Newbie Guide

The Newbie Guide – July 27, 2012

Welcome to The Newbie Guide at MileNerd.com. Since you’re reading this page, I assume you want to learn about airline miles and hotel points. Take a deep breath, you’re in the right place. Without further adieu…The Newbie Guide…

 

Why Get Into This?
Simple. At this moment, I could fly first-class anywhere I choose. When the airplane lands, I could spend the next month in a 5-star hotel. And this vacation would cost me nothing. We’re talking about $20,000 flights and $15,000 hotel stays. For free! Still not motivated? Read this entry ASAP!
I had always heard about the strange people who traveled the world using this strange currency (airline miles). For some reason, it never clicked that it was actually possible for me. And I had no clue it could be so easy!

By January 2011, I was obsessed with this hobby. In the next 18 months, I made over 2.5 million miles and points. I started this blog after realizing there wasn’t a website that had what I was looking for. I wanted someone to cut the fat, listing only the best deals in the fewest words possible. Every day (well, 5 days a week), that’s exactly what I try to do. Oh, and most bloggers in this space are pretty shady. I get a ridiculous amount of credit just for not being a scumbag.

Credit Cards
Unless you travel a ton for work, you can earn your biggest chunk of miles from credit card bonuses. Here’s an introduction to the world of credit:
  • Fiction – “Applying for credit cards will kill your credit score.” Man, I really wish they’d start teaching more about credit in schools. In 18 months, I’ve applied for 32 credit cards. My credit score went UP and hovers between 735 and 795. Because this is The Newbie Guide, let me explain why…
  • Fact – Your credit score is made up of:
    • 35% Payment History (late pays, bankruptcy, and foreclosures CRUSH scores)
    • 30% Debt-to-Credit Ratio (how much credit you have vs. how much you use)
    • 15% Length of Credit History
    • 10% Types of Credit Used
    • 10% Recent Searches For Credit (also known as “Inquiries”)

How did my score actually go up when I applied for 32 credit cards? To put it simply, the 10% (inquiries) went down, but the 30% (debt-to-credit ratio) went up.

Sure, I took a small hit for each inquiry but I had a lot more available credit and didn’t carry a balance. My debt-to-credit ratio was more important than the inquiries. Your score will depend on your history, but if you’re responsible with credit (have a good score, pay bills on time, pay off balances every month) then you really should be applying for more credit cards. I use a system that I’ll explain a little later.

  • Fact – “I’m applying for a home loan, so I want to wait to apply for a bunch of cards.” That’s probably the smart thing to do. If you’re buying a house or refinancing in the next few months, just wait until it’s a done deal to become a credit card application monster.
  • Fiction– “Oh, I already use a mileage credit card. I make plenty of miles.” This one is SUPER annoying. Lets use basic logic and do some math. If you spend $25,000 on your mileage credit card this year, you will earn 25,000 miles. Now, if you apply for 15 credit cards (with a 50,000 bonus per card), you’ll earn 775,000 miles with the same spending.
If you have bad credit, applying for a bunch of cards is not for you (yet). You can still earn miles in other ways, but learn to be responsible with your credit before you play the card game.
  • Fact – “It’s a good idea to wait a few months before closing a credit card.” Some cards claim to take back the bonus miles if you close the account within 6 months. I’ve never actually seen this happen, but I always keep cards open for at least 6 months. I usually close them before the 1-year mark (when annual fees kick in). Occasionally, I change to a no-fee version of the card instead of closing it.
  • Fiction – “It’s smart to close older cards first.” SO WRONG! Remember, Length of Credit History is 15% of your score. Cards without annual fees don’t ever need to be closed. Those old ones you’ve had in your wallet for 15 years should be the last ones you want to close.

 

How To Become a Mile Nerd (Step-By-Step)
  • Ok, here we go. First and foremost, please, please, please…whenever you fly or stay in hotels, COLLECT MILES AND POINTS!! I can’t believe how many people still don’t do this (Cara and Jimmy, this means you).
  • Every single airline has a mileage program. Every major hotel brand has a points program. When you book your flight (or hotel room), all you have to do is give them your account number. Some of the big programs include:

 

  • Yes, all the programs are free. And, yes, you’re going to have a lot of miles and points accounts to track (I have 39). So it’s hugely important to stay organized. The best way to do this is with AwardWallet. Once you set up all your accounts, AwardWallet will save you from ever having to remember account numbers, user names, passwords, or expiration dates. I also keep this information stored in a spreadsheet.
  • Yes, mileage accounts do expire. AwardWallet sends you an email so you won’t miss the deadline. You’ll then have time to extend the expiration date by doing any number of things, including:
    • Flying that airline.
    • Open a credit card for that airline
    • Use a credit card for that airline
    • Transfer points from Starwood or American Express Membership Rewards
    • Buy an item through the shopping portal on the airline website. A $10 gift card or even a 99 cent iTunes song is enough to extend an expiration date.
    • Make a small transfer at points.com
    • Eat a meal with a registered credit card
    • Redeem some miles for award travel
    • Do web searches with an airline toolbar
    • Read blogs like this one for promos that will earn you a few miles and extend expiration dates
  • Again, I already do all the research and hard work for you. All you have to do is follow a few steps. Whenever you do start applying for bunches of credit cards, it should take less than 15 minutes per day to rack up huge miles. To keep all my applications organized, I go into geek mode and use a color-coded spreadsheet. Here’s the way it works:
    • I enter the name of the card, the date I applied for it, the bonus miles I’ll earn, and how much I have to spend to get the bonus.
    • When I’ve earned the bonus, I color-code it yellow.
    • When I close a card, I color-code it green.
    • When it’s a no-fee card (which I never need to close), I color-code it blue.
    • I spend 5 minutes a day looking at my geeky spreadsheet. I’ll know when to spend more money on a card, when to close a card, and when it’s time to apply for new cards.
    • Every 3 months, I do a new round of credit card applications. It takes less than an hour, and I only apply for one card per bank. For example, 1 card from Chase, 1 from Citibank, 1 from Bank of America, 1 from Barclays, and 1 from American Express.
    • I don’t have any credit card links here in The Newbie Guide because the offers don’t last long. I do always post the best offers throughout the blog. These are always the best offers you can find (and better than most of the publicly advertised ones). I don’t make money through credit card links, so I’m always posting the best deals.
  • Get familiar with the 2 main airline alliances, Oneworld and Star Alliance. Oneworld includes airlines like Cathay Pacific, American Airlines, and British Airways. Some Star Alliance options are United Airlines, Lufthansa, and Swiss Air. Things to know about alliances include:
    • You can fly one airline and earn miles for another airline in the alliance. For example, if you book a US Airways ticket, you can choose to earn United Airlines miles on the flight.
    • Certain airlines have a much better first-class product than others. This is important to know, since most of us don’t go through all this trouble just to fly coach. For example, Cathay Pacific has a legendary international first-class product. It completely blows American Airlines out of the water.
    • Since you can use miles to book flights on a different airline within an alliance, one of the very best uses of your American Airlines miles would be to book an international first-class flight on Cathay Pacific. If you pay for this flight in cash, it will cost you roughly the price of a new Toyota Corolla. Why not use miles and do it for free?
    • Some of the best airlines for first-class flights include: Etihad, Cathay Pacific, Singapore Airlines, Qantas, Emirates, ANA, Swiss, and Jet Airways.
  • In general, it’s a huge waste of miles to use them on domestic flights. International first-class (or business-class) flights can cost $10,000+. Why would you use valuable miles on a flight to Vegas that you can find for 400 bucks?
  • An exception is British Airways miles (known as Avios). Because of their crazy fees on long mileage flights, Avios are best used on short trips. For example, if you live in Los Angeles, Avios would be great for flights to Reno, Las Vegas, San Francisco, or Hawaii.
  • It’s good to collect all miles, but some are better than others.
  • An example of one of the a very valuable points program is Starwood Preferred Guest. SPG points can be used on hotel stays or transferred into miles. You get a 5,000 mile bonus for each 20,000 you transfer into miles. Still, the best use of the points is for Cash + Points hotel stays. For example, Le Meridien is a great Bangkok hotel you can book for 7,000 SPG points per night. An even better strategy would be a Cash + Point redemption at 2,800 points + $45 per night. By paying that small amount, you can stretch your points into a longer vacation! Chase Ultimate Rewards points are also extremely valuable.
  • Experience will give you an idea how many miles you need for a trip. If you don’t have that experience yet, you can always call the airline and ask. Phone reps aren’t often the most knowledgeable people in the world, though. Get familiar with this stuff. The internet is your friend.
  • If you’ve collected a bunch of miles and still don’t quite know how to best use them, there are quite a few booking services out there. If you ever need help finding a good one, just let me know.
  • Airlines and hotels offer elite status for loyal clients (Silver, Gold, Platinum, etc). For airlines, this is good for things like early boarding and upgraded seats. For hotels, it’s helpful for things like early check-in, late checkout, upgraded rooms, free internet, and breakfast. I’ve shared tons of tricks throughout this blog for earning hotel status.
  • Depending on your needs, point transfers can be a great option. In the past, I transferred big piles of Virgin and Hawaiian Airline miles because I needed Hilton points. Since they transferred at a 2 to 1 ratio, I’ve got enough hotel points to last a long time. I transfer huge amounts of Chase Ultimate Rewards points every year.
  • Certain credit cards can be “churned,” meaning you apply over and over and earn the bonuses multiple times. Again, I talk about this in the blog, but Hawaiian Airlines cards and the US Airways card have been recent examples.
  • Most blogs other than the ones I link to on the right sidebar are pretty redundant, but Flyertalk can always provide hours of reading for any mile-obsessed newbie.
  • I try to keep mile/point links on the right sidebar current. Some freebies come and go there.
  • EVReward isn’t a website you have to join, but it’s another one worth using before buying anything online. It instantly shows how to earn the most miles on any purchase.
Well, it looks like we’re at the end of The Newbie Guide. I’m sure I forgot something obvious, but I’ll post now and update as necessary. I hope this page will help you newbies figure out how to get started. Please feel free to email me with any questions or comments. And come back to MileNerd daily for the latest tips. Yes, it’s true there are only a handful of “blockbuster” deals each year, but they usually don’t last long. You want to jump on them as soon as possible. Keep learning and hopefully I’ll see you on the beach!
(This page is way, way overdue for an update. In the meantime, when you finish here, you can read this post).
milenerdNewbie Guide