I have been intensely hacking air miles for about 5 years now, though I first started to get to grips with the systems in my childhood.
As my friends and family start to take notice in my hobby, I see many more blogs and travellers sprouting from the unknowns and its authors getting very excited about air miles. While not wishing to suppress their enthusiasm, I do want people to learn from mistakes I see too frequently made.
Let's dive in.
Air miles should never be seen to be equivalent to cash. The terms and conditions of every air miles programme state that the air miles belong to the airline rather than you. Unfair as it seems they can confiscate your miles with no good reason and you will have no recourse to appeal. Therefore you should never save your air miles hoping to get a massive cash discount at a date far into the future.
Air miles should be seen to LEVERAGE your money. Let me provide this example to you. For a particular one-off promotion would you prefer to buy a £250 ticket which you would have normally paid £500, or pay £500 and receive something approximately £1500 in value but you would never normally buy? If you wouldn't have bought it under normal circumstances then air miles must NOT be seen to ‘save' money. If you wish to SAVE money then you should fly budget airlines. Again, air miles are not equivalent to cash.
Following from the above, getting loads of air miles is an expensive game. Take the information provided on mainstream blogs with a pinch of salt, and try to understand the financial relationships the authors have with companies behind the scenes. For instance did you know The Points Guy is owned by Bankrate? There is very little disclosure anywhere in the website, and even the disclosure at the footer of the site (correct as of 14th March 2016) is a little mysterious:
The credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers.
You should not believe sites that tell you how air miles allow you to travel for free. They really don't. Buy played in the correct manner you can really earn back multiples of what you spend.
So having said that, how much can you expect to spend in a year? Well if all your travel is self-funded then to get any decent returns you will probably need to do 4-5 longhaul flights per year (say at £300-500 each) plus 50 hotel nights per year (say £50-100 each night). That starts to add up quickly and don't be surprised to see the costs range from £3700-£7500 for things to get really interesting. If you travel a lot for work and have someone else paying for you, great! So how much of that £7500 are they offsetting and how much extra will you need to put in to achieve your travel aspirations?
On top of that you need to consider the opportunity cost of spending the money on other things or investing it over many years. Imagine if you had £2000 now and continued to put £2000 a year into an investment fund yielding 7% for 5 years, then your total pot would be £14,307. Are you willing to lose those years of compounded interest, knowing the first penny earns the most?
With the above non-mainstream advice, you can make a decent call as to whether air miles is really for you. There will be other things you can learn along the way, but I wanted to provide the financial information up front before it makes you broke!
Do any of you have advice for other air miles beginners? We'd love to hear them!