Anywhere in the World for a Hundred Bucks

My girlfriend wants to visit Thailand but is convinced she can’t afford it. Hotels are expensive, meals are expensive, and of course – flights are very expensive. The internet is rife with budget travel blogs, most of which advocate cheap destinations. For Americans that typically means more than a few hours of air travel. It’s easy to get by on thirty dollars per day in Southeast Asia, but unless you intend to swim there, conventional wisdom contends that you should expect to pay at least $1000 for a flight. For short-term trips, which are typically more applicable to budget-conscious students, airfares can easily account for more than 70% of the total cost of a vacation. From circuitous routes to booking on Tuesdays, numerous strategies exist for shaving a few hundred dollars off an airfare. What if you could knock off a zero, though? Having traded my corporate salary for a graduate student stipend, I’ve turned to more inventive strategies. Through strategic use of frequent flier programs, anywhere in the world is accessible for a hundred bucks.

Airline rewards programs encourage loyalty by offering benefits for repeat customers. Travelers earn miles by flying with an airline, which they can later redeem for award travel. Miles earned are roughly equivalent to miles flown, and are awarded to the ticketed traveler. Consequently, miles earned on business trips are redeemable for personal travel. For those who travel frequently it makes sense to stick to a small handful of carriers, as the earnings are readily translated into award travel and upgrades.

Requirements for award travel vary between airlines, destinations, and travel dates. Booking an award ticket is similar to scavenging for a cheap flight, but with fixed price tiers. Undesirable dates and itineraries usually fall into the lower tier, as airlines use these fares to fill empty seats. Award availability varies with frequent flier status and changes by the minute. Tickets can be booked up to a year in advance or on a few hours notice, often at the same cost. Award travel is subject to taxes and fees, which typically come out to about $100 for an international flight. All things considered, my experience dictates that 80,000 miles can take you to any major city and back. That’s a lot of miles, though! For those of us who don’t annually circumnavigate the globe, it would take years to reach a dream destination via matched earnings on miles flown.

Fortunately, frequent flights aren’t the only route to frequent flier miles. Most awards programs partner with banks to offer co-branded credit cards. I have no intention of endorsing any banks, so I can only discuss these programs in general terms based on my experience. In return for an annual fee, spending on co-branded cards is matched 1:1 or 2:1 with miles for every dollar spent. Promotions with select partners offer “30x earnings” or more for patronizing specific restaurants or delivery florists. Unless you spend tens of thousands per year or are in dire need of two thousand orchids, these earnings are likely insignificant and fail to justify the annual fee for the card.

The signup bonuses, however, are very significant. With many of these cards, meeting a spending threshold within the first three months triggers a bonus of 30k-50k miles. These thresholds are usually on the order of a couple thousand dollars, and are readily met by enrolling prior to major impending expenses and picking up friends’ tabs. The bonus offers differ between targeted customers, so it’s important to consult online forums and find the best available offer. More miles are earned with the addition of an authorized user, resulting in up to 60k total miles simply by opening an account. The process can be repeated for different cards, some of which are applicable to the same rewards program. There are potentially negative implications tied to opening numerous lines of credit, but the bonus from a single account rapidly approaches the requirement for an award ticket. Furthermore, the annual fee is typically waived for the first year and the account can be closed at any time. Additional perks differ between cards, but in general the signup bonuses are the key to an award ticket for infrequent travelers.

Award miles should be redeemed such that overall savings per mile spent is maximized. This definition arises under the assumption that without award miles, the itinerary would have been purchased anyway. In some cases, a free domestic flight home on the Wednesday before Thanksgiving might sound like a better candidate for a free ticket. Such a fare, however, is unlikely to be available for award redemption. Long-haul itineraries are perfect candidates, as fares are high and their availability is somewhat decoupled from the American holiday schedule.

This strategy is clearly not repeatable on a short time scale, but effectively lowers the financial barrier to an overseas flight every few years. When used in conjunction with conventional budget travel advice, it enables opportunities for students that they may have otherwise thought impossible. Unfortunately, there is still one final impediment to a global adventure, as I’m yet to find a credit card that offers more free time.