|by Jason Steele|
As a former business traveler who is no longer being reimbursed for my travels, I am sometimes jealous of those who get to be road warriors. I watched the movie “Up In The Air” kind of like veteran watching a war movie. I have been there, I miss it, but I am not sure if I would want to go back. Last night, I caught up with a friend who has just completed his first full year on the road. My past experiences combined with my travel expertise allowed me to speak the lingo like I was sitting next to him in first class. What really opened my eyes was how his goals for travel and credit card spend differs from mine.
Cash Is Still King For Some
My mission with my travel and my credit cards is to earn enough miles to take my family on vacations at the least possible cost to our discretionary spending. Since we have family overseas, we require three international award tickets every year or two. While you can’t really call visiting family a vacation, it does help if you are traveling in business class. Three international business class award seats to Tel Aviv will run about 360,000 miles in most programs. That is quite a challenge for a non-business traveler, but I have a good streak going.
On the other hand, my friend travels domestically for business nearly every week. He really doesn’t yet see the need to earn as many travel points and miles as possible. To him, the game is all about earning extra take home money.
How He Does It
He is an Atlanta based traveler, so that ensures that he uses Delta for most flights. Yes, there is Airtran, but most Atlanta based business travelers spring for Delta in hopes of first class upgrades and international awards. He does have a Delta Reserve card to get Medallion Qualifying Miles, lounge access, and upgrade priority. He did have the misfortune of starting to travel at mid year last year, only making Gold. Nevertheless, he will soon reach Platinum this year and is on-track for making Diamond by year end.
Nothing unusual there, Atlanta is filled with Delta Medallions using their Amex to reach the next tier. Many of them are even related to me. What he told me next surprised me. He uses a fairly standard, non-Delta Amex for all his hotel and rental car purchases. By staying at Marriott hotels and renting cars from Hertz, he earns 5% cash back with their OPEN program. His goal is merely to pocket as much cash as possible and 5% of all his hotel and rental car expense can be quite a lot.
In retrospect, it is kind of strange that I found it unusual that a business traveler might actually seek money over miles. Money is always great, and there is no doubt that 5% cash back beat just about any other reward points or miles. In fact, I was able to steer him to the PenFed Premium Travel Rewards card that will earn him the same 5% on airfare. Certainly, five cents is better than the two SkyPesos he would have earned if he charged his Delta tickets to his Delta card. In fact, the PenFed card is offering 20,000 points as a sign up bonus and earning 5% on hotel and dining between now and the end of August. The problem really is converting points to cash. They have many gift cards and other merchandise, but that is not the same as cash. I think he can book travel through them and bill his clients for that travel. This is probably the best way to convert his points to cash.
What Kind Of Cash Are We Talking About
He was able to ballpark his monthly business travel spending at $6,000. Lets say he travels ten months out of the year, so that is $60,000. If he were able to convert five percent of that into cash, he would be looking at $3,000. Remember that cash back rewards are seen by the IRS as discounts, no different than using a coupon at a store. Therefore, the $3,000 earned is kind of like earning about $5,000 or so in additional salary, so we are talking about real money here. Throw in rewards from personal spending, and it is foreseeable that his family is earning over $4,000 a year from credit card rewards.
Where To Go From Here
He is definitely on the right track, especially if he can get 5% back on airfare in addition to hotel stays and car rentals. I would stick with the Delta Reserve card, if only for the upgrade priority and the MQMs. He should continue to use his Amex to earn both OPEN savings on hotels and cards and for the Membership Rewards points. Make sure to reach Diamond to get as many upgrades as possible. Finally, always be on the lookout for exceptional credit card sign up bonuses like the now expired Capital One Match My Miles or the British Airways 100,000 mile sign up bonus. Earning tons of cash back on reimbursed travel expenses is one thing, but the next step is to earn cash and miles without even leaving home.