THE 5 MILLION FREQUENT FLYER MILE CHALLENGE

This is the true story of how I’ve earned more than 300,000 Frequent Flyer miles in the past five weeks thanks to mileage bonuses from new credit cards. If you’re up for it, you can do this too – and if you’d prefer a more conservative strategy, you may still be able to earn at least 50,000 new miles.

In short, I’ve spent $500 and a few hours of my time in exchange for 300,000 miles that are worth at least $12,000 to me. I’ve closely monitored my credit score along the way, and the effect has been minimal.

The goal of the 5 Million Frequent Flyer Mile Challenge is to help at least 100 readers earn 50,000 miles or more in the next 30 days.

Here are all the details in almost 3,000 words, a free tracking spreadsheet, and a 12-minute video I recorded live from Mexico in late December.

Disclaimers

WARNING: This is not for everyone. Most of the credit cards I used for this Frequent Flyer arbitrage experiment are only available for U.S. residents. There are a few cards you can get in Canada and the U.K. to replicate this on a smaller scale, but otherwise, you’re on your own.

You’ll also need to have good credit to begin with, since presumably the banks don’t want to give out up to $100,000 in new credit lines to just anyone – although ironically, they never verified my income or (lack of) employment, so you never know.

Lastly, if you have any kind of problem with debt or credit card spending, this project is definitely not for you. I have a healthy paranoia about debt, so it’s not a problem for me, but if you can’t possess a credit card without spending money you don’t have, please don’t do this.

Those are the disclaimers, and here’s the fun part.

The Video

On the 12-minute video below you can see the spreadsheet I use to track the applications, the results, and the miles I received. I recorded this live on location in Mexico, where I was facilitating my Annual Review and spending time with Jolie for our end-of-year vacation. The video is not professional quality in any way – it’s just me talking through the process and explaining which credit cards I used. If you get bored partway through, you can find most of the information in the rest of the post.

(Having technical problems or want a larger version? Try this link.)

How It Works

First, some background: I used to earn more than 200,000 Frequent Flyer Miles each year without flying, thanks to the work I did with Google Adwords and Adsense. Those days are long gone now, and with the declining economy, I needed a new source. I’ve taken advantage of credit card bonuses occasionally in the past, but this time I decided to get serious about it.

Over the course of a few weeks, I applied for and received 13 new credit cards that each included bonuses of at least 20,000 Frequent Flyer Miles.

I was accepted for every single card I applied for, and received $102,100 in new credit that I will never use. What I will use are the 300,000 bonus miles I was awarded for accepting the cards. After meeting any minimum spending requirements, most of the cards will be unused, consolidated, or canceled over the next few years. Not everyone will be want (or be able) to emulate this challenge, but I know that enough people will that I decided to put it all out there for you.

Just as importantly, many other people will be able to use this strategy on a smaller scale and earn at least 50,000 new miles within the next month.

The Cost

The cost for my experiment can be summarized as follows:

• $497 in annual fees (I’ll cancel, consolidate, or ask for a free extension on 
  • he cards before the second year’s fees become due)
  • 3-4 hours of my time
  • 4% decline in my credit score

  Since I regularly use Frequent Flyer Miles for high-value redemptions, I wasn’t worried too much about the monetary cost. As I’ll explain below, the miles I earned are worth thousands of dollars to me. I also didn’t mind the time investment, since the idea was intriguing to me and I wanted to see how far I could take it.

  Before conducting the experiment, however, I was somewhat concerned about the effect on my credit score. I had always heard that your credit score goes down whenever you apply for a new account. Each step of the way, I closely monitored my own report to see what the real effect would be – and I was pleasantly surprised.

  Before applying for the cards, I was in the 98th percentile of U.S. credit users. Presumably this was because I have 10 years of good credit history, only a couple of late payments over the years, and no pattern of defaulting or maintaining high balances. After I had applied for eight new cards, I checked again and noticed that I had fallen to the 95th percentile – hardly a significant amount since it is already so high and I have no plans to apply for a mortgage. A couple of weeks after applying for five more cards, I checked again and saw that I had fallen a tiny bit further to the 94th percentile.

  In other words, the effect was noticeable, but not seriously damaging. Despite the fact that my credit report listed all the accounts and new inquiries, banks continued to send me new credit cards every week. I was never declined, and never asked to provide any additional information.

  At one point I thought the banks were slowing down on the offers of credit, since I received a low $2,000 limit on one card after getting 4-5 others of $10,000 or more – but the following week, another card arrived with a $14,500 limit. We could probably talk for a long time about how crazy the U.S. banking system can be, but that’s another story.

  (Practical Info: I use MyFico.com to monitor my credit, but you can also get a free copy of your report from all three credit bureaus every year atAnnualCreditReport.com. There are other sources as well that I did not thoroughly investigate.)

  The Benefits

  Most importantly, I now have 300,000 new Frequent Flyer miles available to me on all three worldwide airline alliances. I can use these miles for all kinds of awards, including these possibilities:

  • 12 Round-Trip Domestic (U.S. and Canada) Tickets
  • 15 Tickets within Europe or Asia
  • Up to 15 Domestic Upgrades or 10 International Upgrades
  • 6 Round-Trip Tickets to Europe from the U.S.
  • 3 or 4 Round-Trip Business Class Tickets to Anywhere

  Those are a few examples, and of course I’ll choose the awards that make the most sense to me for my own goals. Based on how I travel and how I will optimize the awards, I conservatively estimate these miles to be worth at least $12,000 to me.

  Once I realized that my credit score would not go down and the fees were reasonable, it was a no-brainer. Spend $497 and invest a few hours of time, get $12,000 in free flights. I like it.

  I also received numerous intangible benefits through the process:

  • 8 Alaska Airlines Space Available Upgrades
  • Airline Lounge Passes (multiple)
  • Companion Airfare Discounts (multiple)
  • 6,000 Mile Discount on a Northwest Awards Flight
  • Hilton Gold Status
  • Hertz Gold Status
  • Enterprise Gold Status
  • Free Weekend Car Rental with Hertz, Budget, and Enterprise
  • Other random perks that are still arriving in the mail each week

  In reality, some of those things sound nice, but I don’t really need them. I’d love to give them away, but unfortunately most of them are not transferable.

  All the Details

  Here are the cards I applied for:

  1. Citi AA Visa Signature ($0 annual fee for 1 year, 25000 miles)
  2. Citi AA Mastercard ($0 annual fee for 1 year, 25000 miles)
  3. CitiBusiness AA Mastercard ($0 annual fee for 1 year, 25000 miles)
  4. Chase United Visa Signature ($79 annual fee, 25000 miles)
  5. Hilton HHonors AmEx ($0 annual fee as long as you have another AmEx, 25000 miles + 10000 bonus miles)
  6. Delta Gold Personal AmEx ($0 annual fee as long as you have another AmEx, 20000 miles)
  7. Alaska Air Visa ($79 annual fee, 20000 miles)
  8. Northwest Worldperks Visa ($0 annual fee for 1 year, 25000 miles)
  9. Continental World Mastercard ($85 fee, 25000 miles)
  10. Continental World Biz Mastercard ($85 fee, 20000 miles)
  11. US Airways DM Visa Signature ($90 annual fee, 25000 miles)
  12. US Airways Premier World MC ($79 annual fee, 25000 miles)

  There are a couple of cards I’ve skipped for now – the Virgin Atlantic AmEx andBritish Airways Visa, for example. I may come back to these later depending on when all my other miles post up. There are also cards for JetBlue and Southwest(among others), but I rarely fly on those carriers, and I don’t think I could use the points for much else.

  Keeping Track of Everything

  After I realized my credit score wouldn’t drop significantly with all the increased applications, the greater problem was figuring out how to keep track of the information. I mean, most people don’t walk around with 12 new credit cards in their pocket, right? I also had to remember which cards I had applied to and on what date.

  To stay on top of everything, I made a spreadsheet to track the date I had applied for each card, when it was received and activated, any requirements I needed to meet in order to earn the miles, and so on. If you’re up for some version of this, you can download the template or open it in Google Docs (Gmail users) to add your own details in.

  *Click here to download the spreadsheet template*

  ***

  Your Turn – Here’s What You Can Do

  I could have kept this information to myself, enjoyed the 300,000 new miles, and perhaps included the details in my upcoming Travel Ninja product. Instead, I decided it would be a lot more fun to put it out there for all of you, in hopes that it will help more people be able to travel wherever they want.

  I know that not everyone is comfortable with applying for a dozen new credit cards, but the beauty of this strategy is that you only need to apply for (and be accepted by) one card for every 25,000 miles you want. If you want 100,000 miles for two tickets to Europe, for example, then you apply for four cards. If you want a First Class ticket to anywhere in North America, then you apply for two cards.

  In other words, you can match your number of card applications to your risk level and that’s how many new miles you’ll earn. And of course, if you have a spouse or partner, they can also earn miles through their own applications, potentially doubling whatever new mileage you end up earning.

  Let’s break it down further based on your personality and what you’re willing to do:

  For the Adventurous – You too can earn 300,000 new miles or perhaps even more. Start by paying MyFico.com for a copy of your credit report to make sure you’re comfortable with a slight drop in the score. Then, apply for the cards in the rough order I did above. It may not make much difference, but the Citi AA cards are some of the better ones, so I’d work on getting those first in case you get declined later. Be sure you use the spreadsheet to keep track of everything; unless your memory is better than mine, you’ll probably forget some of the details if you don’t write them down.

  For the Conservative – You may be wary of applying for so many credit cards at once (I certainly was when I started). If so, start with a couple of them and see what happens. Are you approved? Do the miles post in a reasonable period of time? You can move on and do more if you want, or just enjoy a free flight or two to the destination of your choice.

  Regardless of which path you pursue, here are the actions you need to take:

  FIRST - You’ll need to join the Frequent Flyer programs of the airlines you end up requesting credit cards for. Do that before applying for the card (it’s always free and can be done on the airline’s web site).

  Here are the ones that match the cards I listed above:

  • American
  • Alaska
  • Continental
  • Delta
  • Northwest

  (soon to be merged with Delta; do this quickly)

  • United
  • U.S. Airways

  And here are the optional ones:
  
  Virgin Atlantic
  British Airways
  Southwest
  JetBlue

  SECOND – Choose your cards. You should match the cards you get to the airline or alliance you want to fly with, but I have a couple of general recommendations – first, the AA Citibank cards, including the AmEx and the Visa OR the Mastercard, are especially good since they have no annual fee for the first year. If you have a business, get one personal card and one business card.

  Next, the U.S. Airways cards are best used in combination, so if you’re getting one, you might as well get the other to earn a total of 50,000 miles. If you’re loyal to one of the other airlines (United, Alaska, Delta, or Continental), do those cards afterwards.

  THIRD – Meet any minimum spending requirements for the cards you choose. These requirements will be disclosed upon application, and you’ll want to keep track of them in the spreadsheet template or elsewhere.

  By the way, if you’re worried about not being able to spend enough to qualify for multiple mileage bonuses, there’s a trick for this too: buy $1 coins from the U.S. Mint. They come in boxes of $250 each, and you can exchange them at your bank for the same value. With free shipping, it won’t cost you anything at all, and you’ll also earn additional miles for the “purchase” of the coins.

  FOURTH – After the miles post, don’t wait too long to plan your trip. Mileage valuations are going down, and it’s best to use them quickly. I include a few tips for redeeming awards in the Discount Airfare Guide, and if there is enough interest I’ll provide a full tutorial for everyone in the near future.

  That’s pretty much it. Be sure and cancel the cards before the year is up, so that you don’t have to pay for the second year. (If you do forget and they charge you, you can still cancel the next month and get the money back. If you are concerned about a credit score hit after cancellation, you can also try your luck by requesting a free extension.)

  In short, if you meet the basic requirements and are willing to invest a bit of time, you can really rack up the miles and opportunities for free trips with this strategy. I’m looking forward to using my 300,000 miles, but I’m even more excited about creating mileage wealth for many of you through the challenge. Yes, there is a group challenge – because every good goal has a good follow-up. Here’s this one.

  The 5 Million Mile Challenge

  A while back I asked you to pick one place you’d like to go in the next three years and showed you how $2 a day can get you there. Well, if you can fly for free, that makes it even easier.

  I’ve spent several hours compiling this information for you, and I have two easy requests in return. First, use this information wisely. As mentioned, if you are in debt or have cut up your credit cards to keep from charging something you can’t afford, please don’t do this.

  But for everyone else, if you are able to use this information to easily earn at least 25,000 miles (one free ticket anywhere in North America), please let me know.

  I’m making a Google Docs spreadsheet to track the information you submit. But for now, please post in the comments section and include this info:

  1) Your name (however you want it to be displayed in the list I’m making)

  2) The amount of miles you expect to receive (based on the cards you decide to apply for)

  The goal is to create new “mileage wealth” of 5 Million Miles in the next 30 days. I promise to report the full results back to you, and I hope that this will help at least 100 people travel for free on their next adventure.

  How does that sound? Oh, and if you have any questions about the logistics, post them below.

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  P.S. Lastly, if you’ve enjoyed reading this detailed information about my experiment, please help me spread the word. Use the blue Stumble button to vote for the article, and tell your friends on Twitter or elsewhere so they can get their own 50,000 (or more) miles.