The tools you need to automatically earn 2% or 2X points on nearly every dollar you spend, creating a perpetual flow of frequent flyer points.
Most airline frequent flyer programs have become a joke. When I started travel hacking years ago, you could get a decent domestic ticket for 25,000 points and get tickets to the Caribbean and Mexico for around 35,000 points. No more. Sure you might be able to find one of those 25,000 point tickets they promote between two Rust Belt cities with a 5 AM departure and a three hour layover. Forget about flying anywhere near the holidays and get ready to hear them laugh if you’re looking to cash in points for a family of four directly with the airline, to let’s say the Caribbean, Europe, or even Florida. The airlines seem proud of the fact that they’ve become so superefficient through mergers and online ticketing algorithms that they only need to cough up a few regular seats per plane for frequent flyers, unless you’re willing to pay the premium, double sometimes triple points (then the seats will appear). I plan over six months out and I still can’t track decent ones down.
Unless you are flying alone, dealing with airlines to use your points is a waste of time. If you do get lucky and find a seat you can use points for, some airlines like British Airways will hit you with a $500+ “fuel surcharge” on top of the points you’re coughing up. On more than one occasion that surcharge to the UK or EU was more than the entire cost of the ticket from another discount airline like Norwegian Air or WOW airlines. Check out their $199 fares to Europe.
There is a solution.
I’ve been able to travel with our family of four once, sometimes, twice per year using high 2% reward credit cards. And yes, we were all on the same flight departing from and arriving to the airport we wanted. To do this we created a frequent flyer points machine using two cards from Chase, one business, one personal and an American Express card from Fidelity.
Our rewards point machine does not require us to jump on every credit card point enrollment offer, as many travel hackers do, by getting new cards for bonuses, and canceling others. We’ve had these cards for three years. For me, switching to credit cards, especially airline or hotel credit cards that limit your ability to earn and use the 2X points elsewhere is a waste. Even if you live in a hub city and primarily use one airline, you still may want the flexibility to hop on great offers from any airline and use 2X points to pay for them. The airlines will tell you they have partners, but the fact is those partners airlines set aside even fewer points for members of their airline alliances. An American Airlines representative confirmed this in a recent call where I was trying unsuccessfully to use some British Airways points in the US. Sure, rack up free points with frequent flyer numbers but stay away from airline or hotel credit card offers. There’s a reason they offer a free flight or a giant bonus to sign up, because they suck.
Beating the system
The key is to find the best bank 2x credit card programs with the most flexibility – no blackout dates, no seat limits, and will pay you twice as many points as the airline does, regardless of where you earn or spend the points. You will also be able to continue to collect points from your favorite airlines and move points between your card and those accounts. You have the opportunity to earn double points or 2% cash back which I found are nearly equivalent in dollar value.
The caveat here is that to do this right, you need to pay off each card every month and not carry credit card debt. Any interest, bank fees or late charges more than wipe out benefits you receive from using reward points. Now that that’s all out of the way, here’s how I set up my reward points machine.
- Find a great primary card. 2% is the new magic number for rewards and cashback cards. 2% cashback or double points are basically both 2% cards. The key is to look for a card that pays 2% on everything. Some cards out there offer double points or more on specific items like groceries or gas and these may rotate every month. I’ve found that it’s far better to have a general card that pays back 2% on everything and then if you have a second card you can look for high rewards options on specific or rotating items. Two cards I’ve found that meet 2% on everything criteria are the Citi Double Cash Card and the Fidelity Investment Rewards American Express. Both cards have no annual fee which makes the 2% even sweeter. You can search for 2X cards on nerdwallet.com
- For my second card, I chose the Chase Sapphire Preferred Visa. This card is a good alternate card if you have an American Express. Also, they pay double points on all restaurants taxis, tolls, and travel. The cool thing is they include services like Uber and Lyft as taxis and AirBNB, VRBO, others as travel so you can earn double points even when you’re not staying in a hotel or using traditional taxis. Chase Sapphire Preferred also has no foreign transaction fees which can be as high as 3% on other cards. So Chase is my go to card for all personal travel.
- Chase Sapphire Preferred has an annual fee but once you are a member of Chase Ultimate Rewards, the program pays a 20% bonus on all points used through their program. There’s no fee for agent or online booking and they can use points to reserve most offers you find on sites like Kayak. I search the best price then give them the information to book with points. I can also move points between cards or directly to partners like United, Hilton, Amtrak, others with a 1:1 point exchange.
- If you run a small business, it’s important to have a separate credit card for expenses. We use Chase Ink Business Plus. Once you’re part of the Chase Ultimate Rewards program you can move points between your Chase or travel partner accounts. This card also pays 5X points on expensive business items like high-speed Internet, mobile phones, landlines and office supplies. 2X on Gas and Hotels. Those add up.
- Fire up the points machine. You have to look for it, but it’s amazing how many vendors with recurring monthly charges like Verizon, AT&T, even CareFirst health insurance (talk about racking up some points) offer credit card auto pay. The companies hide the sign-up forms deep in their websites and you generally need to call them to get signed up. They do this because they prefer you pay through your bank auto bill pay or with a check so they can save the fee they have to pay to the credit card company. As long as you pay your credit card bills in full every month you benefit from every dollar you spend.
- Have a focus. Once you start cranking up some serious points, you want to get very good at using them. We focus on airlines because that’s the largest part of our travel expenses. We’ve learned how to track down the best airfares to use our points on. I’ll create price alerts on Kayak or other sites and when I find a great fare I can call Chase to apply whatever points I have in my account to reduce or purchase the ticket outright. I can move points around or in some cases transfer them directly to the airline. We’ve been earning double points and get an additional 20% bonus when I book the ticket I found. With Fidelity I can convert the points to cash or use their Worldpoints program to book tickets I found. Like with Chase, it’s best to find a hot price on your own then call the bank program to book the exact tickets you want. I’ve done this with both services World Points and Ultimate Rewards.
- Tracking it all. I still earn airline and hotel points on top of my credit card points, so I want to track them as well. Sign-up for a free service like AwardWallet or Points.com to track all of your points programs in one place. This gives you a quick overview of all of your programs so, for instance, if I see I have a decent amount of points in my Amtrak rewards account I can move a few thousand points over from Chase and I am off to New York with a free Metroliner ticket.
Setting up new cards, auto pays, and tracking can seem like a bit of a chore but once you’ve got everything in the system your point machine goes into autopilot and you’ll reap the rewards for years. If you’re just setting up your point machine, hop over to nerdwallet.com to see some of the latest offers. Don’t forget to search for your existing bank, they often have offers that only pop-up for people searching for new credit cards.
Real-life example. I recently booked four tickets to Puerto Vallarta Mexico, Christmas / New Year’s week on Delta through Chase Ultimate Rewards. I’d been using Kayak alerts to watch the price on the tickets. I watched them drop from $870 down to $540. Once I had the exact flight information I called Chase to use points for three of the tickets and purchase the fourth one. While on the phone with the Chase representative I moved some points from my Chase business card to the Chase Sapphire Card and also received a 20% points bonus booking the ticket through them at the price I found on Kayak. These are seats that were not available through any of the airline frequent flyer programs even with double points. So for us earning points at 2X or 3X than spending them at 1.2X is way better than anything we’d get through airline or hotel points, even if I could find four seats together on a flight to Mexico during Christmas week.
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