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With the new year well underway, it's time to start making those New Years' Resolutions a reality. One of the most common New Years' goals expressed by our AwardWallet community this year was to travel more in 2020.
Unfortunately, when it comes to travel, the biggest hurdle for most people is the cost. This is where points and miles can make a dream a reality. If you resolved to travel more in 2020, but you're unsure how to finance your travel goals, points and miles are the perfect vehicle to help get you there.
There are two main approaches to traveling with points and miles:
- Travel based on your current balance – The first option is to look at what rewards you have and choose your destination based on where your points can take you.
- Build a balance based on where you want to travel – The second option is to plan from the destination backward. First, select a destination, and then work out which points and miles can get you there.
Today we're going to focus on the second option, and demonstrate how to build a balance of rewards points around specific travel goals. We'll work backward from our destination, and run through a practical breakdown of the travel planning, points accumulation, and award booking processes.
When it comes to planning any trip with points and miles, you first need to ask yourself a few questions:
- What points and miles do I currently have?
- Do I have elite status with any program that I can leverage?
- Do any of my credit cards offer travel credits or benefits that I can use?
- How much time do I have to plan and book this trip?
If you subscribe to AwardWallet to track your reward accounts, then you're already aware of how many points and miles you currently hold. That's great because knowing the balance in each account can help you understand how close you are to booking your trip.
Choosing a Destination
This is the fun part. Where do you want to go? How many people do you need to get there? Regardless of the answers to these questions, your first step is the same. Start from the destination and work your way back.
Determine Which Airlines Fly to Your Destination
Wherever you've decided to go, start by going to the Wikipedia page for your destination's airport and clicking the ‘Airlines and Destinations‘ tab.
The Wikipedia page displays all the airlines that fly to your destination, and where they fly from. This is one of the best ways to figure out which points or miles you'll need to collect to get to your destination.
In this example, using the Wiki page for Rio de Janeiro's GIG airport, let's assume we're flying from the U.S. The three airlines that fly directly from the U.S. are American Airlines, Delta Airlines, and United Airlines. You either need miles in the legacy carrier frequent flyer programs, flexible rewards currencies that transfer to those airlines, or partner miles you can use to book on those airlines. Be sure to check out our beginner's guide to award travel planning for more details on this step.
Can We Use Points for Hotels or Accommodation?
The same strategy applies for hotels. If you have elite status or a great collection of points with a certain hotel group, start by going to their website to see if they have properties where you're traveling. If they don't, do any of the major hotel groups have properties in that location? What about Airbnb? Depending on your group size and length of stay, Airbnb may be a better value proposition for you. If there are chain hotels at your destination but you don't currently have status or points with that loyalty program, is there a credit card that would provide elite status and a decent haul of points for the signup bonus?
Collecting the Points and Miles Needed for Your Trip
There are essentially two ways to easily collect points and miles to use for your trip:
- Credit card sign-up bonuses
- Optimize your current spending for greater returns
Credit Card Sign-Up Bonuses
Credit card sign-up bonuses are the easiest and most lucrative way to earn a lot of points quickly. Whether you're brand new to the award travel community, or you've been playing this game for years, it's important to have a good credit card application strategy. Obviously this is a huge topic to cover, but it can be narrowed down to a few key points:
- Individual Bank Credit Card Application Rules
- Correct Order of Card Application
- Strategies for Meeting Minimum Spend
- The Power of Business Credit Cards
It's important to remember that these guidelines are all subjective. What may be a great strategy for you may be totally wrong for someone else. For example, sticking to Chase credit cards while you're still under the 5/24 limit may be important for most newcomers to the hobby. However, it may not be the most efficient strategy if you need Delta points to get to your destination. And that's okay!
Optimize Your Current Spending
We never recommend spending more than normal just to earn points. Instead, find ways to maximize your points earning on your current expenses. The main ways to do this include:
- Use Credit Card Bonus Categories Efficiently
- “Stacking” your earnings on every purchase
- Taking advantage of Shopping Portals whenever possible
- Utilizing Plastiq to pay bills that don't accept credit cards
When you have credit cards that earn bonus points in the categories you spend the most money, it's surprising how fast the points rack up. Stacking and shopping portals can also have a HUGE effect, not only on your ability to earn points, but on your overall financial health as well.
Book Your Reward
Sticking with the example above, let's imagine you and your significant other live in Atlanta, and want to travel to Rio de Janeiro, Brazil, for a week in August. The first thing you're going to do is go to Rio's airport Wikipedia page, as pictured above. As Delta is one of the airlines that flies directly to Rio from Atlanta, and fictional you lives in Atlanta, it's safe to assume you've flown Delta a time or two. Perhaps you already have a Delta credit card and have managed to save up a stash of Delta Skymiles between flying and spending on your card. So let's go to Delta's website to see what their award availability looks like.
It's a smart practice to take a look at what cash fares are like around the same time you want to travel. This is just to get a perspective on how much it would cost without any points or miles. I usually rely on Google Flights for this.
It seems as if the average price for a week-long round-trip ticket is around $900 per person, with the cheapest options in the low $800's. When I select the same dates that I searched for Delta's award availability, I find that while the cheapest option is $839, it includes two layovers and an itinerary length that's almost double the direct route on Delta. Yuck.
That means that you'd be getting roughly $895 in value from the 72,000 Skymiles the award flight would cost. If you're interested, one method of valuing the redemption is to subtract the taxes and fees from the cash cost and divide that by the number of miles the same itinerary costs. This is how the numbers would roll out:
- $895 cash fare – $52.65 taxes & fees = $842.35
- $842.35 / 72,000 = 0.012 , or about 1.2¢ per mile
This is a little lower than we tend to value Delta miles, but is still within the range we would be happy to redeem for an economy flight.
Explore Using Partner Miles for Cheaper Redemption Rates
If you read our award planning beginner's guide, you know that one of the first steps after finding airlines that fly to your destination is to Google the best way to use points and miles to travel there. If you did that, you'd know that you can often use Virgin Atlantic miles to book Delta flights for even cheaper than you can with Delta's own Skymiles. This is especially true on direct point-to-point itineraries like this.
For the same itinerary, Virgin Atlantic only charges 45,000 + $52.55. Obviously this is an entirely different point currency that you would need to collect. On the bright side, Virgin Atlantic is a direct transfer partner of Chase Ultimate Rewards, American Express Membership Rewards, Citi ThankYou Points, and Marriott Bonvoy points, making it one of the easiest currencies to accumulate. In any case, having options is always a good thing.
Let's assume you love Hyatt hotels. Whenever you travel for business, you tend to stay with Hyatt, you've earned elite status, and you love the treatment you receive. So naturally, the first thing you do when you're planning a trip is to go to Hyatt's website to see if there are any Hyatt properties at your destination.
Lo and behold, there's a beautiful Grand Hyatt not too far from the city. Even better, it's only 12,000 Hyatt points a night!
Earning the Remaining Points to Book Your Flight
All up, you need 144,000 Delta miles or 90,000 Virgin miles to book return flights. Let's say you've saved 71,000 Delta Skymiles through travel and spending on your Delta credit card. That leaves 73,000 you need to earn before you can book award flights for via Delta SkyMiles. You also have the option of earning 90,000 Virgin Atlantic miles to book the same flights, although you'd be starting from scratch.
One way to earn the points would be through a credit card welcome bonus. We recommend focussing on flexible point currencies first. American Express Membership Rewards transfer 1:1 to both Delta and Virgin Atlantic, so a Membership Rewards earning card would be perfect for earning those remaining miles.
If your monthly expenses consist of mostly groceries and restaurants. Maybe the American Express® Gold Card would be a perfect choice for you, not only for this redemption but also moving forward. In addition to the welcome bonus, you could also consider using the Rakuten (formerly Ebates) shopping portal to earn Membership Rewards points instead of cash back on all your online shopping. With the 60,000 points welcome offer on the Amex Gold, 4X earnings on groceries and restaurants, and your online shopping earnings with Rakuten, you'll earn the rest of the miles in no time.
If you already have a portfolio of flexible rewards earning cards, you could apply directly for a card that earns Delta SkyMiles and possibly earn all the miles needed with a single welcome offer.
Earning the Remaining Points to Book Your Hotel
You've found a great hotel with a reasonable reward rate, but you don't have enough Hyatt points to book the stay. If we assume you'd prefer to stay closer to the airport the night before flying home, that leaves 5 nights you need to book. At 12,000 Hyatt points a night, that's 60,000 points total.
Rather than earn more Hyatt points by spending a lot of money staying in Hyatt hotels, or applying for the World of Hyatt Credit Card, again we recommend focussing on flexible points currencies. Since Chase Ultimate Rewards transfer 1:1 to Hyatt, this would make an Ultimate Rewards earning card the perfect earner for those Hyatt points.
The Chase Sapphire Preferred® Card, our favorite travel credit card for beginners, currently has a 80,000 point sign-up bonus after you spend $4,000 on purchases in the first 3 months from account opening. Just transfer 60,000 Ultimate Rewards points from your new welcome bonus, and you're all set to book your five-night award. As a side benefit, Chase Ultimate Rewards also transfer to Virgin Atlantic—so your remaining points can be used to top off your Virgin Atlantic account for the flights.
Reward Booking Wrap-Up
Once you've managed to earn the necessary miles for the flight and hotel, there's nothing left but to transfer the points to your corresponding Delta, Virgin Atlantic, or Hyatt accounts, and complete the bookings. Keep in mind that there's no guarantee that the award availability will continue to be there forever. You need to book your awards as soon as you can.
Once the dust has settled, you'll realize that 95% of this trip has been paid with points and miles instead of cash. In this case, you'll be saving roughly ~$2,000 on flights and ~$660 on the cost of hotels!
Everyone has different travel goals. Some people want to fly in the most luxurious first-class seats. Others don't mind flying economy but want to travel to every country in the world. The diversity in goals and experiences is one of the best things travel has to offer. The beauty of points and miles is that they can help facilitate all of it.
If you resolved to travel more in 2020, we hope we've demonstrated that the large cash outlay typically required to travel shouldn't be the death of your travel goals. With a little planning and a lot of diligence, we think anyone can afford that trip they've been dreaming of.
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