[The following is an AWESOME post by my new friend, Geoff Whitmore, over at Noob Traveler. We met at last year’s FINCON and him and his team are doing big things over there. Namely, teaching others how to game the travel system :) Enjoy!]
I’m just an ordinary guy, but I need to GO
When I tell people I’ve traveled to Thailand, Singapore, Ireland, France, and more last year, they usually just look at me in awe. People really start looking at me strangely when I tell them I flew to Thailand and back in 5 days, just so I could fly in a suite on Singapore Airlines! That’s normal, right?
I don’t say this to make me look cool or feel good about myself, because the reality is there is nothing special about me. I mean, I’m pretty good at Fantasy Football, but I don’t think that counts.
The truth is, I’ve always wanted to travel. Even from a young age I loved to get in the station wagon and just GO. But until a few years ago, I didn’t have the means to make it happen.
It’s not until I learned how to leverage my credit safely (quit looking at my guns), that I unlocked the keys to traveling the world for a price I can afford. Now I get to spend my days traveling and writing the blog, Noobtraveler.com, where I teach others how to do the same. I’m very grateful to do what I love!
When my wife and I got married, I thought we’d have to save for 5 years to be able to afford a trip to Tuscany, Italy. Her dream destination. I mean, tickets to Europe are usually a couple G’s. A PIECE.
Everything changed when my buddy introduced me to the beauty of traveling with frequent flyer miles and points. The currency to see the world. The next thing I knew, my wife and I had each signed up for a basic United Airlines credit card and practically covered our flights to Europe.
That’s because many rewards cards offer lucrative sign-up bonuses just for getting the card.
And since I have an addictive personality (yeah, addicted to chap stick) I was hooked. It didn’t even matter that we spent a night homeless in Florence because the parking garage closed at 7 pm (WTH). But it definitely added to the adventure, and it’s a highlight from the trip we still talk about today.
Fast forward a few years, and we have accumulated enough miles (takes less than you think) to fly First and Business Class. You can get to Europe in business class with practically TWO rewards credit cards. That’s c r a z y value.
For example, we just flew back from Europe in Lufthansa First Class – an experience that would have cost us well over $10,000 a ticket! Insanity. And we were even driven to the plane in our own Mercedes. That’s definitely not something I ever envisioned happening, but miles and points have not only made travel more attainable, they’ve made traveling in style possible.
My main concern when my buddy told me that he applied for multiple credit cards and used the rewards earned from them to travel the world was….
“Is this going to eff up my credit score?”
It was my initial thought, so I get it when people are skeptical at first – they should be. Your credit score is extremely important. That said, if you’re not responsible enough to pay off your credit card bills in FULL and on time, this ISN’T for YOU. Seriously, if you can’t manage your spending or payments, applying for and using rewards credit cards shouldn’t be a part of your life.
But, if you can responsibly manage your accounts, then there’s a TON of value in rewards credit cards and loyalty programs.
Here’s what happens: When you apply for a credit card, there will be a 2-5 point ding on your credit score for the initial inquiry. The inquiry is to see if you’re credit worthy. The good news is, your credit score will bounce back, and in some cases improve, as you add positive credit activity over time. Positive payment history and a lower credit utilization (what happens when you raise your overall credit limit, but not your spending) will help to increase your score.
Another concern I had when applying for credit cards was…
“Do I keep all of these cards open or do I cancel them? If I cancel them, won’t that hurt my credit?”
A lot of people think canceling cards will hurt their credit. I did. But that’s only if canceling a card raises your credit utilization (because you’re lowering your available credit, thus using more of it) or shortens your average age of account. Here’s the deal.
When you cancel a card, it will still stay on your credit report for 10 years, so it won’t affect your average age of account. But never cancel your oldest card. You should keep that card open FOREVER. As for other cards, I always try to downgrade any cards I’m considering canceling to a no annual fee version if possible. And if I have another card with that bank, I always transfer over my existing credit limit to that card, so that keeps my credit utilization the same. Winning. This also gives me some credit limit to play with if I’m applying for another card with the same bank in the future. Still, many rewards cards are worth paying the annual fee on, since they have a lot of perks!
All of this may sound confusing, but once you digest it, it’s really simple! I promise.
As far as managing multiple credit cards, that can take work. So I highly suggest looking into a software like Card Watchdog to help you stay on top of your credit cards’ fees, perks, and changes. This helps simplify things, so you can just enjoy the rewards.
The Tricks & Tips
Once you have rewards credit cards, there are numerous ways to maximize their points earning potential. Here are a few of the tricks I use to earn mega points.
#1) Gift Cards. I buy gift cards that earn me at least 5x points per $1 and then I use those gift cards for everyday purchases. Many rewards cards have category bonuses for purchases at grocery stores, gas stations, and office supply stores. I simply go there, load up on gift cards, and then use the gift cards for my everyday spending. I want EVERY dollar I spend to earn multiple points, miles, or cash back. Is it greedy that I want my hard earned money to s t r e t c h?
#2) I apply for business cards. I have a few online businesses and side projects, so I’m able to apply for business credit cards. TIP: You don’t have to be incorporated to apply for a business rewards credit card. You can apply as a sole proprietor. Easy.
Business credit cards are great for a few reasons.
- All credit activity besides the initial inquiry will be tied to the business credit report. This leaves your personal credit score practically unscathed. Just don’t default, but if that’s even a question – DON’T apply.
- Business cards have the best rewards. You can easily get $550 cash back or 55,000 points by just applying for one business card. And the category bonuses on business rewards cards rock.
#3) Amazon Payments. Amazon Payments may be the greatest thing since they started bottling beer (ok maybe that’s a little too far, but it’s awesome). With Amazon Payments, you can send $1,000 a month with a credit card to another person for free. This helps my wife and I spend $2,000 more a month. That’s nifty.
Here’s the post on my blog that gives you step by step instructions for Amazon Payments.
Rewards credit cards and loyalty programs have helped me travel like I never thought possible. It’s just that simple. I never thought I would be able to travel to Europe, Asia, or Hawaii multiple times in a year, but now that’s a reality in my life. And it should be in yours, too!
If you have a good credit score, can manage your credit card spending and pay your bills in full and on time, there’s nothing holding you back from being able to do the same. Give it a shot!
Feel free to to send over any questions you have in the comments below. I’ll be checking in and out for J. Money while he takes a break today!
Geoff Whitmore is lead traveler/writer at NoobTraveler.com, a blog dedicated to educating its readers on reward travel, travel tips, and cost-saving travel techniques. The blog particularly focuses on new travelers (or as they like to call them, “Noobs”), and it teaches its readers how to save BIG. All the while, the site maintains a humorous writing style that is both fun and informative.
Killer resources and apps:
- Best Budget Templates & Spreadsheets (FREE)— The best free budget templates from around the community! Including the ones I use :)
- Personal Capital* (FREE) — A great app to track your investments and net worth. You can see an in-depth review we did here from a millionaire who checks it daily 😂
- You Need a Budget (YNAB)* (FREE TRIAL, then $14.99/mo or $98.99/year) — One of the BEST budgeting methods in the space, with new users saving $600 on avg their first two months, and more than $6,000 over their first year! Check out my friend Vic’s review of YNAB here that went on to completely change his finances 💪
- Digit (FREE 6 mo. Trial, then $5/mo) — This is one of my favorite apps for automatically saving money, and I even came on board as an advisor I believed in them so much! You can see my full review on Digit here.
- Acorns* ($3-$5/mo) – Similar to Digit, this app helps you automatically INVEST money by rounding up all your transactions to the nearest dollar and then investing it right away for you. My full review of Acorns can be found here.
- Honey (FREE) — By far my favorite coupon service out there! Click the Honey button any time you're about to buy something online, and BOOM - any discounts it finds will be automatically applied at checkout. You can see my write up on them here.
- Credit Karma* (FREE) — An easy way to check and monitor your credit score AND report! See my full review of these guys here.
- My Favorite Blogs + Books < -- Click here to see all my other recommendations!