Thursday, September 12, 2013

Helping Friends

As you may have guessed by now, my father is a big fan of exploiting participating in the travel rewards programs being offered by the airline, hotel and credit card companies.

Now, my parents and I have extracted a LOT of value from these programs, allowing us to fly in style to distant countries and stay at even more amazing hotels for almost nothing.

But after a while of living large (while only spending little), you want to share the wealth with your friends and family.

The past month or so, we've been able to help 3 different sets of friends benefit from travel reward programs. And while it definitely won't absolve me for all the crying and temper tantrums I've thrown in public, I like the feeling of helping good people enjoy some great travel experiences for free (or at least, heavily subsidized).

DISCLAIMER: All these friends had two things in common. First, they were friends with my crazy father. Second, they have exceptional control and discipline over their personal finances. None of them spend beyond their means or spend more than they would normally (gas, groceries, etc), and they always pay off their full credit card balance at the end of every month. This game makes no sense if you're carrying any debt at all. Credit cards in the wrong hands can be very dangerous and ruin your life if not handled with strict discipline.

Beth & Paul - Hotel Stays
My friend Jack and Connor's parents (and my father's best friends), Beth and Paul, started getting into the credit card game in February 2013. Based on this family of four's travel preferences, they wanted to focus on free hotel stays rather than free flights.

With that agenda, my father suggested that Beth apply for the Starwood American Express credit card. After Beth spent $5,000 in less than six months, she earned 5,000 SPG points for her spend plus the 25,000 SPG point sign up bonus for a total of at least 30,000 SPG points.

Armed with all those valuable points, she made her first hotel redemption over Labor Day weekend, getting 3 FREE nights at the Sheraton in the beautiful college town of Madison, Wisconsin using just 3,000 SPG points per night.

Ben & Huyen - Economy International Flights
My other friend Shayna's parents, Ben and Huyen, who we just spent a few days with in Colorado, also started getting into credit cards in February 2013 as well. Ben and Huyen had more ambitious plans as they wanted to earn airline miles to fly back to Vietnam where Huyen's family lived. Now economy flights to Southern Asia run anywhere from 65,000-70,000 miles per person. So for two adult tickets, they'd need about 140,000 total miles.

Fortunately, the megabank Citi really wants people have to have American Airline miles. So much so that they have been offering up to 50,000 AA miles each time you open up one of three different Citi AA cards (Visa, American Express and Mastercard).

Both Ben and Huyen opened up a few Citi AA cards each and had enough miles in each person's American Airlines AAdvantage accounts to redeem for 1 economy ticket each.

So the other day, my father and Ben went through the award booking search process to look for flights from New York to Hanoi. As easy as it is to earn AA miles, it's relatively difficult to find ways to use them for certain international destinations.

But after searching for award flight availability on several OneWorld Alliance partner websites (British Airways and Qantas), they were able to find amazingly convenient flights on Cathay Pacific and DragonAir. Despite flying over 8,592 miles in each direction to a relatively small airport (Hanoi's Noi Bai International), Ben and Huyen are able to get there in just two flights:

  • Newark-Hong Kong on Cathay Pacific
  • Hong Kong-Hanoi on DragonAir 
Since there were no direct flights from the US to Hanoi, this itinerary was just about as good as it gets. The timing worked out great as they have just a 3 hour connection in Hong Kong, which has one of the best airports in the world (shops, restaurants, spas) for a layover. Any shorter of a connection time than that, and they could have problems if their first flight were delayed.

Since they were also traveling with their infant daughter Shayna as a lap child, however, they did have to pay some hefty lap child fees. Most airlines will charge 10% of the full fare adult ticket as a lap child fee for award tickets. Most people don't know it, but they're actually buying discounted economy fares, so a full fare ticket can be 2-3x the cost of the discounted fare ticket. Nevertheless, Ben and Huyen still saved well over $2,000 from a few minutes each month of credit card applications and internet clicking.

Hannah and Ivan - Premium International Flights
And last, but not least, are my friend Peyton's parents, Hannah and Ivan. They too jumped on the bandwagon, but made sure to go into high gear right away. Similar to Ben and Huyen, they too wanted to earn rewards for flights to a distant country. But they wanted to fly in style (business or first class) to Paris (that's in France), which would be at least 100,000 miles per person for a roundtrip ticket. So they'd need a total of 200,000 miles.

Hannah had always used frequent flyer programs and hotel loyalty programs, gradually building up decent sized balances from flying and staying at hotels. However, it wasn't until my father opened her Asian eyes to the world of travel reward credit cards, that she saw her dreams of sleeping 8+ hours in a lie-flat seat become achievable.

For example, instead of flying 45,000 miles on United Airlines (which is about 9 round trips from LAX-JFK, or about 3 round trips from LAX-SYD), Hannah could just open up a Chase Sapphire Preferred Visa credit card which offers 40,000 Chase Ultimate Reward points and spend $5,000 over a few months. Then they could also open a Chase Ink Bold business charge card that would earn them 50,000 Chase UR points plus their spending. And if you have either of these cards, your Chase UR points can be transferred 1:1 to United MileagePlus miles (as well as several other airline and hotel programs) instantly and for free.

But Hannah and Ivan were also starting from a base of of about 40,000-60,000 miles each in their respective United Airline MileagePlus accounts. Well, after a few months of opening new credit cards, managing their spending and taking advantage of bonus opportunities (5x at office supply stores, cell phone, cable and internet, 2x on dining and travel, extra bonuses for shopping through online portals, etc), they are about to book their two business class round trip tickets to Paris for 2014.

Final Warning
Again, I want to remind you that not everyone should play this game.

  • The credit card companies will only issue these premium reward credit cards to individuals with high credit scores (above 700 FICO). Applying and getting rejected hurts your score even more, so don't try until you're confident you'll get approved.
  • The points and miles you earn (valued at up to 2-4% of your spend) will be negated if you carry a balance and have to pay 15-25% interest. All that money you're paying in interest and late charges could pay for the trips you're trying to get for free.
  • And if you have trouble overspending, keep in mind that the average person spends 15% more when they use a convenient plastic credit card to make purchases instead of using hard earned cash. Something about seeing your empty wallet makes you thing twice about buying that extra Starbucks.

I know my father is a big proponent of using credit cards to enhance our own travel experiences, but I know for a fact he would be very upset if anyone of our friends took his advice without being disciplined and got into financial trouble because of it. Plus, my mother would kill him.

So please don't make me an orphan!

1 comment:

  1. Thanks for the help, Steve! We'll be toasted Bia Hanoi's to you when we're in Hanoi!