[Updated August 2016]
After credit card rewards, for most people airlines will offer the next best chance to earn rewards (free flights). Now who wouldn't like to fly to a tropical island for free? First, a bit about my travel patterns and then I can explain my system for airline rewards. I am based in San Francisco which means I have easy access to the San Francisco, Oakland and San Jose airports. I travel for work to New York, Chicago and Atlanta 2-3 times each per year. This is my primary source for earning status and miles. I travel to visit my family in San Diego and my wife's family in Seattle a few times a year. I also love to ski/snowboard so I fly to Salt Lake City and Denver twice each year. Lastly, I try to do one big international trip per year with the wife during the summer. Most people would read the above paragraph and assume that I fly United (the major US carrier with a hub in SFO). They would be dead wrong. I hate United. In my opinion, they are the worst US airline - they are always delayed, they treat their customers with a lack of respect and they have very old planes in their fleet. So which airlines do I fly and why?
So now that you know what I fly and why, here is how I maximize point accumulation on these airlines:
To sum up: My main goal with airline miles is to maximize accumulation of miles on my long-haul business trips and then redeem miles for international trips (American) and short personal trips (Delta). Southwest I always fly for free using Chase ultimate reward points. Next: How to maximize hotel reward points. Questions? Comments? Tweet me @RetireOnRewards. [Updated July 2016]
I travel to New York (lower east side), Chicago (the Loop) and Atlanta (Buckhead) for work and I like to snowboard in Lake Tahoe, Park City and Vail so I need a hotel chain that has a good presence in these places AND a great rewards program. After crunching all the numbers, it was a no-brainer to commit all of my loyalty to Starwood. I was indoctrinated into the Church of Starwood Preferred Guest ("SPG") when I was an Associate at McKinsey. We stayed in hotels 4-5 nights per week and they were always Starwoods. I never questioned it at the time and I really took the program for granted. With greater time and perspective, I've really come to appreciate just how great SPG is for both hardcore business travelers and infrequent casual vacations. Earning Starpoints There are a few ways to earn Starpoints:
Earning Status & The Key Benefits of Status Earning Gold and Platinum status at Starwood is easy:
The biggest benefits to me are upgraded rooms (including suites at Platinum Status) and late checkout at 4pm. There are many more benefits, here is a good summary. Redeeming Starpoints There are two main ways to redeem Starpoints:
My Pro Tips I only travel about 6 times per year for work so I would not qualify for SPG Gold Status. However, I discovered a few tricks that help me get to Gold each year.
Now that you've figured out how to accumulate rewards, click here to learn how to optimize redemption of reward points. Questions? Comments? Tweet me @RetireOnRewards. [Updated September 2016]
For most individuals who are not hardcore business travelers, credit card spend and new account bonuses will be the primary way that you accumulate points and rewards. Before I dive into the cards I use, let me start by sharing a little bit about my spending habits. I spend ~$40,000/year on credit cards and about 75% of the spend is restaurants, travel and Amazon. I do spend about $3500/year on gas. I don't spend much at grocery stores as I mostly use Google Shopping Express or Instacart from Costco or Safeway. If I spent a lot at grocery stores, I would consider getting the American Express Blue Cash Preferred Card (6% at grocery stores) or the Bank Americard Cash Rewards (no fee, 3.5% on groceries if you are a Platinum Honors banking customer). So let's dive into what I have in my wallet:
So, to quickly recap. Before I make a purchase, I go through this decision tree:
Note: Before you sign up for ANY of these cards. Please google the name of the card + "new account bonus". For clicking a random affiliate link, you can get a nice sign up bonus. Phew, now that I've covered cards that I currently use. I'll quickly cover cards that I've had in the past:
One more quick note. The best new account bonuses for credit cards have been the American Express Platinum 100,000 membership rewards points, the Chase Sapphire 60,000 ultimate reward points and Hyatt's two free nights at any Hyatt Hotel (Maldives is the best redemption). I no longer churn credit cards for new account bonuses as it is not worth the headache. If you want to learn about it, here is an article on the topic and here is a site that has current bonuses. Note, I don't get paid for any of these links and I just choose to link to Nerd Wallet because their site has a clean UX and the founder is a cool guy. Next: How to Optimize Airline Rewards. Questions? Comments? Tweet me @RetireOnRewards. [Updated June 2016]
There are three main ways to accumulate rewards:
Once you decide what rewards programs to use, go to their websites and sign up for accounts. Keep track of all your usernames and passwords and download apps if the loyalty programs have them. The SPG app and the Delta & American apps are quite useful. My three pro tips for accumulating rewards fast:
Note: It is really important to remember that you should not spend money just for the sake of rewards. I do not believe in mileage runs or buying something you wouldn't otherwise buy just for the points. Otherwise, this whole system fails. Ready to start earning rewards? Let's start with credit card rewards. Questions? Comments? Tweet me @RetireOnRewards. [Updated June 2016]
I use two brokerage accounts for Retire on Rewards - a traditional IRA with Schwab and a taxable account with Fidelity. In an ideal world, I'd have all of the rewards consolidated into one account for simplicity and I would prefer that account be a Roth IRA as it is the most advantageous for tax purposes. For a quick overview of Roth IRAs vs. Traditional IRAs, click here. I don't qualify for a Roth IRA so I use a traditional IRA. Since I can only contribute $5,500 annually to the IRA account, I need to have a taxable account that houses my reward balance during the year until I make my contribution (and carry any overflow if I save more than $5,500 in a given year). Why Schwab? Simple. My employer uses them for a work sponsored SEP-IRA plan so I decided it was better to have both IRAs under one roof. Schwab also offers free trades for certain ETFs and free dividend reinvestment. Minimizing fees is a big part of my investing strategy so they met my criteria. Why Fidelity? Fidelity issues a Visa credit card which offers a flat 2% cash reward on all purchases. This is my default card and the reward automatically gets added to my Fidelity account when I reach $50 in rewards. If I hadn't been a Schwab customer for a really long time (OptionsXpress starting in 2004), I'd just have a Fidelity IRA and a Fidelity taxable account. I like their platform better than Schwab and their fees are lower. One other potential choice was Merrill Edge because they offer 30 free trades if you are a Platinum Bank of America customer. There is also a really nice Platinum bonus if you use the Bank Americard Credit Card. Full details here. However, I love Silicon Valley Bank and the free trades are not enough of a reason to switch. Now that your brokerage account(s) are set up, it's time to start accumulating rewards! Questions? Comments? Tweet me @RetireOnRewards. |
Retire on Rewards
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