $30 a month wine club you just joined? Cancel it. Go ahead and drop all of those premium cable channels while you are at it.

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4. Don’t Close Old Accounts While it is tempting to close credit cards after paying them off, it is best to keep them open if you want to improve your credit score. When you close a credit account it reduces your total available credit, which causes your credit utilization to rise and your credit score to fall. Closing old accounts can also reduce your length of credit history (15% of your score), especially if one of them happens to be your oldest line of credit. Closing old accounts also does not make them go away. Items such as delinquencies or bankruptcy can remain on your credit report for years, regardless of whether or not the accounts have been closed.

5. Opening New Accounts How you approach this step depends on your credit history. If your credit score is low because you have little to no credit history then you should try to open a new credit card account. This will help to establish some credit history and start improving your credit score. You should only apply for a card that you are likely to be approved for so it might be a good idea to start with some of the more basic credit cards offered in the market. Opting to go for a secured card might also be a good option. If you already have an extensive credit history then you should avoid opening new credit card accounts if at all possible. Applying for cards could cause your score to fall even farther and you will likely be denied for them anyway. Remember to be patient! Improving your credit score won’t happen overnight but it can be done with discipline and persistent effort. Now let’s take a look at a few frequently asked questions.

Credit FAQs 1. Aren’t credit cards dangerous? Nope. Using credit cards responsibly is actually a great way to improve your credit profile over time. This will result in a higher credit score, a better chance of being approved for credit cards and loans, and the ability to receive lower interest rates on any existing or future debt. Credit cards are only dangerous when you overspend and start accruing debt.

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2. How many credit cards should I have? There is no set number of credit cards that is best for any one person. The number of cards you should have depends on your credit score and the amount of money that you spend on a monthly basis (see credit utilization above). As long as you are able to keep your credit score within your desired range, the amount of cards you have is up to you.

3. Will avoiding credit help my score? Avoiding credit altogether will prevent you from building credit history and likely result in a low credit score. In some cases, it can even cause you to have what’s called a “thin file,” which means you don’t have enough information to even calculate a credit score. It is important that you start building a solid credit history as soon as you can.

4. How much will a credit card application affect my credit score? While it will vary for each person, a credit card application will generally only have a small impact on your credit score. For most people, one inquiry will cause their score to fall by less than 5 points.

5. Which credit cards should I sign up for? This depends on a variety of different factors. There are pros and cons to every card and most of them will ultimately get you to your dream destination. You can check out my Credit Cards page to see which cards I recommend.

6. Should I cancel a credit card right after I get the sign-up bonus? No! You should never cancel a credit card unless you have a reason to (such as avoiding an annual fee). Canceling a card will cause your credit utilization to rise and likely cause your credit score to drop.

7. I max out my credit card and pay it off every month. Will this help improve my score? While making your payments on time will help to establish credit history, carrying a large balance on your card will likely cause your score to drop until the balance is paid off. This is due to the effect of credit utilization on your score. It is best to keep your utilization ratio below 30% at all times to prevent this from happening.

8. What is the ideal credit score? Technically speaking, an 850 is the ideal credit score because it is the highest score possible. For most, that is not a realistic goal so I would recommend that you shoot for something in the mid 700’s. This will put you well within the “excellent” credit score range, meaning that you will still receive the best offers available. 113

9. When buying something, should I pay with a credit card, a debit card, or cash You should always pay with a credit card when possible (as long as you are not charged a fee to do so). In addition to earning points, credit cards have other benefits such as fraud protection and extended warranties that are not offered by debit cards or cash.

10. My credit score is lower than I would like it to be. How can I improve it? Credit scores are never permanent and can always be improved with a little bit of time and discipline. You can check my Guide to Improving Your Credit Score for some tips on how to do this. I also wrote a book to walk you through the entire process, it’s available at book.10xTravel.com.

11. Do debit cards, utilities, or checks affect my credit score? No. Items such as debit cards, utility bills, and checks are not considered credit accounts and do not affect your credit score unless they are turned over to a collections agency.

Credit Resources Here are a few of my favorite resources for information on credit scores. www.myfico.com www.experian.com www.credit.com www.scoreinfo.org www.nerdwallet.com

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Appendix B: Business Credit Card Overview Business credit cards can be a great source of frequent flyer miles when used correctly. In fact, applying for business cards effectively doubles your ability to earn frequent flyer miles because most major credit cards have both a personal and business version. Here are a few things to keep in mind when using and applying for them.

1. Business Credit Cards Have Zero Impact on Taxes One of the most common questions I get is “Will using a business credit card mean that I have to claim all of my expenses as tax deductions?” The answer is no. In fact, business cards have absolutely zero impact on your taxes. None of your spending is reported to the IRS in any manner.

2. You Don’t Need to Have an Incorporated Business to Get a Business Credit Card This seems a bit counterintuitive to most people, but you don’t have to own an incorporated business to qualify for a business credit card. Each credit card company has a different requirement for what qualifies as a “business” and most of them are pretty lenient. As long as you are engaging in some sort of activity with the intent of making a profit then you can be considered a business. There are a variety of activities that you can do (or are currently doing) that would qualify you as a business in the eyes of a credit card company. Some common examples include selling items online, driving for Uber/Lyft, writing a blog, consulting, and even traveling for work. Just remember that you need to be able to justify your activity as being done for the purpose of generating a profit. For many people, the best way to qualify for business credit cards is to claim their day job as a business. As long as you have some sort of expenses related to your day job, even if they are reimbursed or on a corporate card, you can claim your day job as a business.

Here are a few of the most common examples of this: ● ● ● ●

Salespeople who travel for work (even if they have a corporate travel card) Teachers who purchase materials for their classroom Medical professionals who have continuing education expenses Etc.

Even if these expenses are not frequent or sizeable you can still qualify.

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How to Apply as a Sole Proprietor When applying for a business credit card without a legally registered business you are applying as a sole proprietor. Hereâ&#x20AC;&#x2122;s how the application would look. Business name = your name (must match your exact name in most cases) Business Revenue = your annual salary Tax ID # = your social security number Business Address = your address Time in Business = How long you have worked there Type of Business = Sole Proprietor Business Industry = whichever choice is closest to your job Role = Owner Just be sure to answer each question honestly. This is not the time to make up some sort of fictitious business.

3. Most Business Credit Cards Do Not Show Up on Your Credit Report When you apply for a business credit card the bank will pull your personal credit (generating a hard inquiry), but usually not report the account to the personal credit bureaus. The only exception to this at the time of writing is business cards issued by Discover or Capital One. Both of these banks still report business credit card accounts to your personal credit. This means that business cards (again, except for those issued by Discover or Capital One) will not impact your credit utilization, credit history, etc. and therefore will have no impact on your credit score once you are approved. Note however that you are still personally liable for any debt incurred on the card. You canâ&#x20AC;&#x2122;t just run up a huge debt and walk away from it scot-free. If you start to miss payments those can be reported to your personal credit. This also means that closing business credit cards will have zero impact on your credit score. Again, because they are not even on your credit report.

4. Business credit card spending One more thing to be aware of regarding business cards.

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The terms and conditions for most business credit cards on earth will say something about “this card shall be used for business purposes only.” Which leads many people with non-traditional businesses to ask if their purchases are being watched for anything that is not a “business looking” expense. For example, if you own a blog, does it set off alarms if you host a meetup and buy pizza for your readers? In my years of participating in this the points/miles world (and sharing it with thousands of people), I have never seen a single case of a bank questioning whether an expense was for “business” or not. Realistically, how could they possibly know? At 10xTravel we spend thousands of dollars a year hosting Reader Meet Ups at bars around the country, buying food and drinks for everyone in attendance. These are legitimate business expenses and they go on our business credit card. So don’t worry about only using your card for what appears to be traditional business expenses. Just use your business card like normal, always being sure to pay your bills on time every month.

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Appendix C: Other Benefits of Credit Cards In addition to rewarding you for the purchases you make, credit cards provide a number of other benefits to their users. Here are a few examples. 1. Convenience: Using a credit card means no more running to the ATM to withdraw cash, having to count and carry change, or writing checks to pay expenses. You can just swipe and go. 2. Security: You are generally not responsible for unauthorized charges on your credit card. This protects you against theft and fraud. Using cash or a debit card, on the other hand, offers you little to no protection. 3. Budgeting: It is easy to track all of your spending on a credit card and use it to create and manage budgets. Online accounts also offer great tools for creating and monitoring spending reports. 4. Extended Warranties: Some credit cards provide extended warranties on anything that you purchase. So if that brand new TV breaks after its warranty has expired, your credit card might cover the cost of replacing it.

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Appendix D: Acronym List • 5/24: The Chase 5/24 Rule • AAoA: Average age of Accounts. This refers to the average age of your credit accounts, which is a key component that goes into calculating your credit score. • AF: Annual Fee • AGC: American Express Gift Card • AU: Authorized User • BCP: Blue Cash Preferred (an American Express card) • BOA: Bank of America • BYODP: Be your own data point. Typically used when nobody knows the answer to a question. Much like saying “give it a try and let us know how it goes.” • CB: Credit Bureau. The 3 major ones are Experian, Equifax, and TransUnion. • CK: Credit Karma (CreditKarma.com). This is one of the best ways to monitor your credit score for free. Note though that CK does not provide your “real FICO” score, and can be quite inaccurate at times. • CL: Credit Limit • CPP: Cents per Point. This refers to monetary value out of reward redemptions, calculate by dividing the cash value of a redemption by the number of points/miles required to book it. • CS(R): Chase Sapphire Reserve • CSP: Chase Sapphire Preferred • CSR: Customer Service Representative (also Chase Sapphire Reserve) • DP: Data Point. Typically used in a sentence such as “we are seeing many DPs that this method works.” • FF: Frequent Flyer miles • FTF: Foreign Transaction Fees • HH: Hilton Honors Reward Program. • HUCA: Hang up call again. Typically used when making a recon call (defined below) regarding a credit card application. HUCA is basically another way of saying “Try again if you don’t get the result you liked.”

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• IHG: Intercontinental Hotel Group • MO: Money Order • MR: American Express’ Membership Rewards Program • OV: One Vanilla, a type of Visa Gift Card frequently used to manufacture spend (but not the only type of Visa Gift card on the market). • PRG: Premier Rewards Gold (an American Express card) • Recon: A reconsideration call where you attempt to overturn a credit card denial. • SM: Secure message. Typically the most convenient way to contact a bank. • SPG: Starwood Preferred Guest (a hotel loyalty program) • T&C: Terms and Conditions • TYP: Citi’s Thank You Points Program. • UR: Chase’s Ultimate Reward Program/Points • VGC: Visa Gift Card (there are many varieties of these) • YMMV: Your Miles May Vary. Which is another way of saying “Different results for different people.”

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