Bargain hunting miles and points with credit cards

(This is a guest post from Mr Credit Card of Ask Mr. Credit Card.  If you like his style, you can subscribe to his feed.)

Firstly, I would like to thank John for the opportunity to guest post here and also for giving me the opportunity to host the Carnival of Debt Reduction on numerous occasions. Being a bargain hunter myself, I would like to highlight a few ways where you can actually make use of your credit cards to squeeze even more out of your bargain hunting efforts. For this post, I'll specifically focus on frequent flier miles and reward points.

Lots has been written in the personal finance blogosphere about using cash back cards and rewards cards and just either earning rebates or points. Most of the advice revolves around this – pay your bills in full, and since you are going to spend that money anyway, you might as well earn rebates or points. This is sound advice, but the real deals are available only if you keep up with your reward program's newsletters. And if you have not been keeping up, you are really missing out on gems. Today, I will highlight some extra tips to help you earn more miles or points (and in the processing save you money):

Get Free Bonus Miles with reward cards – Many reward cards, especially airline credit cards offer substantial sign up bonuses in the form of air miles or reward points just to apply for the card. Very often, they give away enough miles to get a free domestic economy class airline ticket. If you are planning a vacation, it is a good idea to sign up with one of these cards to get these miles.

Double Stacking – Better yet, do a double stack. For example, you can get your spouse to sign up for the same card under his or her name. This way you get double the bonus miles. By doing so, you could potentially get 50,000 miles and get 2 free airline tickets. These tactics have to be used carefully. Your credit score will get hurt if you apply for too much credit in a short period of time. Do not do this when you are looking for a new auto loan or a mortgage.

Transfer Frequent Flier Miles – If you are a member of a frequent flier program, you should always subscribe to their newsletters, read their blogs for the latest alerts. For example, right now between 1st August 2009 until the end of September, Delta Skymiles members can transfer miles to families and friends and the person that is receiving the miles can get 40% more miles. So if you have 25,000 delta skymiles that you have earned from your Delta Skymiles Credit Card, you can transfer them to your spouse and she will get 35,000 skymiles in her account! Now, just imagine that she also has miles and transfer to you!

Transfer Points for Miles – Another way to get more bang for the buck is to transfer miles from another program. You can only do it for certain programs. For example, the starwood preferred guest program gives you 5,000 bonus miles if you transfer 20,000 starwood points to your frequent flier program. Because Starwood has over 30 airline partners (mostly with 1 to 1 transfer ratio), this is a great program to do so.

Right now, you can transfer american express membership reward points to Delta Skymiles and get 20% bonus miles. In fact, you can transfer the points into miles and take further advantage by transferring to another family member (triple stack!).

The lesson here is that if you have an Amex Card or a reward program with a few frequent flier partnerships, there is a strategic time to transfer miles and get more miles in the process.

Buy Frequent Flier Miles – Frequent Flier programs also allow you to buy miles. Very often, it is not really worth it. But sometimes it makes sense depending on how you want to use the miles (more like where you want to travel) and whether they give bonuses fro buying miles. For example, right now, US Airways Dividend Miles is offering double miles (up to 50,000 miles) if you buy miles from them! So buy 20,000 miles and you get 40,000 miles.

Earn More Miles or Save Money Shopping Online with Credit Cards – Most frequent flier programs have partnered up with many online retailers. The way the partnership works is as follows. You login into your frequent flier account. From there, you go to their shopping portal and go to their online merchant partners. When you make a purchase, you have to use your airline credit card, but you can earn double miles (or more) in the process. This is another way to increase your miles earnings.

But if you are not into airlines, credit cards these days offer shopping portals as well. Most credit card issuers have massively scaled by on their cash rewards in their cash back credit cards. Too many people who pay in full have taken advantage of it. They have got smarter and now, the trend is towards offering rewards that let you earn rebates when you shop online with your card. Issuers like Discover have always had this feature. Recently, Citicard also introduced a similar feature called extra cash for some of their cards as well. How does this work? Well, kind of similar to airline frequent flier programs.

Credit card issuers will form a network of merchant partners. What you have to do is to shop at these online stores by going through the credit card issuers website (more like you have to login into your credit card account). From their website, you could navigate to a merchant's site and use your credit card to shop on the site. When you do that (instead of going directly to a website), the site can tracking your purchases and give you rebates. So for example, you could go directly to nike.com and make any purchase their. Alternatively, if you are a Discover Card holder, you could login into your Discover account, go to nike.com, and then make your online purchase there. By doing so this way, you could earn 5% rebates (or rather get a 5% discount – depending on how you look at it).

Essentially, this works like the numerous rebate sites that are available on the internet. For the really savvy folks, you can always do shopping comparisons between these sites and your frequent flier or credit card shopping portal.

Charge your utilities to your credit card – Since you are going to pay for your utilities anyway, you might as well, make some money out of it. The way I do it is to charge my utilities to my cash rebate card (you can do so with your frequent flier card). The reason is that I can earn a small amount of rebates every month simply by charging them to my card (you can earn extra miles by doing so). I also get a 30 day float! What I do is to set up an automatic payment so I do not have to worry about paying late.

To make all this work, you have to pay in full – To make all of the above strategies work, you have to pay in full (PIF) your credit card bills every month. If you do not, then all the savings will be wiped out by the interest that you pay on your balances. Be a responsible user of credit cards and you will find a surprising number of ways you can save money and earn more miles (which results in saving money on travel).