Why pay to fly when you can fly for free?
If you play the credit card game correctly, you can take advantage of big promotions to earn free travel. Right now a hot deal is the Citi Aadvantage Platinum Select World Elite Mastercard which currently has a 60,000 point sign-up bonus after spending $3,000 in the first 3 months. With 60,000 points, that gives you exactly the amount of points needed for a free flight to Europe and back. But you have more options than just Europe! You could instead choose a free trip to Hawaii, Central America, or South America!
In order to win the game, you have to know the rules.
Here are the big 3 rules to ensure this strategy is worthwhile:
1. You must pay your credit card statement in full each month.
If you end up paying credit card interest, you fall into the credit card company’s trap. That’s exactly what they want you to do and exactly why they’re willing to give such hefty sign-up bonuses. Don’t give up so much as a penny to credit card interest.
2. Only purchase items that you were already going to buy.
If you spend $3,000 on a new couch that you weren’t already going to buy, then that defeats the whole purpose. You’ve now spent more than the value gained. If you think hitting $3,000 in 3 months on everyday spending will be difficult, look at the expenses you’re already paying for. Car insurance, cable/internet, phone service, and gym memberships are all items that can be paid with credit cards with no convenience fees. With groceries and dining on top of those, there is a good chance you already have $1,000 of monthly spending to put on the card. If not, there are other ways to manufacture spending.
3. Decide whether to keep the credit card long-term.
The annual fee is waived for the first year, but after that it costs $95 per year. In my opinion, there are way better credit cards for rewards on spending, but maybe you fly American frequently and the free checked bags is worth the cost. If it’s not, determine that before the 1st anniversary date.
Is it Really Free?
Of course in today’s world free flights don’t mean completely free. You’ll still have to pay the mandatory fee and possibly fuel surcharges. For the fuel surcharges, pay attention to the airline of the award flight as the flights could be on any Oneworld alliance partner. British airways flights have some of the highest fuel surcharges in the business, costing as much as several hundred dollars each way.
Here is a perfect example. It’s a one-way award flight from Chicago (ORD) to London (LHR) on British Airways. This flight will cost 30,000 points plus $287.10 in taxes and fees.
On the other hand, the surcharges on American Airlines flights are very low. Often you’ll only have to pay the $5.60 mandatory government fee.
Here is a direct flight from Chicago (ORD) to London (LHR) on the exact same day as above. The only difference — it’s on American. Oh yeah, and the fact it only costs $5.60 on top of the 30,000 miles.
On a roundtrip flight, that would cost you an extra $563.00 for flying on British Airways. Needless to say, avoid British Airways as much as possible for award flights.
There are only a handful of reasons you should not take advantage of this offer. You already have the Citi Aadvantage card (or had it in the past two years), have no desire to travel in the near future, would not get approved due to really poor credit, are saving a credit card application due to the 5/24 rule, or are about to apply for big loan such as a mortgage or car loan.
If you follow all the rules and avoid credit card interest, annual fees, unnecessary purchases, and fuel surcharges, you could get a roundtrip flight to Europe for $11.20 and a credit inquiry. In today’s world, that’s as close to free as you can get.
I got this credit card in 2015 to help my wife and I get to Italy for our elopement/honeymoon last spring. My wife then got this card in 2016 at the 60k sign-up bonus in preparation for a European vacation next spring. Neither of us have the cards any more. According to Citi’s rules, you are eligible for sign-up bonuses if you have not opened or closed a credit card in the same family of cards for 24 months. Since I cancelled my card in summer 2016, that means I can take advantage of this exact same strategy anytime after summer 2018. And then my wife can do it in 2019. Rinse and repeat.
Bonus Tip: If you don’t already have a card with no foreign transaction fees, now you have one for your trip! Using a credit card with no foreign transaction fees is the best way to make purchases internationally to avoid big fees in exchanging currency.