Brief Summary
Tim Ferriss and Chris Hutchins discuss strategies for maximizing the value of credit card points and miles. They cover topics such as arbitrage opportunities, travel hacks, and the psychology of spending. Hutchins shares insights on optimizing credit card usage, finding deals, and avoiding common pitfalls in the points and miles game. The conversation also touches on the future of travel, the importance of financial literacy, and the balance between frugality and enjoying life.
- Maximizing credit card points and miles
- Travel hacks and arbitrage opportunities
- Balancing frugality and enjoying life
Introduction and Goals
Tim Ferriss and Chris Hutchins start by outlining the goals of their conversation, which include figuring out how to best use Tim's accumulated points and miles and providing insights that are accessible to a broad audience, not just the ultra-wealthy. Chris shares examples of arbitrage, such as buying gift cards at a discount and purchasing gold at Costco to maximize cash back and points. Tim expresses his frustration with the complexity and perceived worthlessness of his points, setting the stage for Chris to provide guidance and practical strategies.
Arbitrage and Financial Philosophy
Chris explains his background in arbitrage, driven by a desire to "keep up with the Joneses" without taking on debt. He shares examples of how he creatively finds ways to profit from discounted gift cards and special offers, such as buying Amazon gift cards at a discount and reselling them for a small profit while earning credit card points. Tim introduces the concept of a "religious war" in personal finance between ultra-frugality and simply making more money, hoping to explore a balanced approach. Chris acknowledges that his arbitrage activities have evolved into a sport, while Tim positions himself as a "defense attorney" for those who find the points game overwhelming.
Costco Gold and Low-Lift Approaches
Chris details how he buys gold at Costco to take advantage of the 2% cash back offered to executive members. He monitors gold prices to potentially profit from the spread and uses credit cards to earn points on these transactions. Tim highlights the self-serving nature of the podcast, aiming to leverage Chris's expertise to manage his points while promoting Chris's business. They discuss low-effort approaches to using points, such as using Award Tool, a website that simplifies the process of finding valuable award travel options.
Award Travel Tools and Examples
Chris describes Award Tool as a resource for finding the best deals on flights using points, allowing users to filter by destination, date range, and preferred airlines. He also recommends Points.yeah, which helps users discover travel destinations based on their available points. Chris provides examples of finding a San Francisco to Tokyo flight for 37,000 points and a business class flight to Lisbon for 45,000 points, illustrating the potential value of using points for aspirational travel.
Points Value and Airline Loyalty Programs
Tim emphasizes the appeal of using points for high-value travel, such as business class flights to Europe, due to his frugal mindset. Chris reveals that Tim has 15.5 million points accumulated over 24 years. He shares surprising facts about airline loyalty programs, noting that their market cap often exceeds that of the airlines themselves. Chris explains that airlines essentially operate as banks for their miles and points, selling them to banks like American Express and Chase.
Strategies for Using Points
Chris breaks down the landscape of points into airline miles, hotel points, and transferable bank points. He emphasizes the flexibility of transferable points, such as those from American Express, which can be moved to various airlines and hotel programs. Chris advises that the best value from points comes from long-haul, international, business, and first-class travel, as well as luxurious hotels. He also suggests that domestic travelers can find value during peak times or when flying between small airports.
Accumulating vs. Using Points and Cashback Options
Tim reflects on the challenge of balancing the effort required to accumulate points with the desire to use them effectively. Chris suggests options for those who find the points game too complicated, such as booking travel directly through the American Express portal or transferring points to a brokerage account. He recommends using a cashback card for simplicity, highlighting the Bank of America Preferred Rewards program as a scalable option for earning 2.625% cash back on all purchases.
Planning Travel with Points and Maximizing Value
Chris advises Tim to use Award Tool to search for flights and then book through the American Express travel portal, taking advantage of the Business Platinum card's perk of getting 35% of points back. He suggests that Tim's points could be worth $250,000 to $600,000 if used for aspirational travel. Chris also explores extreme scenarios, such as booking 200 nights at a high-end hotel or 65-75 roundtrip business class flights to Japan.
Booking Strategies and Flexibility
Chris explains that airlines don't release every seat for points redemption, and when they do, it's often at tiered pricing. He recommends booking something that's "good enough" but not optimal, setting alerts for better options, and then canceling the original booking. Chris also suggests considering flights to a general region rather than a specific destination to find better deals.
Using Airline-Specific Points and Altruistic Options
Tim asks about using points from specific airlines like Alaska, American, Delta, Emirates, and TAP Air Portugal. Chris advises using those points for flights on those airlines or their partners, emphasizing that there's always a price available with points, even if it's not the best deal. He suggests considering charitable options like Miles for Migrants, though it appears to be defunct. Chris recommends donating dollars to charity and using airline points for travel, following the same search sequence as with AMEX points.
Expiring Points and Alternative Uses
Tim brings up the issue of expiring points on Emirates Skywards and TAP Air Portugal. Chris explains that most US programs don't expire if you have a credit card with the company, but many programs do expire with inactivity. He suggests donating a small amount of miles or buying a magazine to extend the expiration date. Chris recommends transferring Emirates points to Marriott and crediting foreign flights to major US carriers to avoid small balances in random airlines.
Mind-Blowing Travel and Lufthansa First Class
Tim and Chris discuss the idea of using points for a mind-blowing travel experience. Chris suggests using Seats.aero to find ANA, Lufthansa, or JAL first-class flights. He mentions that a San Francisco to Frankfurt flight on Lufthansa first class can be booked using United miles for 165,000 points. Chris highlights the unique experience of Lufthansa's private first-class terminal in Frankfurt, complete with rubber ducks.
Caproat Hotel and Shoulder Seasons
Chris shares a story of finding an amazing resort in Mayorca called Caproat and booking it using Hilton points. He advises searching for flights to a general region rather than a specific destination to find better deals. Chris also recommends considering shoulder seasons for travel, as they often offer crazy deals.
Points Gone Wrong and Optimizer's Curse
Tim asks about examples of points strategies that didn't work out, leading to a discussion of the "optimizer's curse." Chris admits to spending excessive time trying to find flight deals, only to have the trip canceled. He emphasizes the importance of setting a threshold for when to stop caring about optimizing and just buy the flight. Chris recommends the Points Path browser extension, which layers on Google Flights to provide opinions on whether to use points or cash.
Valley of Despair and Future of Travel
Chris acknowledges that learning more about points can initially lead to a "valley of despair," where one feels worse about past decisions. He shares examples of booking non-cancellable flights and forgetting to cancel backup flights, resulting in lost points. Tim asks about the future of travel and what he could have done differently with his points.
Optimal Credit Card Strategy and Examples
Chris explains that the optimal credit card strategy involves having a card that gives elevated earnings on the things you spend the most on and a card that gives 2% or 2x points on everything else. He suggests that Tim would have been better off with the AMEX Business Gold card for advertising spend and a 2x card like the Capital One Venture X Business. Chris also shares examples of people spending their way to elite status on airlines and hotels.
Pudding Cups, US Mint, and Wedding Stories
Chris shares three stories illustrating extreme points arbitrage. The first involves a man who bought thousands of pudding cups to earn airline miles. The second tells of a person who bought millions of dollar coins from the US Mint to earn credit card points. The third story recounts how Chris bartered a wedding video for business class tickets to the Seychelles.
Negotiating with Points and Employee Benefits
Tim suggests using points to pay contractors or provide employee benefits. Chris advises caution regarding tax implications but suggests offering employees a $5,000 vacation that costs the business owner $1,000 worth of points. He explains that you can book a flight in the AMEX portal for anyone, even if you can only transfer AMEX points to your loyalty account.
Low-Hanging Fruit and Capital One Points
Tim asks for additional low-effort strategies and advice on his Capital One points. Chris recommends switching to a Bank of America Premium Rewards card for 2.6% cash back or a Fidelity card for 2% cash back. He emphasizes that everyone should be earning at least 2% on every transaction.
Future of Travel and Credit Card Competition Act
Chris discusses the future of travel, noting that government scrutiny may prevent airlines from devaluing miles. He mentions the Credit Card Competition Act, which could lower interchange rates and reduce the value of cashback and points. Chris believes AI will make it easier to use points, but there will still be opportunities for those who pay attention to the details.
Hotel Hacks and Credit Score Myths
Chris shares hotel hacks, such as emailing the hotel after booking to build a relationship and potentially receive upgrades. Tim adds the tip of asking for upgrades at check-in and using specific language when requesting tables at restaurants. Chris dispels the myth that opening multiple credit cards ruins your credit score, sharing a story of a couple who opened 26 cards in a year and improved their credit scores.
Credit Card Strategies and AMEX Platinum
Chris advises against canceling old credit cards, as they contribute to your average length of credit history. He suggests product changing to a card with no annual fee or calling the bank to negotiate a retention offer. Tim questions whether his AMEX Platinum card is worth the $695 annual fee, and Chris suggests downgrading to a gold card if he doesn't use the benefits.
Credit Reports and Relationship with Money
Chris explains the difference between a credit report and a credit score, advising people to freeze their credit report to prevent identity theft. Tim asks about the importance of both partners being involved in points arbitrage, and Chris suggests keeping your spouse as informed as they want to be. They discuss the importance of having a conscious and fulfilling relationship with money, recommending books like "Happy Money" and "The Five Types of Wealth."
Die with Zero and Alternative Careers
Chris shares his thoughts on Bill Perkins's "Die with Zero," noting that it's most relevant for those who have already built a nest egg. He recommends "The Man Who Quit Money" as a thought-provoking read that challenges base assumptions about money. Chris reflects on what he would do if he couldn't podcast, stating that he would enjoy working as a product manager, building products to simplify complex problems for others.
Final Thoughts and Where to Find Chris
Chris encourages listeners to earn more, make good value out of it, and live happier lives. He directs people to his podcast, "All the Hacks," and his website, chrisutchins.com, where they can sign up for his weekly newsletter. Tim thanks Chris for his time and insights, encouraging listeners to be just a bit kinder than is necessary to others, but also to themselves.
