Credit Card Points and Frugal Travel – Ask Alex – Travel Question Wednesdays

Ask Alex - Travel Question Q and A every Wednesday

This post is part of the Ask Alex, Travel Question Wednesdays weekly series. To see previous questions click here.  To submit your own; tweet it to @AlexBerger, ask it in a comment on this post or send it in by e-mail.

A quick introductory note – When I began authoring VirtualWayfarer in July of 2007 I never expected that I’d still be blogging on travel, adventures, study abroad and everything that goes with it nearly five years later.  Over the years I’ve had a lot of questions and luckily my friends, network, and more than a few random strangers have gone well out of their way to answer those questions. While I still find myself asking questions on a regular basis I’ve found that I can also pay it forward as a resource for friends, my readers, and strangers alike.  In an effort to share what I’ve learned from my various adventures I’m launching a new Wednesday feature here on VirtualWayfarer.  Starting today I’ll be answering one reader-submitted question every week.  Anyone can submit, and all past questions will be archived and available as a resource for readers of this blog. I’m going to take a very open approach to the topics I’ll cover, so feel free to ask me just about anything  – as long as it is travel related.

This week’s travel question is from Lindsay B. she asks,

Q. “What’s the best way to use credit card points/miles to travel frugally? Recommend any cards/programs/strategies?”

A. This is a challenging one because it depends on a wide variety of different factors which vary from person to person, and are constantly changing. I’ve had a very mixed track record in the past, having gone so far as to swear off mileage plans after a particularly frustrating experience, before being lured back by Chase’s 100,000 mile British Airways signing bonus.

Let’s start with the basics.  Before you even consider getting a mileage/points card, you have to evaluate your spending and debt behavior.  Is getting a credit card something that  makes economic sense for you?  Can and will you pay it off completely each and every month? Keep in mind that if you carry a balance and are paying interest that’s airfare money going up in smoke.  You’re also going to need to tally up your monthly credit card expenses.  If you put less than $1,000 a month on your credit card you are probably not going to accrue more than 12-13,000 points a year without bonuses.  Given that many point-based cards cost $80-$150 a year and that mileage to fly internationally usually starts at 35,000 miles and is typically closer to 60-80,000 miles round trip, you may actually cost yourself money by getting a mileage card. Ultimately, this is the type of user credit companies are hoping for.  You should also keep in mind that many airlines are in the process of inflating the number of miles needed for various destinations which is in turn driving up the amount of miles you need. Others have discussed switching to a different methodology for counting how many miles are needed from destination to destination.  In general, as you might imagine, very few of these changes actually benefit us as consumers.

On the other hand if you’re flying regularly for business, have business expenses, or your monthly credit card total is over $1,000 then a mileage card might be right for you. These cards often offer airfare bonuses for frequent fliers and if you can accrue points fairly quickly that annual fee becomes less of an issue.  Most cards waive the fee for the first year and offer a hefty mileage reward for signing up for the card.  While most offer 20-40,000 miles for signing up periodic specials are offered where that can be more than doubled.  I mentioned earlier that I was lured back to a miles credit card after having sworn off of them.  Despite reservations the special that drew me back in was a super bonus through British Airways which offered me 50,000 miles for opening the card and another 50,000 miles when I spent $3,500 on the card within the first three months (be very aware that many of these cards have similar requirements).  These miles were roughly the equivalent of two round trip tickets to Europe. So far I’ve had fairly good luck with the British Airways frequent flyer program, and I was able to book my ticket to Copenhagen using these miles without any of the redemption issues I had previously.

As you might imagine, there are a subset of consumers who are focusing on accruing the signup mileage bonuses as an alternative to accruing points on a per-dollar basis.  Keep in mind that even though you may get your points through an airline branded credit card, the points themselves are actually held within the Airline’s mileage program.  So, I can technically sign up for a Chase British Airways card with a 50,000 point sign up bonus, and a Bank of America British Airways Mastercard with a 45,000 point sign up bonus giving me a collective 95,000 British Airways miles.  Many of these users then cancel the card after keeping it for most of a year (thus avoiding the annual fee) while also meeting the $3000-$4,000 minimum spend required to qualify for the points.  So far credit card companies haven’t been thrilled about these users, but have tolerated them. Given that a fair number of people no doubt read up about this way of generating miles and register for cards intending to churn them, only to end up keeping the card I imagine the banks are still doing quite well.

The verdict is still out on just how negative the impact of this type of credit card churning can be on your credit. From what I’ve read it seems that those who tend to put a fair amount of cash onto their cards each month and maintain several old cards with a long credit history haven’t had significant issues.  On the other hand, I’ve also read reports from a number of users who have been blacklisted by various credit card providers.

This space is constantly changing, and varies from provider to provider so you’ll want to do extensive research before deciding what approach you take.  To do that research there are a number of communities that are dedicated to making mileage plans work for you. Keep in mind it’s a game and a complex one at that which is structured in the airline and bank’s favor.  Doing your research, having a plan and sticking to it is fundamental if you’re going to be able to successfully use your miles as a budget travel technique.  For research I suggest reviewing Chris Guillebeau’s posts on using frequent flyer miles via his Art of Non-Conformity Blog.  Additionally FlyerTalk is dedicated to all things frequent flyer based and is a great place to find out what cards are offering the best signup bonuses, how to get the most out of your mileage program, etc.

A few final thoughts – keep in mind that frequent flyer programs may give you the flight for free, but they often do not include taxes which you’re responsible for. For my one-way flight to Copenhagen I saved around $800 BUT still paid $250 in airport taxes and fees.  Also, if your work schedule is very limited it can be extremely difficult to redeem your miles on short (less than 6 months) notice.   On the other hand if you have a very flexible schedule, mileage can be great.  Another key consideration is the quality of the card itself.  Amazingly many mileage based “travel” cards are surprisingly not-very travel friendly.  While it is changing, many older mileage cards charged a 3% international transaction fee on all purchases made outside of the US, in addition to various other fees.  That adds up quick when abroad.   Lastly, consider the possibility of using your miles for a RTW (Round-The-World) style ticket.  These multi-destination tickets can be incredible, and often only slightly more expensive mileage wise than a long-distance international ticket. Though you’ll need to have more than a week or two to properly utilize them.

Hopefully that gives you a crash course introduction to mileage cards.  Make sure to head on over to FlyerTalk for more in-depth information and to do your own research.  To be clear, I’m not providing any financial advice in this article, or suggesting you employ any of the tactics outlined within this blog post.  Only that you utilize the resources available to educate yourself and make your own decisions.

Lindsay, thank you for a fantastic question!

If you end up using these tips to book a trip I’d love to hear about it! Good luck and safe travels!

If you’re looking for additional information, you can also explore what Nomadic Matt has to say. Matt is a premium advertising partner and also one of the most well recognized and respected names in the independent travel advice community.  He has a series of guides and informative posts that cover most of the relevant topics you need to worry about when preparing for a trip.  Of particular interest based on this post consider taking a look at his guide to the best travel rewards cards.  As a long-term traveler who has circumnavigated the globe he also provides a number of insights on how best to book and research round the world tickets.

 

Flying With British Airways – Why I Will Never Trust Them Again

If you talked to me in the month or so before I caught my flight over to Denmark to begin my two year study abroad session I was probably very complimentary of British Airways.  I’d recently signed up for a British Airways associated Credit Card, received 100,000 miles as the signing bonus and been able to book my international flight with the miles without significant lead time.  Further, I’d talked to the agent with whom I booked the ticket and he had made several suggestions which seemed like they solved the problems I was looking at in getting my luggage (including a desktop) over to Copenhagen for an affordable rate.

Unfortunately, British Airways managed to burn every ounce of that good will and then some in the 36 hours before my flight.  If there’s one thing I can’t stand it’s a good old fashioned bait and switch.  When you sell me on a product, sell me the product as delivered or straight to hell with you.

The Pitch: In talking with the agent and explaining what I was doing and inquiring what my options were for getting additional luggage to Denmark he suggested that I book the ticket (30,000+$239 in taxes/fees) and then upgrade for an additional 15,000 miles (a 50% increase in “cost”) to decrease the cost of additional bags.  The way it typically works is that a standard ticket with BA gets 1 free checked bag, 1 carry on, and 1 personal item.  From there the first additional bag would cost me $51 w/ a discounted price if I booked it ahead of time and online. The third bag would then cost $119 (online) or $140 (at the counter).  BUT, if I upgraded to World Traveller Plus for the additional 15,000 AirMiles I’d receive a second bag free and then be able to pay $51 for my third bag, and $119 for my fourth if I needed it.

With a weight limit of ~50 pounds and the need to transport two LCD monitors and a desktop I knew I’d need three bags, in addition to my carry on (backpack) and personal item (laptop). So, the 15,000 miles and additional ~$50 I’d end up paying for the 3rd bag seemed like a great option.  I did some research, thought it over, and then went to book online using their e-portal.  Only to have it error out every time I tried over a 6 hour period.  Frustrated and having been told there were only a few tickets left I called in and manually booked it over the phone repeating my previous conversation to the new agent.  I told him to book the ticket with the upgrade, and he reminded me that there was a baggage discount if paid online ahead of time/during online check-in.

Fast forward to a day or two before my departure.  I was about to enter the 24-hour window for check in. I logged in and went to pay for my additional luggage.  You can imagine my surprise when I added my third bag only to be notified it was going to cost $119. Assuming a mistake with the website I exchanged tweets with @BritishAirways and then began the process of trying to call the executive club member number on my card. I also had noticed that I was never prompted to purchase traveller’s insurance either on-line or in the follow up e-mail.  Wondering if it was included through the insurance on the Signature Credit Card or had been auto-included in fees I paid I was eager to speak to a rep and ask them about it.

After two calls at different points in time (both of which projected 13+ minute wait times) which is absurd for a “premium” member service I tried calling a third time only to learn that the executive office closes at 8PM EST (Good luck westcoasters!). With less than 24 hours left before my flight I called the standard booking number and spent more than 30 minutes on hold before finally giving up.  Keep in mind this is the phone number to BOOK with British Airways.

In doing  some online research I found an additional number for the 3rd party vendor they use and called their 24 hour number only to learn that not only was there not a policy # for my flight, but because I hadn’t purchased insurance from them within a 7 day window after purchasing my ticket from BA, I wasn’t going to be able to buy a policy.    Frustrated I went to bed and woke up early to try calling once again.

Finally after a few short hours of sleep I found myself awake, called and after a relatively short hold time I reached a BA sales agent who I told about the issues with web pricing.  With an incredibly rude tone, she directed me to the website and said that regardless of what I’d be told previously the $119 fee for the 3rd bag was correct.  Throughout the conversation she was rude, unfriendly, and combative.  This led me to escalate to a supervisor who while apologetic and far more friendly was unwilling/unable to do anything to fix the fee amount despite the source of the misinformation being one of their booking agents.

At this point I’d been forced to book by phone because their web portal wasn’t working, been sold an upgrade at 15,000 miles on the premise of discounted luggage fees which were non-existent, faced ridiculous  hold times and BA had no intention of doing a damn thing about it. Not to mention never having been offered the opportunity or informed of the need to purchase third party travel insurance (which only had a 7 day window to begin with).

Unwilling to make the situation right about the mileage upgrade and added fees for the luggage the supervisor did at least take the time to call the insurance provider and to line up a last minute insurance plan which I was able to purchase over the phone.

I am both incredibly annoyed and disgusted by the way British Airways handled the entire thing.  Their lack of interest in making the situation right was only compounded by the terrible performance of their phone and web services. For a major airline and allegedly one of the more reputable ones, their level of professionalism was absolutely lacking.

It’s a pretty sad statement when a customer has to not only work to spend money on an airline, but also has to work with that airline on a buyer-be-ware basis. If this is the type of service and treatment I can expect from them, I’ll be looking forward to the moment when I can dump my miles and cancel my card. It is also worth noting that in sharing this story with friends and fellow travelers, I’ve heard similar story after story that indicates BA has systematic customer service and quality issues.