Take the power back

Like it or not, we’ve evolved into a cashless society. From gas to groceries to nearly all of life’s everyday expenses—whether online or at brick-and-mortar businesses—credit cards are most peoples’ default method of payment. The banks that issue credit cards make money hand-over-fist through fees and interest collected from retailers and cardholders alike.

However, anyone with a travel bug can also rake in thousands of dollars a year in free travel (flights, hotels, car rentals and more) without buying any more stuff than you’d buy anyway. The value to you, fellow traveler, isn’t spending more money but spending it the right way using the right credit cards. If you aren’t earning significant rewards for every purchase you make using a credit card, you’re simply throwing away free money.

This article will introduce you to point surfing, a strategy of taking advantage of reward credit cards and sign-up bonuses they offer to earn you free travel. Before we get into point surfing in greater detail, I have one quick question for you. Do you pay all your credit card debt in full each month? If not, don’t feel bad, as most people do carry credit card balances month-to-month. But until you get your credit card(s) paid off in full, point surfing isn’t for you. If your financial house is in order to the point where you do not carry revolving credit card debt, read on!

The man gets his cut

Credit cards provide a path for banks to make billions in profits. Credit card companies glean a slice of each plastic purchase in the form of a fee imposed on the retailer (roughly 1-2% of each credit card transaction). For those that carry a credit card balance, credit card issuers really score the big bucks in the form of high interest charges (often around 20% annualized). It’s a win-win for the banks as they make money on both the retail and consumer end. But there is hope for the little guy, if you’re willing to take the time to learn the credit card reward program system.

The consumer strikes back

So what’s in it for the consumer? To woo customers away from competitors, years ago credit card issuers began offering cardholders a piece of their commission in the form of reward programs. Some are tied to brand loyalty, rewarding cardholders for making purchases by giving away incentives for the card’s branded partner: airlines issue cards that offer miles to earn free flights; hotels offer free nights at their line of hotels; etc. Other credit card issuers offer flexible points that can be used across various travel or retail partners, freeing the cardholder from being locked into earning and redeeming within a single entity.

Regardless of which type of card you have, they all work basically the same way. For each purchase made, you earn points (or miles). With branded cards, Citi American Airlines AAdvantage for example, you earn more miles for purchases on American Airlines than other purchases. With an open earning program – Capitol One Venture VISA for example – you earn double miles for any purchase and can redeem miles at full value across any airline, hotel or car rental company, giving the cardholder far more flexibility in redeeming earned miles.

Is point surfing worth the effort?

There is value in earning miles and points by using credit cards that are linked to loyalty programs. If you pay every bill and expense possible using a credit card, and pay your credit card bill(s) in full each month, you will generate significant travel rewards. For example, if you generate $3,000 a month in credit card charges with the Capitol One Venture card I mentioned earlier, you would earn $60 in travel each month (2 miles earned per $1 spent, with each mile being worth $.01). For the year, you would earn $720 in free travel for a card that has an annual fee of $95 (fee is $0 for the first year). So even after the fee, you still clear $625 in free travel, enough for a round-trip ticket most anywhere in the U.S. (two tickets if you score a cheap fare), a bargain international flight, or four nights in a decent hotel. Not bad, eh?

At this point you may say to yourself, “Hold the phone bro, didn’t the top of the article state you could earn thousandsin free travel?”

Glad to see you’re paying attention!

Everyday purchases are the kiddie waves of point surfing

The epic power of point surfing isn’t about earning a point/mile or three for every dollar charged. In surfing terms, those everyday earnings represent gentle three-foot rolling breaks at Waikiki Beach. Unless you churn huge amounts of purchases monthly, you’re looking at earning hundreds in free travel, not thousands.

To catch the North Shore version of point surfing prowess, you must learn to snatch the pebble from the hands of big banks. Remember how competition created reward programs in the first place? These days, banks offer huge incentives to open credit cards. The thirst for quality customers turns normally-tightwad banking institutions into (dare I say it?) generous patrons of your travel well being. You can score new cardholder bonuses of *$200, $300, $500 or even $1,000 worth of free travel. Totally tubular, dudes and dudettes!

*Pro tip. We hold out for at least a $500 value before opening a new card.Be patient and check options regularly as bonuses change regularly.

“I dunno man, it seems, like, kinda complicated.”

I’ll go into much more detail about the ins and outs of point surfing in future posts, but for now, suffice it to say that a couple that spends less than an hour a month point surfing can quite easily earn $2,000 in free travel annually. I’ve heard of some people juggling up to 17 credit cards and earning first class international flights and hotel suites all over the world but that sounds exhaustingly complicated. Instead, Heather and I have kept it simple so far, opening (and closing) two or three new credit cards a year and earning new cardholder bonuses across a handful of hotel chains, airlines, and flexible travel programs. The beauty of card surfing is that, with certain credit cards, you can earn new cardholder bonuses over and over again. Again, we don’t have a plethora of cards at any one time. I developed a simple credit card tracking sheet that catalogs our point surfing (which cards we currently have, bonus terms, dates opened/closed, important terms/limitations, etc.). A monthly Outlook reminder nudges me to keep on top of our surfing and ensures we avoid paying any unwanted annual fees or signing up for cards that don’t allow multiple new cardholder bonuses.

Will my credit score crash and burn?

Will opening and closing multiple credit cards thrash your credit rating? Absolutely not—especially using our strategy! Heather and I take turns opening new cards, which allows us each to earn bonuses while splitting the number of cards each of us opens in any given year. We’ve kept it simple, never been greedy and our credit card rating has stayed excellent during more than five years of point surfing. It’s true that you’re credit card takes a minor, short term knock by opening a new card but as long as you close one card as you open another, avoid opening several new cards in a short time frame, take turns, and (most importantly!) continue to pay your balance(s) in full each month, you’ll enjoy the rush of point surfing without eating sand.

Tell us: is the concept of point surfing, or earning travel points and dollars, brand new to you? Or have you already caught the wave?