Beginner’s Guide To Miles and Points
Collecting points and miles can be a really exciting and fun hobby! Dubbed “travel hacking”, the basic goal is to collect miles or points through credit card sign up bonuses and strategic spending in order to exchange them for flights and hotel rooms. This is a 3 Part Beginner’s Guide To Miles and Points.
This will be a simple guide to get you started – there is a ton of information out there and a million ways to use points. Sometimes it can get overwhelming so I boiled it down to the basics. I hope you enjoy the read and hope it helps you Live happy and Travel More!
Credit cards are the basis for collecting points. The credit cards we focus on offer big sign up bonuses after a minimum spend in a specified time period. Once you choose a card to open and you earn the bonus points, you will continue to earn points/miles by using the card for all of your everyday purchases.
The more cards you open, the more points you can earn, but I would suggest to start slow with 1 or 2 cards at first. You can still gain some serious value with just a couple of cards. If your card has an annual fee, after about 10 months or so you will need to evaluate if the card is worth the annual fee and either cancel it or keep it open.
How to Use Credit
One of the most important factors to consider (perhaps THE most important factor) is how you use credit. If you tend to carry a balance on your credit cards then STOP, turn around and find a different hobby. Seriously, though, it is extremely important to pay off your bill each month in full – every time. If you start to carry a balance, the interest charges will eat away at the value of the points you are earning (among other negatives) . If you have any credit card debt or less than stellar credit, focus on getting those things cleaned up first before you try your hand at miles and points.
Setting a Goal
There are lots of credit cards out there to choose from that earn a lot of different types of miles and points. It’s best to have an idea of where you would like to go or at least what type of travel you are interested in. Not everyone is after a luxury first class flight to Hong Kong. Maybe you want to take a yearly trip to the Caribbean or just want enough miles to visit family more often. Decide what your goals are then you can figure out what type of card to start with. Transferable currencies like Chase Ultimate Rewards points or American Express Membership Rewards points will be the most flexible and are usually the best to get you started.
Concerned about the impact on your credit score?
Don’t be (as long as you are responsibly using your new cards!). You should have a decent score (700+) to start with if you are getting into this hobby. I have found that each new account reduces my score by a few points (literally only by 2-3 points). Other factors will then help your score bounce back up (and even increase) within a couple of months. If you want to check your credit score for free or learn more about your score check out Credit Karma. One word of caution – if you are planning to take out a major loan like a mortgage in the next year or 2, you might want to take it slow or hold off on new cards for now.
There are 6 main factors that will impact your credit score.
- Open Credit card utilization rate – how much of your available credit you are using
- On Time Payments
- Number of Derogatory marks – includes collections ,bankruptcies, foreclosures and liens.
- Average Age of Open Credit Lines – average age of your open credit cards, mortgages, loans and other lines of credit on your report.
- Total Number of Accounts
- Total Hard Credit Inquiries
So, if you have decent credit, no credit card debt and promise to pay off your bill every month, then congratulations – you are ready to jump into the travel hacking world!
Tips for Travel Hacking Success
Here are a few tips to keep in mind as you get started collecting your points and miles
- Pay off your balances in full each month
- Use a credit card for EVERYTHING you can. $2 coffee? Charge it! (I have actually charged a penny before…seriously)
- Set a goal so you can collect the right miles or points for your needs
- Pay attention to detail. Keep track of when you opened your card, when payments are due, your deadline for earning bonus points, etc. I use a simple excel spreadsheet.
- Don’t forget to sign up for frequent flyer and hotel loyalty programs…and keep track of your membership numbers
PIN IT FOR LATER