How to Fly 35,000 Miles, Visit 4 Continents, 9 Countries, and 15 Cities for $418
nerdfitness.com
nerdfitness.com
I guess being on the other side of the table - a merchant - I resent the whole 'rewards' racket. A) I end up getting charged more as a merchant, and I can't not accept your card. B) It's encouraged a culture of chasing after rewards that often aren't really something you need or end up being hard to use for most people (airline miles).
Yes, there are a few people who can really 'make out' (like this guy) but in the end this is mostly just another way for banks to make extra profits off people's greed ('something for nothing').
"If I were to pay for this adventure with cash and book individual flights, it would cost almost $6,000"
I'm guessing there was a lot more than $6k spent on 'stuff' to get this.
Maybe I'm missing something blindingly obvious though? I can't help but think banks and card providers aren't going in to debt to provide these rewards. The price is baked in to costs to cover the extra fees banks charge when rewards card holders use their card.
better yet, get a card that gives you 3% when you buy gas or 5% back when you buy stuff at a store you shop at anyway (Target does this, for example).
if you're clever, cash can be amazingly flexible. its easy to redeem and accepted in most places.
- Regular 1% card: $9000 at 1% = $90
- Amex Blue Cash: $5525 at 0.5%, $975 at 1.25% (for the first $6500), then $2125 at 1.5%, $375 at 5% = $90.44 (the splits assume the average spending habits of 15% on "everyday purchases")
is there an annual fee?
They do have a calculator to help you figure it out.
https://www295.americanexpress.com/cards/loyalty.do?page=bluecash.maximize.newI'd imagine the companies have done their sums, and make much more on interest that they pay out in rewards when averaged across a large number of customers.
I would also suspect (haven't researched it) that reward paying cards will have a higher interest rate than non-reward cards.
My standard merchant fee rate might be 2.4%, but if you use a 'airline miles reward card' with me, I may end up having to pay 2.9% or 3.4% (or more). I can't not take your card - against Visa/MC terms of service - so I'm stuck paying for your 'rewards'.
On the personal side, rewardsnetwork lets me earn up to 5 miles per dollar at participating restaurants. Since my fiancee and I don't cook we earn quite a few miles this way too.
3% merchant fees on that $40k is $1200. The cost of a couple flights is probably a few hundred to $1000 or so. Even at regular merchant rates they may still turn a profit, cause most people won't redeem points. But they'll charge a merchant higher fees for the rewards card anyway.
You're already spending $40k - understood. Most people aren't, and are enticed in to spending more than they should to get 'free' stuff. Insane.
You can however charge your federal income tax (and some state income tax) payments against your card for a fee.
American Express even lets you use rewards points to offset this fee.
I think most schools are charging fees now, though. There used to be a scam where you could massively overpay you tuition bill on a credit card and then the school would cut you a check for the difference. (Lots of people legitimately end up overpaying because grants or loan dispersements can hit your account at weird times)
B) Do you want to be told - "sorry, I can't accept your BoA airline rewards miles VISA card, please use a different VISA card"? I'm pretty sure Visa/MC TOS prevent that.
Refusing AMEX is a big one from many vendors - AMEX fees typically start at 4-5%, and MC/Visa is typically 2-2.5%. On large repair bills of, say, $1500, and extra 2% is another $30+, just for accepting a different piece of plastic.
Why would you do that? As far as a vendor is concerned, a visa is a visa is a visa. If you take a look at the card and say you don't want to accept it based on it being some kind of rewards card that's just bizarre nonsense that would definitely keep customers away.
Nope. A "rewards card" CC jacks up the rates I'm charged. It's the difference between paying 4.5% to process a transaction vs 2.2%. I don't particularly like being forced in to paying extra so someone can go on a 'free' airplane trip. It's not free. It costs me money. And it ends up costing everyone even more, because merchants have to add that 'cost of business' in to the price of everything.
To answer your first question, I didn’t buy ANYTHING outside of what I would normally purchase to get these bonuses. For example, to earn 100,000 British Airways points, I had to spend $2,000 in six months – after prepaying my car insurance for the year, and putting all of my other payments (cable, gym, etc.) on the card for a few months I hit the bonus with ease.
But racking up $4k in 6 months is not actually all that difficult if you put everything on your card (utility payments, insurance payments, groceries, cell phone, gas, etc).
And if you can't meet the required spend by normal means, there are schemes out there to help you get there without actually spending any more money. For example (as mentioned below), buying $1 coins from the US mint with free shipping with your credit card, and then depositing them back in your bank account.
If you spend any amount of money with a credit card, and are responsible enough to pay it off every month (rewards cards typically have higher interest rates), there's no reason not to collect rewards from it.
The main question becomes whether to get a standard 1% cashback card or an airline miles card. This mostly depends on how much you fly (or plan on flying in the future). But if you do fly, the bonus miles offers and the potential value of the miles can be worth a lot more than the standard 1% cashback.
EDIT - Damn Chrome - it just auto-saves half a comment then breaks.
Is it blantantly ignoring the content when the content was partially about how he piled up rewards cards points to get 'free' airline miles?
edit: I shouldn't have been so oblique.
Credit card companies will give you free money (a portion of what they charge merchants), and that really has nothing much to do with how to travel cheaply.
If someone said "here's how to get $500 of stuff on amazon for $50" and the trick was to use $450 in amazon rewards earned from normal credit card use, that'd be a dumb article, right?
Yes but you're ignoring that $4000 spend on Amazon Visa might net you a $40 certificate (@1%, I dunno the exact reward) where as $4000 spend on British Airways Chase might net you 75,000 miles (incorporating their bonus) which might represent $1000 worth of airline ticket.
In my experience, assuming you fly, the airline reward cards are the best in terms of the $ value of the reward.
edit: Maybe some airlines do it by only letting you use reward miles on seats that they wouldn't have been able to sell anyway or something along those lines. But some don't. I know Southwest reward tickets aren't heavily handicapped or anything lame.
2) $1000 in airline fare isn't actually a $1000 liability to the airline, because that is the market price where as to them the cost price is going to be less... and as you suggest if they restrict it to a few seats per plane the cost price is even less.
And yes, reward flights usually require you to pay tax, and for popular routes there may be only one FFM redeemable ticket per class per flight. Meaning you have to book ages in advance, choose less popular routes/times or be damn damn lucky.
So I'm not questioning that the flights could be $418, however I do expect living expenses for the next 9 months for him to be massive depending on how he plans on handling himself (which he doesn't talk about in the article much).
But, he still got a great deal using the OneWorld Awards program and it's definitely a great option for those who have the free time to do this.
As far as rewards go, amazon's reward card gives a good return without cognitive effort.
I'm certain that fiddling with my 30 year old pinball machine is a net loss. But I'm going to do it anyhow.
http://www.flyerguide.com/wiki/index.php/Challenge_(AA)
It'll help you get bonus miles for flights you're doing anyway, and AA is actually not a bad airline when you have decent status with them.
If I didn't do the challenge, I would have left 50,000 bonus miles and a bunch of upgrade stickers on the table. At the time it was free to do, so there was no downside, but if you're going to fly enough to qualify for platinum or executive platinum anyway the fee for the challenge is well worth it to get the bonus miles and priority boarding that much sooner.
Your status must come up when you book ("Oh, you travel with us a lot. We'll just ignore the overweight bag fees today then...") and on the passenger manifest (more than once I had free drinks given to me, or better brands of drinks brought back from First).
Now that I have no status they don't go out of their way to do those things, despite having a ton of miles i'm slowly working through, and a bunch of unusable upgrade stickers. Meh.
The recent flight to Hawaii paid for with some of my miles made up for that though.
http://ronnie.me/gallery if you'd like to see.
Sure, it requires twice as many miles, but if you're going to be flying multiple transcontinental flights, first class is nothing to scoff at. The total cash value of that many first class flights is going to be far north of $100k, so in some sense you're also getting more value out of it.
"I’m not kidding when I say that I spent probably more than 24 total hours in the past three weeks having a blast on this thing creating itineraries, checking mileage, and figuring out where the heck I could go without going over the limit."
In truth, this trip cost well in excess of $418 due to the other purchases and time tie-ins involved.
I'm all for leveraging advantages, but there's leveraging, and then there's outright "gaming". The former can yield value when you factor in your time & attention, reasonable workflow safety margins, and compliance with spirit of a policy. The latter is merely a mental exercise to optimize a series of transactions around a single parameter, in this case the present dollar cost, to the complete exclusion of externalities.
At least he got some follow-on web traffic for his efforts.
It was all possible until there was a crack down. This guy essentially did just that.
1) Get a rewards credit card (Citi had at 5% rebate card at the time if you wanted cash, but there were also other rebate cards like frequent flier miles.) 2) Purchase bonds at treasurydirect.gov. (I bonds were a favorite at the time, the fixed rate was over 1%.)
The ability to buy savings bonds with a credit card was ended in 2003. http://www.treasurydirect.gov/news/faq/faq.htm
http://catalog.usmint.gov/webapp/wcs/stores/servlet/Category...
I think the question you're really wondering about, though, is why someone would borrow a significant amount of money given the state of the economy. I don't have good answers to that question.
If I have something that is: a) currently cheap b) likely to go down in value c) exchangeable for things of real, lasting value
and I was prepared to let you borrow it from me, would you?
Interest rates are low. Inflation is high (don't believe the govt statistics, look at your cost of living increases) Things of real value are currently low
Your two risk factors are: 1) loss of ability to service debt 2) loss of value for the thing you exchange the debt for
As long as the thing you buy covers the interest rate and/or you have reasonably assured income (nothing is certain) then the loss in value shouldn't matter, unless we're talking speculation in something. But if you can buy into a real company earning over it's cost of capital, or real estate that is providing income over it's expenses, then you should, by all rights, be home and hosed.
Sure, it involves risk. But so does the zero case of sitting still and hoping things will get better.
Renting a house/apartment is basically credit because you are agreeing to pay the total rent over a 12 month term and as such landlords want a credit score.
In hot rental markets like San Francisco a better credit score can win you the application over the next person with a lower score. A poor score can even prevent you from renting even if you have monthly income to cover the rent.
- Miles/Cashback. - Free international travelers insurance. - Free car insurance. - Free 1 year warranty on most electronic goods above a maximum 1 year warranty from the manufacturer effectively doubling your warranty. - Concierge if you have a really good score. - Discounts on car rental. - Free access to airport lounges (high credit score + relatively frequent flying). - Purchase price protection: If you bought an item recently and someone else is selling it for cheaper, get your invoice + ad together and get a refund for the difference (up to a limit).
(not an exhaustive list)
There is no need to be in debt to have a good credit score. Also, the higher your credit score the less interest you have to pay if you ever decide to get into debt (house/student/car).
TL;DR
Having credit available doesn't mean you have to use it and it comes with a lot of free perks.
130,000 American Airline miles
105,000 British Airways Miles
40,000 Starwood Preferred Guest points
25,000 American Express points
Having said that, I admire his sense of adventure to just pull-up stops from his life and travel the world for 9 months. It is something I really need to get around to myself.
point is, min/maxing is possible with rewards points, and people do it.
If I'm going to a restaurant, it's a luxury, not a chore, and if I'm doing chores, I'll just go do chores.
Using that as a base measurement (even though I'm now probably stretching the math too far in the other direction) he could rack up 300,000 miles spending $16,000. Very easy, especially if you also have some business expenses.
On a completely unrelated note, it's great to see a fellow Qlder on HN.
There are people who make a game of applying for cards as fast as their credit rating will allow (I think 700 is roughly the floor, below which you stop applying).
If the company tries to charge an annual fee, you call them up, try to negotiate out of it, and if they won't, you cancel the card.
Having too many cards isn't that bad of a thing (as long as they are with different issuers). It can be a good thing, because part of your credit score is the amount of credit you are using out of your total credit.
Like everything else, you game your credit score... there is no real value to having it be perfect high, you just need "good", so you get approved.
Also, the miles that are best come from getting new CCs... not from spending. There is usually a minimum spend to get the initial bonus... but after you do that, you can move on to another card, and get far more than $1/mile.
For instance I got a card that gave me 75k miles for $1500 in spending.
Then the counter argument to that is that if enough people don't fly the airplane won't fly at all... But that would just make it commercially infeasible to operate many routes and in turn whole airlines and then we just have a complete deterioration of the airline industry.
Do people really care this little about the environment?
I don't get how my argument is like voting. If we all vote together then something positive happens (change). If we all 'vote' by not flying then the airline industry collapses - which is not positive. If I've miss-understood your example + argument please elaborate.
The solution here isn't black & white unlike in voting (you vote or you dont vote). Sure you can choose to fly or not fly, that's a "solution" but the better solution is to create more efficient airplanes that emit less CO2.
As a sidenote: traveling and seeing the world is what made me start caring about the environment. When you go snorkeling in Hawaii or climb Machu Picchu, you can't help but care about the environment.