The good news is that being retired usually means having the opportunity to travel without having to think about vacation schedules, the limits on your time off from work, and whether you’ll be exhausted when you get back from your trip because you tried to pack too much in. The bad news is that travel can be expensive, especially if you want to do it often, and most especially if you’re living on a fixed income and want to be as budget-conscious as possible.
There is a solution: free (or almost free) travel using frequent-flyer miles and points. And the best part is that you don’t have to pay for a lot of travel in order to accumulate a huge stockpile!
During my work years, I collected many frequent-flyer miles and hotel points the traditional way because I traveled so much on business. Bill and I used the miles and points to travel frequently over the years to lots of different and wonderful places. But when we retired, I really hated the thought of spending so much money to travel for pleasure just because my paid business travel had ended. Then I found out that we didn’t have to.
The answer is credit cards. No, I am definitely not talking about charging a lot of flights and hotels and paying them off over time with those horrible interest rates. What I am saying is that
Acquiring the right credit cards
Many credit cards today offer sign-on bonuses, sometimes quite large. As one example out of many: Barclay Bank offers a MasterCard that gives you 10,000 JetBlue frequent-flyer miles if you spend a certain amount on the card in your first 90 days of opening your account; it’s a free card with no annual fee. In addition, if your use the card at restaurants and grocery stores, you’ll get two JetBlue points for every dollar you spend.
Another very attractive option is to acquire credit cards that have transferable points. For example, many of the cards that American Express offers accumulate “Membership Reward” points that can be transferred to a wide variety of airlines and hotels for free travel.
Acquiring the cards at the right time
Your credit score definitely matters, but it may not be based on the factors you think. Many people, for instance, are under the mistaken impression that having a lot of credit cards will negatively impact your score. But it doesn’t; much more important is your payment history and the amount you owe on all of your cards relative to your total credit limit. If you pay off all of your cards in full and on time every month (which you can do automatically), you will be just fine.
Another issue is that some banks have limits on how many cards you can acquire during specific time intervals. Chase Bank, for example, has a “5/24” rule that says you can’t have a new Chase card if you have opened more than five new cards in the last 24 months.
Never carrying a month-to-month balance
Never, ever, ever carry a balance on a credit card. The interest rate you will pay far outweighs any benefit you will get from the miles and points. Use the cards only for things you would buy anyway so you are not incurring unaffordable expenses that can’t be paid off within the month. To build points, you will want to use the cards as much as possible, both for everyday expenses and big purchases (such as a new refrigerator), but only if you don’t carry a balance.
There’s a lot more to this: minimum spends, bonus categories, other benefits besides points from branded credit cards, elite airline and hotel levels, shopping portals, and on and on. I came across this wonderful hobby shortly after stopping work nine years ago and I have become totally immersed in it. I keep a spreadsheet of all of our credit cards (26 at the moment – but not a single one with an ongoing balance), points, and plans for future travel and I update it several times a week. It can get complicated for sure, but for me, it’s worth every second I spend on it. We’ve been on many trips since retiring and I can hardly think of another hobby that could do so much for our enjoyment while still helping us be financially responsible people.
Are you already doing this? If so, I would love to hear about your tips and tricks. If not, here are some suggestions for getting started:
Million Mile Secrets beginner’s guide: https://millionmilesecrets.com/step-by-step-guides/beginners-guide/before-you-get-started/
One Mile at a Time beginner’s guide: http://onemileatatime.boardingarea.com/whats-the-point/
I'm Linda Fleit. My husband and I were lucky enough to retire when we were 61, about nine years ago. We love being retired and want to share all that we've learned over the years about this wonderful stage of life.