Saturday, November 15, 2014

How to Get Started on Miles and Points

I use miles and points to take my family to overseas destinations. And I don’t fly for work every week. I accrue my miles and points with credit card sign ups. The overwhelming majority of my balances are from the signup bonuses that banks offer on their credit cards.

How do I get started? 

First off, check your credit score. You need a good score to play this game hobby. There are multiple sites available for this service. My favorite is creditkarma, mostly because it is a truly free service. You don’t have to register with a CC. Once you have done that, figure out if you have any major financial activities happening soon, such as buying a home or car. If you do have something coming up shortly, meaning within the next six months, then you would be better off waiting until after you have secured that loan before thinking of applying for credit cards. However, in the long run, as long as you pay on time and don’t carry balances, your credit score will improve. Further details on credit scores is a post in and of itself. 

What is your goal? 

If you’re just starting off in miles and points, then figure out what you want to do get done first. Do you want hotel stays? Or to fly? Domestic or international? Who is going to travel? How you answer these questions will lead your credit card application strategy. I have a friend who recently told me that it has been his wife’s dream to travel to Europe. My recommendation to him was to collect United miles. They are easy to collect and have multiple options for flying to Europe. If you want to do a lot of domestic travel, then Southwest might be your airline of choice.

Which credit card do I apply for? 

Now that you have your score and your goal, you need to figure out which card(s) to apply for. Yes, you are allowed to apply for more than one credit card. In the past two years, I have applied for and been approved for over 30 credit cards. Let your goal help to guide you on this step. 

Most credit card offers nowadays require a minimum spend requirement to qualify for your bonus. This is a crucial point in the process. The reason you are still following at this stage is that you want to get somewhere or stay somewhere using miles and points. If you do not meet your spending requirement, you will not receive your bonus, and this exercise will not have born any fruit.

Now what? 

You now have that shiny new credit card in your hands. Change your buying habits and use that card for all of your purchases. For every dollar you are spending on that card, you are earning more points towards your goal. Stop using cash, and start charging everything. Within a few short months, you will have received your credit card bonus and be on your way towards reaching your goal.

One HUGE caveat. Do not spend more than what you would normally spend. Just because you have a new credit card that accrues miles and points doesn’t mean that you should start carrying a balance

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