Alooooha! Fly free to Hawaii.
I think most people can’t be bothered with airline points and miles. I know there are some people who turn it into a hobby, and travel all over the world by squeezing out every possible point from their purchases. But I was never one of those people. I was only willing to accumulate and use points if it was easy to do so. And I was not alone in this regard. A recent poll found that only 15 percent of Americans have ever used points to pay for even a portion of a flight.
But I was first introduced to the joys of travel rewards when I noticed that I had accumulated, through no conscious effort on my own, some 80,000 American airlines points on one of my Citibank credit cards. My future wife and I were planning a trip to Hawaii for our honeymoon, and I did a little research to see if I could do anything with those points. It turned out they were enough to upgrade us to first class for the flight to Hawaii. Normally I’m perfectly content to fly coach, but that seemed like a nice way to start our honeymoon.
After that introduction, I was willing to devote a little more attention to credit card points. I have found that they offer tremendous benefits with just a little planning. But we all have to crawl before we walk, so I want to show how easy it can be, with just one credit card and a tiny bit of planning, to earn some truly amazing, free travel. The great part about the example I am using is that it holds true for any of the 48 contiguous states. I’m almost jealous of people on the East Coast, because their flights to Hawaii will cost the exact number of points as do mine from the West Coast. I guess I’ll have to take solace in the fact that their flight takes five hours longer. Let me take you through the simple steps to fly free to Hawaii.
But first, some disclaimers.
But let me say right up front, this system only works, from a financial viewpoint, if you never carry a balance on your credit cards. When you are accumulating credit card points, you are dealing with pennies per point, and the moment you find yourself paying interest on a credit card balance, it is no longer free travel.
By the same token, if you buy anything you would not have normally purchased, just to acquire points, that also wipes out any potential benefit. The technique that follows relies only on expenses you would have paid in any event. With one exception, they are all expenses that you likely already pay with a credit card.
And let me finally add that while this example involves going to Hawaii every year, you of course are free to mix it up a little. My wife and I love to scuba dive in Hawaii, and that’s why we go there so often. You may not have the same love of Hawaii, but consider this. If you can go there for free every year, you no longer need to think of it as a vacation destination. In other words, most of us working stiffs have our one, two, or three weeks of paid vacation every year, and we set it up as this special event; feeling the need to make every one a life long memory. You may not want to use your annual vacation to go to the same place every time. But since this trip will be free, you could just use it for an extended weekend. At least here on the West Coast, I can fly to Hawaii in about the same time it would take me to drive to Las Vegas.
With all those disclaimers in place, let’s get you to Hawaii.
A travel point primer.
The primary players in the travel point game are American Express, Chase, and Citibank. There are other players to be sure, and the credit card gurus will fight over which cards are best, but for your free trips to Hawaii we are going to settle on Citibank. The primary reason is that each of these credit card issuers offer their own set of travel partners to whom you can transfer your points, and Citibank happens to offer the airline with the best deal for first class travel to Hawaii; less than what other airlines charge for coach with points.
The card you need is the Citi Premier. The card has an annual fee of $95, but before you yell that I promised you a free vacation and $95 isn’t free, the card comes with a $100 travel credit every year, so you’ll be making $5 on the deal.
This is a great card. All the credit cards with travel rewards offer points based on various purchase categories, and some offer higher points on specific categories, but beginning August 23, 2020, the Citi Premier offers a very good three points for every dollar spent on gas, groceries, and restaurants. The credit card nerds make use of various “trifectas” (combinations of three different cards) to maximize their points – using this one for groceries and that one for gas – but in the spirit of keeping it simple, we are going to use just the one card, which is possible because of the three point categories. And, perhaps best of all, the Citi Premier comes with a sign-up bonus of 60,000 points. The system works better and faster with that initial infusion of points.
But before you pack your bags, let’s talk about your spending.
As I said, the Citi Premier card pays three points per dollar on gas, groceries, and restaurants. Don’t over think the use of the word “restaurant.” Most any food joint, from Taco Bell to Totoraku will likely code as a restaurant for purposes of the points. According to AAA, the average American spends between $6,957 and $8,876 per year on gas, so let’s take the average of $7,916. And according to the Bureau of Labor, the average is $3,060 per year for groceries and $2,736 for food at restaurants.
All told, that means the average person will spend a total of $13,712 on these items. Don’t worry if you don’t spend this much, because you’ll see that there is a lot of wiggle room. For example, I have a fifteen minute commute and don’t spend anywhere near that amount on gas. I just make up the difference by using this card for some of my other recurring expenses.
Based on these average numbers, if you use your Premier card to make all these purchases, at the end of the first year you’ll have a total of 101,136 points (13,712 times 3, plus 60,000). By the way, for purposes of comparison, the Citi Prestige card, with a hefty annual fee of $495, would have yielded 27,000 fewer points, because it doesn’t include these three categories.
Time to go to Hawaii.
The points transfer process is a little crazy, but it will only take you about 20 minutes to complete. The first class flight will cost you 25,000 points round trip, and involves transferring those points to Turkish Air, in order to book a flight on United Airlines. I told you it was a little crazy. The access to Turkish Air is why we are using a Citi card, since that is one of Citi’s travel partners. Rather than reinvent the wheel, I’ll just direct you to this excellent article, which walks you through the process.
Off you go to Hawaii, sitting in your nice first class seat, sipping champagne and eating finger sandwiches. After your fun filled visit to the 50th State, you return to the rat race, and start your point earning again (although you no doubt earned a few points in Hawaii already). You would start the year with your remaining 76,136 points, and assuming the same spending over the course of the year, you’ll end up with 117,212 points.
Time to go to Hawaii again.
Off you go to Hawaii, again first class all the way. This time you find yourself seated next to Rachel Bilson. Things didn’t work out between her and Bill Hader, so she’s flying solo, literally and figuratively. You had planned to sleep on the flight, but you find that you have so much in common with Rachel, that you talk the entire flight and end up exchanging numbers as you deplane.
Back on the mainland a week later, you find yourself refreshed, and still with 92,212 points, which builds to 133,348 points by the end of the year, still just with your typical spending on gas, groceries, and restaurants.
During the year, you’ve grown close with Rachel. You swore that you would not let yourself be her rebound relationship, but you are now sure it is more than that. You invite her to travel to Hawaii with you on your annual trip, and although she offers to pay, you don’t roll that way.
But that means you are going to deplete twice the points. You’ve been gaining ground every year, but now you’ll be spending 50,000 points for the two of you, leaving you with just 83,348 points. You’re worried that the free travel days will soon end.
Not a problem, because now you can add a second point earner to the mix. Convince Rachel to pick up a Citi Premier card of her own (she can hide it behind her AMEX Centurion), and not only will that add another 60,000 sign up points to the mix, but she will be adding her 41,136 points each year from her spending. At the end of that year, you’ll have a an incredible 225,680 points combined! In fact, Citi will give you an additional 10,000 points for referring Rachel. And heck, with Rachel being a Hollywood celebrity type, she’ll probably contribute way more than the 41,136 points we mere mortals generate (although I hear celebrities never pay for anything).
As you can see, your spare miles are increasing every year, so even if the price goes up, you’ll probably be okay. Enjoy your future trips to Hawaii, and the best to you and Rachel. But before we part, we have a couple more details to discuss.
Seems too good to be true. What’s the catch?
The first “catch” is that the example assumes one or two people contributing points. If you come to this article with a family of four, I can’t get all four of you to Hawaii every year for the rest of your lives. But if you and your spouse are both contributing points, then you and the kids can go for an amazing seven years before you dip below the needed 100,000 points. You’ll need to skip an occasional year to keep it going beyond the seven years.
Also, almost every credit card offering a sign-up bonus will require a certain spend amount within a given amount of time. In the case of the Citi Premier card, you must spend $4,000 in the first three months. Based on the average figures we’ve been using, you’ll spend $3,426 in those first three months, leaving you $574 short.
You are not limited to the three categories, although money spent outside those categories earns only one point per dollar. Still, if you use the Premiere card exclusively during those three months, it’s likely you’ll make up the difference. There are some other easy ways to hit required spends when going after a bonus. I just pay my quarterly taxes with the credit card, and run all my other expenses through the card, such as utilities. Here is an article with 11 ways to meet the minimum spend requirement. Try to avoid the ones that incur a fee. For example, you can use a service called Plastiq to pay your rent or mortgage with your credit card, but there is a 2.85% fee. For example, paying your $2,000 monthly rent would cost $57. Still a very small price to pay for trips to Hawaii for the rest of your life, but the flights are so much more enjoyable if they are totally free.
And finally, this has all been about the free, first class flight, but where are you going to stay when you get there? You can use points to stay at resorts on the islands, but I just can’t bring myself to spend them in that way. On the low end (but still a resort), you’ll pay 20,000 points per night. Thus, a five night stay would burn through 100,000 points.
My wife and I have stayed at the resorts, and while they’re nice, it’s just not our thing. We don’t go to Hawaii to hang around the pool. Instead, we usually book through AirBnb.com, where you can find a beautiful condo for less than $150 per night. We hit the grocery store and stock up for the week, avoiding all the costs of eating at restaurants. By the time we get back from a day of diving, all we want to do is crash and let the nitrogen escape our blood. A resort is wasted on us.
This article is about cheap travel. If that’s your goal, then you’ll just need to decide if you want to go to Hawaii (or wherever) every year and stay on the cheap, or go every three years with resorts included. Totally a personal choice. But as a bonus, hotels rooms are another 3x category on the Premier card, so any money you do spend on a room adds to your total points.
Alternatively, you can tell Rachel you’ll pay for the first class flight if she’ll pick up the cost of the resort. She’ll be cool with that.