Note: The terms ‘points’ and ‘miles’ are used interchangeably in this article.
If you are like me, you might have read these incredible stories online about people “flying for free” using airline points, known as ‘miles’. The stories are usually fantastic recounts, maybe with a picture or two of themselves in an exotic beach asking “wouldn’t you want to be here FOR FREE!” This post will cut the crap and give you the real deal on how it works, the pros, the cons, the boring math stuff, and the nitty gritty things that don’t make click bait titles.
While a lot of people make New Years Resolutions, you might not be aware that I make February 1st resolutions because I really don’t want to limit myself or be stressed out around the holidays. My biggest resolution for 2014 was to learn about how points work and how to get some of these ‘free’ flights myself. This article is the full recollection of what I learned over the past year. Like always, this is a REALLY LONG POST, so go grab a coke (drinkable type) or something because you’re going to be here a while.
The first thing you should know is about Airline Alliances. The whole world has dozens of airlines, but 60% of them belong to one of three airline alliances: Sky Team, One World, or Star Alliance. If you have a points membership (usually free, just visit their website and sign up, but wait until you finish this article!) with one member of an alliance, you can generally get points for flying with another member of the same alliance. For example, since I have Korean Air points (Sky Team) I can also claim points when I fly Aeromexico or Delta (also Skyteam). The US has one major airline in each of the three alliances, which is pretty convenient for us! Sometimes, however, the cheaper flights are exempt from getting points, which leads to my second point…
It’s a SCAM…Kinda
Traditional point earning is a scam. Many people, my past self included, believe(d) that if you continue to book flights and gain points, you will one day have enough for a free flight. What you don’t realize is three key things:
- It Takes Too Long – To save enough points for a flight, you have to take a TON of PAID flights in the first place. This is fine if you are a businessman who has to fly often for work or someone who doesn’t have to pay for their own flights (paid by employer). I have a friend who flew 100 times in a single year and had enough to fly around the world first class for free*. However, for the average Joe like you and me, it is never going to happen.
- Points Expire – This one threw me for a loop. Many airlines have their points expire in as little as one year! American Airlines is a bit more generous with 2 years and Korean Air is the best so far with 10. However, given how it takes a while, now you are even less likely to make enough for a ‘free flight.’
- Nothing is Free – Even if you have enough points for a flight (big ‘if’), there is almost always a ‘booking fee’ and the larger the point amount you are using, the larger the fee. For my ‘free’ flight from Kuala Lumpur to Auckland last year (one way), I had to pay $35 per ticket. For my upcoming flight to Los Angeles from Bali, Delta charges a fee of $50 for booking. Make no mistake, this is definitely cheap, but I guess airlines and I have a different definition of ‘free.’
What Else Should I Know?
Points Belong to the Flyer – Many newbies like me did not realize this very key rule. If you buy a flight for your friend on your credit card, THEY get the points (not counting if you used a travel credit card, in which case you would both get points, but a different amount). This is important because as I mentioned above, if you travel for work, you could give out your frequent flyer number and rack em up on your employers dollar (and no this is not shady).
Never Be Loyal to An Airline – Do not book a specific airline just to ‘get points’ unless absolutely necessary. Like I said above, the average person will NEVER earn enough this way to make it worth while, and you might potentially spend more on an expensive airline trying to reach that carrot.
So, it is hopeless, thank you for listening!
Of course I am kidding, and the main reason for this article was to talk about ‘churning.’ For those who don’t know, churning is the method of ‘gaming’ travel credit cards in order to get bonus travel points. In brief – you sign up for a credit card, you fulfill their requirements in order to get the sign up bonus, you use this sign up bonus to book flights, you cancel the credit card before the first year since they all have a yearly fee (which is waived the first year). This is such a big deal, Reddit even has an entire community that talks about churning news, tips, tricks, etc.
Like I mentioned above, you will never make enough points for it to be worth while (and yes, it is worth mentioning three times). However, the bonus points some credit cards offer at sign up are HUGE. This changes year by year, but you get anywhere from 30,000 – 75,000 points / miles per card. THAT’S A LOT right? Well, what if I told you that a domestic flight costs 3,000,000,000 points / miles? It doesn’t, but the point is that ‘points’ or ‘miles’ have no meaning unless you know the value of a ‘point.‘ The system for earning miles is incredibly complicated and my only conclusion is that it is this way by design. For example, back in 2012, I tried to claim a KLM Airlines flight from Amsterdam to Seoul. KLM proceeded to give me their bracket system of how they rank flights, and they seriously had about 20 different categories. After a bunch of airline jargon, they pretty much said I qualified for 300 points on this flight, which I’ll save you the math, is pretty much worthless. I’ll get more into what a point is worth later though.
Travel Credit Cards
There are three credit cards you should be aware of which are associated with different banks and alliances:
- Delta / American Express / Sky Team
- American Airlines / Citi Mastercard / One World
- United Airlines / Chase Visa / Star Alliance
When I signed up in April 2014, each of these three gave you 30,000 points. The conditions for all three were also the same, asking that I spend at least $1,000 within the first three months of opening the card. What I did is I signed up for an additional card for my mom, she used it for her normal expenses that she normally paid cash, gave me the cash instead, and I used the cash to pay off the cards before they gained any interest. By May, I had 30,000 points with all three alliances / major US airlines (and this could be important too, which I’ll explain a little further down).
The conditions and points change every year. In 2013 till right before I applied, some were giving out up to 75,000 miles! This year, some of them are promoting 50,000 bonus miles on sign up. I also read that the conditions might be tougher, maybe requiring you to spend $3000 instead of $1000 to get the bonus. Always read the details!
Now, remember, even IF you have enough points for a flight, there will still be a ‘booking fee’ which makes the next (and fourth and final) credit card more appealing:
Barclay Arrival Card
This card is special in that it is not attached to any airline, which is a good thing. Instead, the card automatically records any expense that can be considered ‘travel related’ and you can use points to get a rebate on these at the cost of 100 points = $1. The sign up bonus for Barclay was 40,000 points, which translates to $400 up front. In addition, while the other three cards give you 1% cashback (roughly), Barclay gives you exactly 2% AND 0% APR for 1 year AND 10% bonus points when you USE points. The catch, however, is that Barclay did expect me to use at least $3000 within the first three months. I can see how this can be hard to do for an average person, so you might want to wait to apply right before you make a big purchase. That was a lot of math for you non-math people, so let me give you my real life example.
I got my card, and spent $3000. With 2% cashback, I got the 40,000 bonus points, + 6,000 points. Having 46,000 points, I rebated partially on a flight, $460. However, since I now used 46,000 points, they gave me 4,600 free points (10%), or another free $46. When I used those 4,600 on a hotel, they have me 460 free points (10% on 4,600), or another 4.60. All added together, that was about $525 just for fulfilling the initial requirement.
For the last year, Barclay has been my card of choice, while the other three got used for the points and sat on the shelf with $0 balance. You don’t have to use it though, and could just as easily leave this one with no balance after getting the points.
How Many Miles = A Flight?
It depends on the airline, which is more annoying and frustrating than it sounds. Here is a breakdown of my experience:
American Airlines in my opinion, is the most straight forward, and consistent on how much miles gets you what. 7,000 miles give you one way for a super short flight. Think LA to Las Vegas more or less. 10,000 give you one way to a slightly further flight, 25,000 for a short to mid international flight and 35,000 for a long distance international flight. They are straight forward with it on their site. When my friend Sarah came to visit me in New Zealand on a three week trip a few months ago, Auckland to San Francisco was 35,000 miles, which was the most generous of any airline. Luckily, I had 20,000 more points on some super bonus triple point extravaganza I got in 2013 (which doesn’t matter as it was absolute luck). And of course, you can fly American, or they will put you with one of their partner airlines.
Delta and United are not as consistent. I flew United’s partners from Kuala Lumpur to Auckland for 17,500 points one way. I had over 35,000 at the time, but I did have to pay the pesky $35 fee. For this flight, United was the cheapest as American wanted to charge 25,000 and Delta 20,000. However, for Auckland to LA, Delta charges 55,000 while, like I said, American was 25,000 and United is 40,000.
The main thing to get from all this is that the sign up bonus will get you MAYBE a round trip domestic flight. However, if you start traveling 2-3 times a year or so, and use your cards responsibly, you can definitely get enough points for an international flight (or at least part of one).
Note – It seems American starts at 12,500. Here is their updated chart.
The Nitty Gritty Stuff!
There are a few things you might be wondering right around now. First, congratulations on being more realistic as to what those points can get you and how to do it with minimal spending on your part. All in all, I personally saved $800 for my flight to NZ (two people), am going to save $400 ish to get back home, and already cashed out on Sarah’s flight to NZ and ~$600 in cash from Barclay. These are HUGE savings, but what are the catches?
Yearly Fees – All four cards charge a yearly fee. However, all four waive the fee for one year. They are counting on your loyalty to remain a customer and pay this yearly fee year in year out. If you are a businessman, some of the perks might be worth it (for example, United offers 2 passes to their Admiral lounge per year), but for the common Joe like you and me, it is best to cancel the card before the year passes. People are forgetful though, and they are definitely counting on it. I actually forgot about cancelling my American Airlines card but was forgiven as I have been a Citi customer for almost 10 yrs!
Credit Approval – These cards are generally only for people who have good to excellent credit. Try creditkarma.com if you don’t know your credit score. There are some options if you don’t qualify and it is best to check out the Reddit link I provided above.
Credit Damage – This is the biggest deterrent for people, and you might not understand if you don’t know how credit works. When you open an account, there is an ‘inquiry’ which affects your credit score. The more inquiries within a short amount of time (like say, opening 4 new credit cards simultaneously) brings up red flags, which is not good for people looking to get a home loan or something of the sort.
In addition, canceling a card COULD affect your credit score negatively, and people who are against churning usually point to this, saying churning makes you ‘irresponsible long term for quick freebies short term.” They are partially correct. While canceling a card may reduce your score a few points, a MUCH more important factor to credit score is “average age of credit cards.” Opening a new credit card brings this average down. However, if you are established like me, canceling a card that is less than 1 yr old will actually bump your score as your average card age goes back up. I personally had to cancel three of my cards and looking at my credit history over the last year, it is better NOW than before. This, however, could affect someone with a more shallow credit card history.
APR – The APR on most of these cards is horrendous. Much like how store credit cards work (I’m looking at you Target) they entice you with quick benefits which long term, makes them money IF you keep a balance on your card. If your card has a high APR, just use it to get the bonus, pay It off, and DON’T USE IT AGAIN!
Downgrading Cards / Waving Fees for Another Year
When I first researched about churning, many people claimed that if I called the four credit cards above and asked nicely after one year, 50% of the time they will waive the fee for another year. THIS WAS NOT TRUE! While I am not calling them liars, it is just that credit cards are businesses and they are not stupid. They are aware of churners like you and me and are trying to close the loopholes to maximize profits. For this reason, they constantly change their policies, one of which has been to be tougher on people trying to cancel their cards. Barclay went as far as to try to scare me by saying my credit score would be ‘harshly impacted’ multiple times before agreeing to cancel after they refused to waive the fee. The only one I had success with was the American Airlines’ Citi card, which allowed me to downgrade to a ‘Bronze fee-free card’ whatever that means.
Finally, I wanted to touch on something I read about but haven’t practiced myself yet. When you cancel a card, it is said that you cannot reapply for a year. However, it is also said that their ‘business card’ has the same perks but is completely independent of their ‘personal’ one which theoretically means, I should be able to reapply for all the same cards, under the term ‘business’ (even if I don’t have one) and get all the perks all over again. I will try it later this year and will report back!
- Churning is the way to go. Bonus points is the only way you will have enough to get a semi-free flight.
- Don’t be Loyal! Always use the cheapest flight regardless.
- Be aware of fees. From booking fees to yearly fees to APR, be one step ahead of the game.
- Cancel the cards before the fees roll in and you have successfully gamed the mileage system.
- Take a selfie on a beach. Watch how jealous those around you are thinking you’re rich and not knowing you just read some stupid blog post from a chubby dude named Julio that made you a flight mileage pro.
- Share this post with your friends. Because, they ARE your friends, so don’t be a jerk and share the wealth. Wouldn’t it be nice if someone reminded you to bring sunscreen next time?
So far, I have had one friend use this system to cash out on the bonus points, but I hope many of you follow suit. If you have experience with churning, let me know in the comments!
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