26.11.19

Travel Hacking 2.0

As some of you know, over the years our family has been able to take some pretty amazing trips with our kids through maximising Aeroplan points. Not a week goes by that I don’t receive an e-mail or DM about how our family manages to travel internationally on a budget so I’ve asked Brad (the master travel planner in our family!) to explain things in more detail. He did write up a post a couple of years ago that I know was helpful for so many of you (I love e-mails from strangers telling me they’ve made it to Madrid/Hong-Kong/Reykjavik/etc thanks to our points tricks!) but since the points program with Aeroplan has changed somewhat, here’s the updated version.



The Aeroplan points program isn’t *quite* what it used to be with the reward points and some of the advantages having been curtailed. While it’s no longer the free travel it used to be, it’s still nonetheless heavily discounted travel, which makes all the difference when you’re buying five plane tickets for every family trip!

Essentially, the trick is to sign up for certain credit cards which offer huge amounts of Aeroplan points as a sign-up bonus, which we then redeem for flights. All we end up paying is the credit card annual fee and the flight taxes. When done properly, it’s saved us tons of money on our flights. I know this can feel super complicated, so here are some concrete examples.  

Let’s say you wanted two return tickets to Europe, say from Toronto to Copenhagen next June. Google Flights says it would cost $1,888.  

Yet the Aeroplan points that you get from two Amex credit cards would bring that cost down to $1,028.92 ($499 and $250 in fees for the Amex Business Platinum and Business Gold credit cards + $279.92 in flight taxes).

Not a bad way to save $850!

Here’s a favourite travel hack of ours:  A little known fact about Aeroplan is that it allows you to add a second destination to your itinerary at no extra cost. That’s right, a completely different city in a completely different country – completely free! (more on that below).

So if you wanted to buy one ticket from Montreal to Tokyo next July, and spend a week in Taiwan on the way, with the Amex Business Platinum card the cost would only be $689 (the annual fee of $499 + $190 in flight taxes). If you had to book that with cash, however, according to Google Flights that ticket would cost $1,602. Here you’re saving $913!

Last example:  How about Edmonton to Hawaii in February, but first stopping in San Francisco for a week? $450 with Aeroplan points ($250 Amex Business Gold annual fee + $200 in flight taxes) vs $1,034 in cash.



There’s a few other advanced tricks I’ll mention later, but for now probably the only question is, So what’s the catch? (Because there’s always a catch!)

The catch is, you need to be able to spend significant amounts on these credit cards in the first three months. These cards require you to put between $5,000 and $7,000 worth in purchases on the cards in order to qualify for the bonus points.

For most of us, these are very large amounts of money. But with some strategic planning, we’ve been able to do it many times over the years without increasing our household budget. The easiest solution is to time your credit card application with an upcoming major expense, such as a home renovation, tuition costs, or new appliances. Combined with regular spending, this allows you to reach these minimum spending amounts pretty easily. However, even without these kinds of huge purchases, we’ve found some tricks that make it possible (see below for a list).

So if travel hacking sounds like something you’re up for, I’ve put together a handy step-by-step guide that simplifies the process.

FIRST THINGS FIRST

The first thing to do is to check your credit score. Every credit card application you make lowers your score by about 5-7 points. Now, that’s out of a total of 900 possible points, so it’s not a huge number, but it’s still something to keep in mind.

Some other quick thoughts on credit for those interested:
  • A score represents a moment in time and can change based on your behaviour.
  • Missed or late payments or lots of maxed out credit accounts will lower your score.
  • The best way to increase your score is to pay back debts on time and consistently.
  • Scores typically range from 400 to 900, and 'good' scores are usually 660 and higher; anything over 750 is considered 'excellent'. So whether it’s 750 or 850 doesn’t really make a difference. For an institution like a bank or credit union looking at your credit, anything over 725 is a no-brainer.

If it might help allay your fears, I don't know how many credit cards I've applied for in the past few years, and Equifax tells me my score is 761.

Here's two great ways to get your credit score for free:

www.borrowell.com/free-credit-score

Also, if you don't already have an Aeroplan membership you can get one here (it's free).

Ok, let's get started!



STEP 1 - GETTING YOUR POINTS

In order to rack up the necessary points for your dream trip, you have to follow these steps:


  1. Apply for a given card
  2. Meet the minimum spending requirements for the card
  3. Wait for the points to appear in your account (they say it can take up to 8 weeks but I usually see them within a few days)
  4. Cancel the card before the second year begins so you don’t pay the annual fee twice

These steps will lead you through applying for various American Express credit cards, whose points are transferable 1:1 to Aeroplan. (So when I use the term 'points', I'm referring to both Aeroplan points and Amex points, since they have the same value.)

Links to Credit Cards to Apply For:

Ok, start dreaming: where do you want to go? Figure out how many points you'll need, and then apply for the cards to make it happen.

In addition to the examples I mentioned above, here’s a brief list:

Anywhere in North America: 25,000 points
Mexico: 40,000 points
Hawaii: 45,000 points
Europe: 60,000 points

All for round-trip flights! (And don’t forget in every case you can add another destination on the way for free!)

(You can see the whole award chart here.)

Now let's take the first step: applying for cards!

Note: if you decide to sign up for a card, make sure you use the links below! You get thousands of extra points per card for doing so!

AMERICAN EXPRESS BUSINESS GOLD REWARDS CARD – 30,000 points (40,000 if you use this link!)
  • $250 annual fee 
  • You need to provide a business name - but it doesn't need to be an officially registered business. It can be anything that allows you to make money - even if it's not currently doing so.
  • For example, I have sold the odd used book on Amazon. So I used my Amazon selling name as my "business" name and it worked perfectly. An eBay seller account would work as well. Have a blog? You can use that. It's really flexible and still ethical, which is important to us!
  • When it asks for ‘Annual Business Revenue’, I just tell the truth: $50, $20, sometimes $0! They don’t seem to mind that my business isn’t very profitable :)
  • You also get 1 point per dollar spent on the card, so after meeting the minimum spending requirement (more on that below), you'll have 45,000 points, enough for Hawaii!

AMERICAN EXPRESS BUSINESS PLATINUM CARD - 40,000 points (75,000 if you use this link!)
  • $499 annual fee
  • Same as the above card for the business name
  • Except this card gives 1.25 points per dollar spent, meaning after meeting the minimum spending requirement, you’ll have 83,750 points, which is just shy of the 90,000 needed to get to Australia, New Zealand, Singapore and Indonesia!!!


It’s fun to dream, but those fees (especially if you’re doing for both cards) are not insignificant.

So the key to travel hacking is to maximize the value of the flights you’re getting for free (spending $499 for a card that will give you enough points to book a free flight from Toronto to Dublin that you can buy with cash for $650 is obviously less than stellar value).

So what are some tricks we use to get the optimal value from these points?

The easiest one, as I already mentioned, is adding a free stopover (which I’ll explain how to do below). But here’s two more:

a) Sweet Spots

The Aeroplan points system is based on regions: a set number of points is required for travel within a large geographical area. But within a given area, the cities towards the periphery naturally yield the best value since they are furthest from your point of departure.

For example, Toronto and San Francisco couldn’t be further apart in North America and yet you can get to San Fran for only 25,000 points (the same that it would cost you to go from Toronto to Regina). So with the Amex Business Gold you can get a flight that usually costs upwards of $800 for only $320 ($250 + $70 tax) and leaving you only 5000 points shy of being able do the entire trip again.

If you are looking for something out of the ordinary, you could fly from Toronto to Whitehorse or Yellowknife, which despite being insanely far away (and costing $800+ for a ticket) is also available for only 25,000 points return.

If you’re located in Quebec you’re even more lucky, as everything in the Maritimes is considered ‘short-haul’, meaning those flights cost a mere 15,000 points. So to fly Montreal to St. John’s, instead of paying $600 per ticket, with the Amex Business Gold card you could get THREE tickets for just $771.31 (the annual fee of $250 + $173.77 in taxes per flight).


b) Living the High Life

But by far the best value with Aeroplan points is to redeem them for ridiculously expensive Business Class flights. If luxury travel is your thing (or you’d like it to be!) you can enjoy a luxury experience wining and dining in the sky (while the rest of us struggle for elbow room in coach!) that would normally be unaffordable.

So instead of forking out $4,079 (!) next June for a trip from Vancouver to Rome, you would only need to pay $915.83 ($499 and $250 for the two cards annual fees + $166.83 in flight taxes).

Whether you actually value that business class flight at $4,079 is another story, but the fact that there’s a way to save $3,000 on a flight is pretty unreal. With three kids, we’ve never done this before but it’s always been a dream! 



STEP 2 - MEETING THE SPENDING REQUIREMENT

As I mentioned, these cards require some significant spending before they'll dish out the points: $5000 for the Business Gold card, and $7000 for the Business Platinum card, all within the first three months of having the card.

These are huge amounts for us, but these are some tricks we’ve used to help accelerate the process without actually increasing our household spending:
  • You can overpay your utility bills (internet and cell phone, for example) and essentially pay for a year of service upfront. So a $720 cell phone payment will result in an account credit that will be used to pay your $60/month bill for a year.
  • Some businesses won't take Amex, but almost every online retailer will. Between Old Navy, Gap, Paypal, Airbnb, and Amazon, we can put a lot of money on our Amex cards just through regular spending.
  • Donations: if you give monthly to an organization, an option is to cancel the donations for a year and simply make a one-time donation. So you cancel your $100/month donation for six months and make a $600 donation. (But don’t forget to restart the monthly donations after!)
  • Offer to put big purchases for a group on your card. A friend of ours put some big costs for his brother's wedding on his card, his brother paid him back, and he was able to hit his minimum spend in one shot!
  • Some other great sources for our Amex spending: all gas stations, TD and RBC insurance, Home Depot, Walmart and Shoppers Drug Mart/Pharmaprix. 


STEP 3 - SPENDING YOUR POINTS

First, you convert your points:

Since you’re working towards an Aeroplan flight reward, you need to convert your American Express points to Aeroplan miles (they transfer 1:1). Thankfully, this is super easy. Go to the Rewards section after you log in to Amex, and find the link for "Rewards", and then “Transfer my points.”

The conversion from Amex points (called ‘Membership Rewards’ points) to Aeroplan is instantaneous – however, you must first register your Aeroplan account, and that can take a few days. So plan accordingly!

Then, the fun part: booking your flight!

But wait. You might have heard about the dreaded taxes that accompany a reward flight booking. It’s true. And really, it’s ridiculous that a “free” flight isn’t actually free. In particular, there is often a ‘fuel surcharge’ levied which can be $500-$600 alone. So the taxes can amount to almost the full price of the actual flight! Which would mean this was all a colossal waste of time.

But I learned of an ingenious workaround: different airlines charge different levels of fees and taxes. And some airlines charge very little!

Want to know which ones? Here is a list of some of the airlines that you can book with your Aeroplan points in order to avoid the most obscene of the reward flight surcharges:

United Airlines
Swiss Airlines
Brussels Airlines
TAP Airlines (great for Portugal)
EVA Air (great for South East Asia
Egypt Air
Aegean Air (for Greece!)
SAS (for Scandanavia)
Copa Airlines (for South America)
Avianca Arlines (also for South America)
Air New Zealand
Air India
Turkish Airlines
Ethiopian Airlines
Shenzhen Airlines
Singapore Airlines
South African Airways

When flying with these airlines, our flight taxes generally range from $70 to $150 per ticket. Considering the actual price of these flights I usually pay these taxes with a smile on my face :)


There are two ways to redeem your Aeroplan points for a flight:

  1. Online through your Aeroplan account page
  2. Over the phone with an Aeroplan agent

Most of the time, you should be able to find your preferred flight on the Aeroplan website. When booking, you have three choices: round trip, one way, and multi-city. If you’re looking to include a stopover, multi-city is what you want. (The Aeroplan website has great info on how to book this type of flight, but if you have any problems I would be happy to help.)

If your itinerary is quite complex there’s a chance you’ll need to call Aeroplan to book it. (Note that they charge $35 for this. Which is why it’s always preferable to find it on Aeroplan’s website if you can!)

STEP 4 - PROFIT!

That's it! It might sound complex but you get the hang of it real quick. If you have any questions I’d be happy to help, so just ask them below in the comments and I’ll reply there.

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