Loyalty programs or bust

Rack up frequent-flier miles without taking a flight

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Air-travel lovers take note: If you're not flying free much of the time or flying in luxury — first-class seating, airline club lounges, free checked bags — you're probably not taking advantage of sophisticated strategies to supersize your frequent-flier miles on the cheap.

Granted, it takes effort and know-how, but using the strategies allows regular people, making regular salaries to travel the world, experts say.

"Miles really afford you the ability to travel like someone with a lot more wealth than you actually have," said Brian Kelly, founder of ThePointsGuy.com, a website that advises people on how to accumulate and use travel points and miles.

Rick Ingersoll, 62, of Hilton Head Island, S.C., is also a travel-points expert and founder of FrugalTravelGuy.com. He has taken a 35,000-mile, around-the-world trip while flying business class for a total of $360. He recently booked a flight for two on American Airlines from Florida to St. Martin in the Caribbean for award miles and $176 in taxes and fees. And to ring in the 2013 New Year, he and his wife will be flying to Sydney, Australia, for five days, all paid for with points and miles. One of the flights, from Bangkok to Sydney, includes a preflight one-hour massage.

What if he didn't have the loyalty points? "We couldn't afford to do it," said Ingersoll who owns a small mortgage banking company and whose wife is a nurse. "We're just middle-class Americans. Now, we're flying on airline tickets that would cost $15,000 or $20,000."

Like extreme couponers, who can fill grocery carts and pay next to nothing, a community of travelers has figured out how to play the loyalty-program game and become worldwide jet-setters on their frequent-flier miles. They leverage their good credit, everyday spending, time and effort for travel — often luxurious travel — that people of average incomes wouldn't dream about.

"You have to immerse yourself but once you get into it, it's totally addictive and fun," Kelly said, adding that the thrill is similar to those supermarket coupon shoppers. "But instead of stocking up on 1,000 rolls of toilet paper, you're traveling first class."

While travel loyalty strategies can defray costs on a wide range of travel products, such as hotel stays and car rentals, free flights are some of the most lucrative and easiest to get. Here are a few strategies for accumulating frequent-flier miles without taking paid-for flights.

Credit cards

Far and away the easiest way to rack up miles is to apply for credit cards, which grant points or miles — the terms are often used interchangeably and depend on the credit card and loyalty program and often one point equals one mile.

A key is the sign-up bonus.

"Historically, 25,000 points was the sweet spot, but nowadays it's really 40,000 to 50,000 points," Kelly said. That's usually plenty to take a round-trip domestic flight right away on bonus points alone. Some of the bonuses require you to spend a certain amount soon after receiving the card — for example, charge at least $1,000 during the first three months. It's important to understand what the requirements of the card are.

Ultimately, the idea is to apply for many credit cards to rack up bonuses with many different loyalty programs. For example, Ingersoll and his wife over the years have had about 175 cards between them, he said.

You don't need an especially high credit score to get approved for cards — a 700 FICO score, which is mediocre, will get you approved for most mileage cards, Kelly said. "People don't realize you don't need to be a super-frequent flier to earn miles. Most miles that I earn nowadays aren't even from flights."

Some cards have annual fees that are usually waived for the first year. Often, people only interested in the bonus miles will cancel those cards before they pay their first annual fee. They can keep their bonus miles or points, Kelly said. Some people then reapply for the same card they canceled to get more bonus miles, he said. "Some issuers allow you to apply over and over again for the same card every four to six months," Kelly said.

For specific card recommendations that suit the way you travel, go online to such websites as FrugalTravelGuy.com, ThePointsGuy.com, and the hard-core message boards Flyertalk.com and Milepoint.com.

The best way to get up to speed quickly is to avidly read those and other sites, Kelly said.

Credit card warning

Some consumers get into trouble with credit cards and end up paying sky-high finance charges. These reward-card strategies are for people who pay off their credit card balances in full every month. A few debit cards also offer reward points.

Effect on credit scores

Applying for credit cards temporarily harms your credit scores. But experts claim it's a matter of only a few points on credit scales that might go up to 850 or 990, depending on the credit rating company. Formulas for calculating scores are secret.

So, applying for cards is unlikely to harm your chances of being approved for an auto loan or wireless phone contract. Still, if you have a major borrowing event coming up soon, especially something as important as a home mortgage or refinancing, you might want to wait until after you've secured the loan.

Miles vs. cash-back

Many personal finance experts advise consumers to use cash-back rewards cards, which typically offer 1 percent back in cash or statement credit. There's nothing wrong with that, but travel experts say you can earn many times that reward if you're willing to take rewards in the form of travel loyalty points.

"If done right, you can get 5 or 6 cents per point, which means you could get a $7,000 business class international flight for 120,000 miles," Kelly said. It would take tremendous spending on a typical cash-back card to earn a $7,000 reward.

Everyday spending

The strategy for all rewards cards, whether the currency is miles, points or cash back, is to put most of your everyday spending on credit cards to reap greater rewards. The more spending you pile on a card, the greater your rewards. More sophisticated users will use different cards for different purchases because some cards offer greater rewards on certain categories of spending — groceries or gasoline, for example.

"People who play this game seriously have more than one credit card in their pocket," Ingersoll said.

A potential pitfall is that some people will subconsciously spend more with plastic than cash because swiping a card doesn't feel as psychologically painful as parting with hard currency, consumer behavior studies have shown.

Online shopping portals

Instead of going directly to a major retailer's online site to make a purchase, you can often go through a shopping "portal" that gives you cash back or travel points. Prices and selection are the same. You visit the portal site first and then click through to the retailer site. That minor detour, like entering a store through a different door, is another way of racking up airline miles with everyday purchases. By entering through that different door, your reward points — typical is an amount equal to 5 percent of your total purchase — are automatically credited to your account.

"If you're going to make the purchase anyway, you might as well go through the portal," Kelly said. And if you pay with your mileage reward credit card, you get even more points or miles for the same purchase.

For example, if you were going to buy something online at Macy's, you instead could go to Macy's via a portal, such as Chase Ultimate Rewards Shopping Mall, or airline-specific ones, such as MileagePlus Shopping (United Airlines) or AAdvantage eShopping Mall (American Airlines).

Cashing in

Whole other strategies are developed around the best ways to redeem miles and points. "The whole myth with all these mileage programs is there's nothing available, with blackout dates, etc." Kelly said. "It's absolutely false."

Fortunately, advice sites also offer guidance on cashing in points and miles.

"It's a pretty loving community of people who are all trying to see the world," Ingersoll said. "And we're willing to help one another out to accomplish that."

gkarp@tribune.com

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