Friday, 22 August 2014

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Updated July 10, 2017

So you want to travel the world but not sure if you can afford it? Trust me, you can. It will take some work, but believe me, it is not at all difficult. And a little bit of work in exchange for very-nearly free travel is so completely worth it.

The process is actually pretty simple. It involves applying for certain credit cards which offer disproportionately high amounts of Aeroplan miles as a sign-up bonus, redeeming the miles for free flights, and cancelling the cards.




FIRST THINGS FIRST

The first thing to do is to check your credit score. Every credit card application you make lowers your score by about 5-7 points. Now, that’s out of a total of 900 possible points, so it’s not a huge number, but it’s still something to keep in mind. 

Some other quick thoughts on credit for those interested:
  • A score represents a moment in time and can change based on your behaviour.
  • Missed or late payments or lots of maxed out credit accounts will lower your score.
  • The best way to increase your score is to pay back debts on time and consistently.
  • Scores typically range from 400 to 900, and good scores are usually 660 and higher; anything over 750 is considered excellent. So whether it’s 750 or 850 doesn’t really make a difference. For an institution like a bank or credit union looking at your credit, anything over 725 is a no-brainer.
    • If it might help allay your fears, I don't know how many credit cards I've applied for in the past few years, and Equifax tells me my score is 759.

The credit bureaus don’t make it easy to find, but here's a great way to find out your credit score for free:



  

When you get your report, make sure all the information is accurate. If your report shows loans or credit cards that you didn’t apply for, someone may have used your identity to apply for credit or the credit bureau may have incorrect information about your credit use. Either way, you’ll want to tell the credit bureau about the discrepancy immediately.

Generally, you will need to apply for about 2-3 credit cards for a return flight from Canada to Europe, and more for further destinations like Asia or Africa.

One last quick thing: I didn’t come up with all this on my own. I am 100% indebted to the website FlyerTalk for everything you read here. Most of the time I spent on this project was used trying to piece together how this whole thing works and how to pull it off without getting burned by silly mistakes. 

But after our most recent trip, a lot of people have been asking me for info on how we pulled this off, so I figure if I can make this as straight-forward and easy-to-follow as possible, I can spare you guys the most painful part of the process: sifting through endless forum posts trying to get a straight answer to my questions!


GETTING ORGANIZED

This is supposed to be a way to travel for free, so make sure you don’t cancel out the benefits by unnecessarily paying for annual fees, missed payments, etc.

I made an Excel spreadsheet with two tabs: one for credit card info (when I received the card, how many points it should give me, how far along I am in meeting the minimum spending requirements, etc) and another page for credit card payments (which card is due when, has it been paid, etc)

Also, you'll need an Aeroplan membership (free) if you don't already have one.


STEP 1 - GETTING YOUR POINTS

In order to rack up the necessary points for your dream trip, you have to follow these steps:
  • Apply for a given card
  • Meet the minimum spending requirements for the card
  • Wait for the points to appear in your account (can be up to 6 weeks)
  • Cancel the card before the annual fee kicks in
These steps will lead you through applying for a combination of Aeroplan and American Express credit cards, because Amex points are transferable 1:1 to Aeroplan.

Notice I said Aeroplan. If you're using Air Miles, I would strongly encourage you to cash out and use Aeroplan instead. For many reasons, but here's two: (1) Air Miles points expire; and (2) Aeroplan points are MUCH easier to accumulate.

So when I refer to 'points' throughout this blog, I'm referring to either Aeroplan points or Amex points, since they are essentially the same with the same value

The other thing is to check if the annual fee is waived for the first year. Some credit cards have an ongoing promotion where they cover that fee for you for the first year, as a further incentive to sign up. The fees are usually about $120/year, which, depending on your situation, may or may not be worth it.


Links to Credit Cards to Apply For:


If this info is helpful to you, and you decide to sign up for some cards, consider supporting this blog by signing up using the links below. (Only applies to the Amex cards.) Thank you in advance!


AMERICAN EXPRESS GOLD REWARDS CARD – 25,000 Amex points (first year free)
  • A huge amount of points, and with the first year free. Nothing like this card! Good for a round-trip flight anywhere in North America.


AMERICAN EXPRESS BUSINESS GOLD REWARDS CARD – 40,000 Amex points (first year free!)
  • This is an insane offer - best I've ever seen for a free card. Here's what you need to know:
    • Minimum spend requirement is $5000 in three months. $1666/month takes some planning but is doable. Check out my suggestions for meeting spending requirements below.
    • You need to include a business name - but it doesn't need to be an officially registered business. It can be anything that allows you to make money - even if it's not currently doing so :-)
    • For example, I have sold the odd used book on Amazon. So I used my Amazon selling name as my "business" name and it worked perfectly. An eBay seller account would work as well. Have a blog? You can use that. It's really flexible.


TD AEROPLAN VISA INFINITE CARD – 25,000 Aeroplan points (first year free deal no longer active)
    • 15,000 points upon 1st purchase
    • 10,000 points after you keep the card open 3 months


So with just the 2 free Amex cards, you're looking at:
  
-Amex Gold (25,000) 
-Amex Business Gold (40,000)

A total of 65,000 points - and you've got yourself a free plane ticket to Europe!!!


A Short Cut

Does this seem like a lot of work? If so, there’s a simple short-cut. Instead of having to apply for and track several cards, you can apply for this beast of a card: 

For what seems to be a limited time, the Amex Business Platinum card gives you a whopping 75,000 points (along with a ton of other perks, like airport lounge access!). 

AMERICAN EXPRESS BUSINESS PLATINUM CARD - 75,000 Amex points ($399 annual fee)

This is a ridiculous amount of points, way more than enough for Europe. In fact, it’s actually enough points to get you to Japan and just shy of enough for Australia! So sure, paying $399 isn’t for everyone, but consider that you're paying $399 to go to Japan! Seen that way it's actually an incredible deal.

(And if you follow my instructions below for redeeming the points, your taxes should only be around $120).


The High Life - Business Class

There's another way to use those insane 75,000 points. For most of you, you’re just happy to get there. You don’t much care about what class or what perks the flight has. 

But for some of you, Business Class (or even First Class) would be a dream come true. Those flights need a lot more points - 110,000 for a Business Class flight to Europe. And the Amex Business Platinum card would be a way to make that dream a whole lot closer to becoming a reality. 

In terms of pure value, this is by far the best deal. Crazy though it might seem, a Business Class flight to Europe is about $3500. So using 110,000 points for a $3500 Business Class flight yields more value per point than using 60,000 points to book a $900 Economy Class flight. 

If you’ve always wanted to see how the other half travels, this is a really cheap way to have a once-in-a-lifetime experience.

STEP 2 - MEETING THE SPENDING REQUIREMENT

Having a hard time hitting the minimum spending requirement?

For most of these cards, the minimum spending required is so low ($500-$1500 in three months) that you can meet it with your regular purchases. But for cards with higher minimum spend requirements, and for Amex cards which aren’t accepted as widely, here are some ideas for how to achieve the spending requirement:

  • This is obvious, but put everything you can on your credit cards. Sometimes people seem reluctant to do this, but as long as you pay your bills promptly, it’s a no-brainer.
  • Donations: if you give monthly to an organization, an option is to cancel the donations for a few months and simply make a one-time donation. So you cancel your $100/month donation for 6 months and make a $600 donation. (But don’t forget to restart the donation after!)
  • I haven't tried this, but I've heard you can buy coins from the Canadian Mint and put it on your credit card. Do your own research, but if it works like it's supposed to, that might be a gold mine.
  • I've also heard of Paytm - it seems like it allows you to pay any kind of bills using your credit card
  • If you need more ideas, you can do some research online. On the interwebs they call this “manufactured spending”.

Converting Your Points

Since you’re working towards an Aeroplan flight reward, you need to convert your American Express points to Aeroplan miles (they transfer 1:1). Thankfully, this is super easy. Go to the Rewards section after you log in to Amex, and find the link for "Rewards", and then “Transfer my points.”

The conversion from Amex points (called Membership Rewards points) to Aeroplan is instantaneous – however, you must first register your Aeroplan account, and that can take a few days. So plan accordingly!



STEP 3 - SPENDING YOUR POINTS

Now here’s the fun part: booking your flight!

Have a look at the Aeroplan reward chart. Start dreaming!

But wait. You’ve probably heard about the dreaded taxes that accompany a reward flight booking. It’s true. And really, it’s ridiculous that a “free” flight isn’t actually free. In particular, there is often a “fuel surcharge” levied which can be $500-$600 alone. So the fees and taxes can amount to almost the full price of the actual flight! Which would mean this was all a colossal waste of time.

But thanks to those helpful FlyerTalk peeps, I learned something ingenious: different airlines charge different levels of fees and taxes.

And because Aeroplan is part of the Star Alliance network, you can use Aeroplan points for flights on any airline within the network.

Want to know which airlines don’t include the “fuel surcharge”? Here is a list of some of the airlines within Star Alliance that you can fly in order to avoid the most obscene of the reward flight surcharges:

United
Swissair
Brussels Airlines
Croatia Airlines
Egypt Air
Air China
Scandinavian Airlines
Air New Zealand
Turkish Airlines
Ethiopian Airlines

I don’t remember exactly, but I think we paid about $150 in taxes for each of our round trip flights to Copenhagen and Amsterdam. Considering those flights were supposed to cost over $1200 each, I’ve never paid $150 with a bigger smile on my face.


There are two ways to redeem your Aeroplan points for a flight:

1) online through your Aeroplan account page
2) over the phone with an Aeroplan agent

The thing is, Aeroplan (for obvious reasons) tends to mostly display Air Canada flight options on the Aeroplan website – and Air Canada happens to be one of the worst-offending carriers for fuel surcharges on reward flights. For simpler trips (say Montreal to Paris) you might luck out and find a flight with Swissair or United (for example) on their site. But for more complex itineraries, you may need to call Aeroplan to book it. (Note that they charge $35 for this. Which is why it’s always preferable to find it on Aeroplan’s website if you can. But if you’re doing a complex routing, it’s well worth the charge.)

Most of the time, you can explain your preferred flight details to the agent, and they can find what you’re looking for and book it for you.

To avoid calling a hundred times, however, a good tip is to search for the flight using United Airlines award search. They are in the Star Alliance network, meaning everything you see on their website is bookable with Aeroplan points. But unlike the Aeroplan website, they don't intentionally hide the flights without the insane fuel surcharges. 

So I usually search United's site until I find the ideal flights (their 'saver award' are the ones you're looking for), and then either book on Aeroplan's site (if I luck out and the flight is listed there) or I call an Aeroplan agent to book it for me.

If you hate the idea of searching every day, there are handy 3rd-party tools that can help with that, like www.expertflyer.com.

Overall, it takes some sleuthing but shouldn't be too hard to find your ideal flights. If you get really bogged down, email me and I’d be glad to lend a hand.

Once you find availability for your itinerary, call Aeroplan and ask them to book it for you. You may have to spoon-feed them the info. The United site sometimes finds flight options that even the agents can’t see right away. If the agent gives you a hard time, thank them politely, and call again until you get a more cooperative agent.


STEP 4 - PROFIT!

That's it! A few more tricks to mention:



Adding a stopover

You know how when you’re flying you often have a stopover in some random airport for a bunch of hours? Wouldn't it be cool if instead of a random airport it could be a place you actually wanted to visit? And instead of 4 hours, you had a week? Well, a little known fact is that you can intentionally add a stopover your trip.

Different airlines have different policies, but generally, you can add a stopover on both your outbound and inbound flights. So essentially, you are getting completely FREE flights to new destinations.

We were limited by vacation time constraints, so we only added one, but here’s how we did it:

Outgoing flight: YUL-IAD-CPH
Return flight: CPH-AMS-ORD-YUL

So on our return flight, technically we are flying Copenhagen to Montreal. But we forced a stopover in Amsterdam...which lasted 8 days. After 8 days, our return voyage resumed, and we flew to Chicago (mandatory stopover because there’s no AMS to YUL direct) en route to Montreal.

This is probably one of the coolest tricks out there. If you have the time, and if your destinations are considered ‘valid’ (in other words, you can’t fly Toronto to Belfast with a Shanghai stopover, it exceeds the 'Maximum Permitted Mileage') you can almost literally fly around the world for no additional cost. 


Know Your Perks

On top of everything else, these credit cards come with some really cool perks. I mentioned the lounge access with the Amex Business Platinum card already. Other things include free travel health insurance, trip cancellation insurance, and, my personal favorite: delayed baggage insurance ($1000 spending spree if your bad is delayed for more than 6 hours!)

So check what your cards include!


Timeline

One last helpful bit of info would probably be: how much time does this all take? How far out do I need to start?

Amazingly, finding flight availability was not a problem at all. If you’ve ever heard that flight rewards need to be booked insanely far in advance, that’s totally bogus. Airlines constantly release new availability depending on sales and route popularity, so if your desired routing is not available, just check back the next day.

Here’s what I did:

Early Nov 2013: started the card applications
Early Dec 2013: started putting money on the cards to hit the minimum spend requirements
Early Jan 2014: hit all the minimum spends
Early Feb 2014: all points received – began searching for flights
Feb 17 2014: booked the 4 flights (May 28 departure)

So really, it wasn’t a painfully long process. If you’re the cautious type, you can always just give yourself more time and start earlier.

Note: Amex says it can take up to 8 weeks to credit your account with your points. So plan accordingly. But if you get into a tight spot (like I did) you can ask them to please pretty please expedite the process. They did for me.

So that’s pretty much it. If I’ve left anything out, please feel free to drop me a line and I will try and help as best as I can. Or check out flyertalk.com. Those guys have this down to a science.


Picking a Default Card

One last quick thought: make sure whatever credit card you use for ordinary purchases is helping you with your travel goals. In other words, if you’re dreaming about Paris and Brussels, cut up your grocery store credit card and get a better one.

Here’s one I recommend:

MBNA Travel Rewards Mastercard

2% cash back on all your purchases. They waive the $89 annual fee the first year, and give you $100 as a sign-up bonus. Not too shabby at all.
 


 

 

16 comments:

  1. Honey you are such a babe. Now let's go to Turkey!

    ReplyDelete
  2. Does Costco take any Amex or just "their" amex? (I thought it was just theirs)

    ReplyDelete
  3. What do you have to do for free accommodation and food? That's the greatest travelling expense for our family.

    ReplyDelete
    Replies
    1. Ya, I hear you. What we do is rent an apartment instead of staying in a hotel, which enables us to cook all our own meals. So we don't spend any more on food than we would at home.

      So pretty much your only significant expense is the apartment rental. But depending on where you're going, and what you're comfortable with, you don't have to break the bank on that either.

      Airbnb has become the go-to apartment rental website, and we use it regularly. If you'd like, you can use this link to save $27! https://www.airbnb.ca/c/bmorrice?s=4

      Depending on the country you're traveling to, there's free options as well. But Airbnb certainly does provide the most protection.

      I hope that helps! Let me know if you have any other questions.

      Delete
  4. We LOVE our Capital One Venture VISA. Are you familiar with it? Would love to get your thoughts. http://captl1.co/YMz6yS

    ReplyDelete
    Replies
    1. Hi Peter,

      A great looking card indeed! But as Tim mentioned below, unfortunately for us Canadians, it is a US only offer. Sadly, American credit card offers far surpass ours. But all the better for you if you live in the US!

      Delete
  5. I left a comment, but I'm not sure it made it.

    It looks like the Chase deal above is US-only, and the Canadian version is much less exciting — looks like you won't get more than 6,000 miles out of it. It looks like the Starwood Preferred Guest Amex might be a good alternative.

    ReplyDelete
    Replies
    1. I didn't mean only the one in the comment, but even the one in your article is US-only. The Canadian version is very weak compared to the American.

      Delete
  6. And, literally, within a minute of publishing that comment Air Canada emailed to say that the TD Aeroplan Visa Infinite (15,000 miles + 10,000 bonus miles if you spend $1,000 in the first 90 days) has a deal with no annual fee for the first year.

    ReplyDelete
    Replies
    1. Wow, are you sure about the first year free, Tim? I saw the same offer for 15,000 + 10,000 bonus but not the fyf part. Please do share if that's the case! Thanks!

      Delete
    2. Yeah, it just came in an email from Air Canada. I'm not sure if the "Apply Now" link they gave me is personalized or not. Email me and I'll send it to you if you like. You've got my email, right? It's tim @ the name of my blog. :)

      Delete
  7. Hey Brad, thanks for the info! Do you know if you have to redeem your points (ie take a trip) prior to cancelling the card? Thanks!

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    Replies
    1. Hey Julia!

      With Amex, if you have multiple Amex cards, when you cancel one you can ask that the points be transferred onto the card you are still keeping. If you are cancelling your only Amex card, then before cancelling, you will need to transfer the points to a frequent flier program (Eg. Aeroplan) so you can eventually redeem them for a flight. Aeroplan points don't expire (as long as you make one transaction a year), so you can safely keep them there and cancel your Amex card.

      But don't forget you have a full year before the Annual Fee kicks in, so you don't really have to cancel before then. But if some some reason you absolutely must, as long as you keep the above in mind you'll keep your points.

      Delete
  8. Yes, I'll be calling you personally for help with that app! So enjoy this vacation because I'm booking you as my agent the second you land. Or second day. I might show some grace! ☺️ This is so helpful!! We have loads and loads of points and the TD travel card AND loads of European friends to visit but we never knew how to book the tickets without it still costing an arm and a leg in fees! Thank you for all the work you put into this!!

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  9. Lol! Anytime! You'll be pleasantly surprised at how simple it is.

    ReplyDelete