Credit Card Tips

Ever since our first international trip for our honeymoon, I have been paying for most if not all of our flights by redeeming frequent flyer miles.  Even when there were only two of us, dropping $2000 on flights just to get to our location wasn’t an option.  My wife and I both work in public education so it isn’t like we are ever going to be those people who can afford to fly all of the time.  Once we started having kids, and flight prices started climbing…plus working in public education means we can basically only travel long distances over Christmas break or Summer break when prices are at their peak…we needed to find a way to travel without spending $5000 to get us to Europe because we simply can’t drop that kind of money just to get somewhere….not even close.

Taking a step back, when there were just two of us I always put everything I could on a Continental (now United) brand card and tried to order everything online through the airline shopping portal maximizing my miles spent per dollar.  Say for example I wanted to buy item a shaver, I could go to the store and buy it and get one mile per dollar spent or I could go through the portal and get anywhere from two-twenty miles per dollar.  At the time it took 100,000 miles for a round trip European flight for the two of us, and since we didn’t actually pay to fly anywhere I needed to get all of these miles via credit card purchases so getting multiple miles per dollar spent through the airline shopping portal was the only way we could do it.  For most items I’d wait until they had a special where you got free shipping in order to not cost myself anymore money, and if you order from a place that doesn’t have a store in your state (amazon) you don’t get charged sales tax either.  So you could save money AND get lots of extra miles.  It just required a little planning ahead, but overall a win/win.  I’d assembled quite a stockpile of miles, from everything to buying items online, to even using a massive miles promotion to find our realtor through when we bought our first house that essentially was enough miles to take four round trip flights to Europe.  We didn’t have a realtor in mind, and we already knew exactly what we wanted…so we used the service, the guy was great, and we flew for nearly free to Europe two years in a row.

Fast forward to us having our two kids, and the cost of miles required for the same European trip to United going up to 60,000, we now needed 240,000 miles to travel.  I still had a decent amount of miles left but basically ran out after our oldest child turned one and a half with another child on the way.  I don’t care how much you maximize the airline shopping portal, unless you make/spend a ton of money you aren’t getting enough miles every 12 months to fly your entire family.  This is where earning airline miles truly became one of my hobbies and something I started doing.  I read an article in the wall street journal that you can still access even now about people who “churn” credit cards to earn lots of airline miles.  The basic idea is if you have a high credit rating and spend a good amount of money on credit cards, the credit card companies want you to use them.  In order to entice you, they offer you a bonus.  For example you may get 50,000 airline miles for spending $5000 over three months.  The idea of “churning” credit cards is you get that card, spend the $5000 and get the 50,000 airline miles, and do that again for another card.  You spend that amount, get those bonus miles…and you rinse and repeat.  Although there are only a handful of credit card issuing banks out there, there are a ton of different cards to choose from and always more being added.

The questions I get the most are, Does this hurt your credit, is this really true, can anyone do it…and the most common comment I hear is that is sounds too complicated.  The facts are that while doing this will temporarily ding your credit score by a few points when you apply, you will usually make those points back up shortly afterwards because of how your credit scores are calculated.  When you apply for a card your score goes down, however after you are applied for a certain credit limit your pool of credit available to you goes up and assuming you don’t add a lot more debt to your name, you have a greater amount of debt/credit available.  Anyone can do it if they have an excellent credit score, and it only has to be as complicated as you make it be.  That all being said, I have a few warnings.

This is NOT  for people who…

  1. Get a credit card and start to spend like crazy “because they can.”
  2. Aren’t organized and already forget to pay their bills at times.
  3. Will spend more than normal because it is easier to buy with credit instead of cash.
  4. Have a poor credit score.
  5. Don’t like to travel.  If you don’t like to travel, this doesn’t really make sense.

However if this all sounds interesting to you, instead of re-inventing the wheel here are a few websites that do a great job of covering this “hobby” and have far more free time than I.

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