NerdWallet's Smart Money Podcast - Nerdy Travel Diaries: Use Points to Fly in Luxury

Episode Date: May 26, 2022

You can fly abroad in business class on points alone — if you know how to play the points game. To wrap up our Nerdy Travel Diaries series, Liz talks with travel Nerd Elina Geller about her strategy for booking international business class flights.  To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Flying business class is pretty sweet and also pretty expensive if you have to pay cash. Fortunately, there are ways to use travel rewards to score the live flatbeds of your traveling dreams. Welcome to the NerdWallet Smart Money Podcast, where we usually answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Liz Weston. This episode, we're continuing our Travel Diaries series, where we'll hear stories from our travel nerds about the trips they've taken and the money they've saved along

the way. This episode, we're talking with NerdWallet travel writer, Alina Geller. She's going to share the details of a recent trip to New York and talk about how you can use points and miles to score business class flights once you're ready to get back out there. Welcome to the podcast, Alina. Thanks for having me. In case our listeners haven't heard before, Alina is known as the digital nomad, and she basically travels for a living. She uses points and miles almost exclusively, and she typically books business class for those longer flights. So Alina, let's start with some travel hacking basics. What

are some of your rules for getting and using points? So that's going to give you the most flexibility. That's also better than having an airline or a hotel card, because if you have an airline or a hotel card, you're only earning miles or points with that specific airline or hotel versus a transferable point card. You're going to be able to transfer those points when you need to use them. And then the other thing is, obviously, when you're deciding to sign up for a credit card, you want to aim for signing up when the signup bonus is high. So different credit cards will offer different signup bonuses at different times, you want to take a look and see when the higher signup bonuses are offered, just Google like, whatever card you're interested

in Google what the signup bonus history is. And then you will see if the current bonus that's offered is higher or lower than what has been offered in the past. And that's important, because a lot of times most of the points that you get are from those signup bonuses, right? Exactly right. There's a few components to this hobby. First is making sure that you sign up for a card when there's a high signup bonus. And second is using that card for your everyday purchases so that you're a point earning machine. Awesome. And we should mention that even though we are charging everything we possibly can,

we're also paying our balances off in full every month. Yes, that's super important because you want to make sure that you're not paying anything to earn these points. So it's fine to have a credit card with an annual fee if the cards benefits are worth it to you. But you should aim to pay your balance in full every month. Because if you're going to be paying finance charges, those finance charges are going to negate the value of the point. So when we talk about spending, using your card for all your purchases, your spending pattern should not change. You should not be spending more money just because you're using a credit card. You should just be shifting how you're paying for things. Yeah, exactly. Because it doesn't make any sense to make purchases you wouldn't otherwise or to carry a balance that's going to wipe out any benefit you get from the rewards. Absolutely.

Let's say if you're looking at a credit card and the signup bonus is great, but you need to spend a significant amount of money in a short amount of time and that's not feasible, then that's not the right card for you. Wait until a different offer comes along. All right. For people who have not yet flown business class, can you talk a little bit about what the big deal is and why business class is so much better? Yeah, absolutely. There's also a few nuances to this, right? So international business class. And when I say international, I mean, something like a flight from the US to Europe, a flight from the US to Europe, a flight from the US to Asia, when you're flying long distances, crossing oceans, that's what I

mean. That is a different product than let's say something like first class that's domestic within the US or business class that's domestic within Europe, because those are just seats that are slightly bigger in the front of the plane. And that's not a true business class product. You're just getting a slightly superior product than economy on a short flight. What I'm talking about is international

long distance business class. When you're in a separate cabin, the seat transforms into a bed. There's individualized service. It's different food. It's different entertainment options. It's just a completely different experience. Yeah.

And when you get to wherever you're going, at least this happened the first time I did it, I didn't want to get off the plane. It was the first time in my life that I got to my destination like, no, not yet. I'm not ready to go yet. I know. I feel the same way. If I'm flying in business class, and let's say if it's a flight from the US to Europe, oftentimes those are overnight flights. So while it's great to sleep in business class on a flat bed, obviously you wake up as fresh as a daisy after having a nice meal, you don't truly get to experience all the fun that business class is. And if you have a day flight, which is usually what happens when you fly from Europe back to the US, you really end up experiencing all of business class. And it's really nice.

And you just really get to enjoy all the perks, the food, the champagne, the priority boarding, the speed of your check in, just all these nice things, the snacks, the variety, the good entertainment options, the space. I mean, the perks are just awesome. Yeah. And then there's the lounges on top of that. That's usually included in the ticket, right? Absolutely. So there's lounge access that's provided when you fly in business class or first class, of course. And you can also get lounge access through some credit cards and through priority pass.

But sometimes if you're lucky, the lounge that you'll be accessing for your business class flight could be different than priority pass and can only be accessible by passengers flying in those premium cabins. The lounge is gonna be a lot less crowded and it's gonna be quieter. Maybe you'll have better food options. Your flying experience really starts from the moment that you get to the airport

when you're flying in premium. And it's just like a nice experience from start to finish. Now, all of this stuff does not come cheaply. Can you talk about the typical cost of an international business flight versus economy? Generally, you're looking in the thousands of dollars like it could cost 3000 roundtrip 4000 5000 6000. It's always expensive. Obviously, like that's in contrast to what it costs for an economy ticket. I was just looking at some

prices of roundtrip economy flights, and they were like $500 or $600. This is like between the US and Europe. Well, talk a little bit about how many points you need and what the contrast is between economy and business. cost 30,000 miles, it's very feasible that a business class ticket will cost 60,000 miles. So we're talking about a double of the points, right? However, when you compare that to the cost in cash, when a business class ticket is in the thousands of dollars, like you're paying way more than double, you're getting more out of your miles. So although using points to fly business class can be a really good use of those points, you're also using a lot of points, even if you get a deal. So how do you decide when to travel business class? My general rule is if I'm crossing an ocean and it's a long flight,

I want to have a nice experience. I always want to make sure that I'm paying attention to my miles balances with my different programs, because I never want to be in a position where I don't have enough miles for a redemption. Could you talk specifically about your recent trip where you flew from Amsterdam to New York on business class? There are two nonstop options. There's either United, which flies Amsterdam to New York, or KLM that flies the exact same route. And the United flight was about 60,000 miles and the taxes are quite low. And then I know that KLM has, it's 57,500 miles, but the taxes are pretty high.

They're close to about $300. I always shy away from the KLM flight because to me, the whole point of this hobby is to not pay for travel and paying $300, even if it's taxes, it's still paying. I prefer to just spend as little as possible. How much were the taxes on the United flight? They were around $90. Okay, so $200 more in taxes to fly KLM. Exactly.

So that's the flight you went with, the United flight? Yeah, so of course, there's a story to this, right? I booked that flight, paid the $90 in taxes. And I thought that that was that. And then what happened? I knew in the back of my mind that KLM releases monthly flying blue promo rewards. And the next day, I was like, Wait a second, let me just quickly check just to see maybe maybe there will be a discounted promo reward from Amsterdam to New York. And usually something like this never aligns for me. But I saw that there was a discounted award ticket in business class on KLM from Amsterdam

to New York, 43,125 KLM miles plus $290 in taxes. So now I would be basically saving 20,000 points, but paying an extra $200. Okay. And what were the advantages and disadvantages of KLM? The advantages were that it was a newer plane. The configuration and business class is a one-to-one configuration, which means that if you're sitting on the sides of the plane, there's only one seat. And in the middle, there's two seats.

So if you're traveling with someone, picking two seats in the middle is great because you could talk, there's a divider, you can put it up, you can put it down. But if you're traveling solo, it's nice to have a seat by the window because you don't have to step over any passenger that's next to you versus on the United flight. It's a two to two configuration. So if you're sitting on either side of the plane, you may have to step over the passenger next to you. I didn't like that. So that's a disadvantage of United. Another advantage of the KLM flight was there's a better lounge in Amsterdam. It's a KLM flying blue lounge. And it's just a lot nicer than the United lounge because United uses a priority pass lounge and it's a lot more crowded and the K-Lounge is just much more beautiful. So I like that lounge. Also when you fly in K-Lounge in business class, you get a little blue Delft collector house. So that's just like a cute little gift. Yeah. Like I already, I flew this route before, so I have another house and now I have two. So it's like very cute.

Oh, that sounds great. Not something you'd want to pay extra for, just get that house, but it's kind of a nice add on. Exactly. It's like a cute little gift and they give you a choice of different ones to pick so you can make sure that you get a collection of all different houses. And of course, one of the cons of KLM is the fact that it flies into JFK versus United, which flies into Newark. And that's much more convenient for me. I live on the west side in Manhattan and that's closer airport ride.

Okay. So what did you ultimately decide? I ultimately decided that I was going to fly KLM. First of all, it's less points in general. And obviously, it's a nicer business class experience, because it's a better seat, newer plane and all that good stuff. The flexibility to cancel and have the points come back. That's another benefit of booking with points. If your plans change, if you change your mind about a flight, you can easily just cancel it, get the points back and move on.

Well, that's not always the case. Oh, good to know. Yeah, you know, honestly, it's been such a long time since I looked at what the actual cancellation policies were before the times of COVID. It's super flexible now. But I don't know if every single airline is super flexible. There's no hard and fast rule of how much flexibility you have. Everything completely depends on the airline and the type of fare you booked and when you're traveling. Okay, that's good. So it's another thing you want to research before you make a decision. Always. It's just like any kind of booking,

you always want to know, is it free cancellation? Is there a fee? Can you get your miles back? Do you get your money back? Or is it going to be a travel credit? What are you going to get when you cancel? Alina, you do a great job of sniffing out the deals. And sometimes when you look at an award chart for business class, they want a phenomenal amount of miles. Sometimes it's not 60,000. Sometimes it's 500,000. So how do you find the sweet spots? How do you find those great deals?

Right. So it's true that prices can vary significantly. And what you're talking about, when the really, really high redemptions, like a ticket costing 300,000 miles or 400,000 miles. So when an airline will release award availability, they will release a certain number of seats in business class that you can book with miles at the standard, let's say award chart rate. So 60,000 miles, right? So maybe there'll be 20 seats in business class, and maybe five will be available to book with miles at that standard rate. Once those five are booked up, or maybe once the cabin available to book with miles at that standard rate. Once those five are booked up, or maybe once the cabin is mostly full with passengers who pay for revenue tickets, the airline will take away those standard rates. So all that's going to be available is the book

at any time kind of fare in miles, which is gonna just be a completely dynamic number that could vary, could cost hundreds of thousands of miles. And I will never book with those. I just know when I see that, that I need to be more flexible. Maybe I need to fly in another date. Maybe I need to fly into another airport. That's like another thing that it's important to think about when you're getting into miles and points is that you have to be flexible, right? It's not like you're going to look and say, okay, I want to fly on Friday and come back on Monday, and I want the cheapest flight. And if I can't get it, then this hobby doesn't work. No, like, if you're trying to get these redemptions, sometimes you may need to fly on a Thursday,

or maybe you may need to have a connection. It's not always the case. The majority of the time, I'm able to find the redemptions that I want. But sometimes you do have to be flexible, especially around holidays. Do you have any other hacks that you used on this particular trip? Yes, because I have several credit cards that give me Uber credits, I was able to get $25 off my Uber ride home. This is another important thing, travel insurance. If you have a credit card that gives you travel insurance, and you use that credit card to pay for the tax component of your flight, you will get the travel insurance benefits. So first of all, do that. And then second of all, when you're paying for those taxes, obviously use a credit card that earns

points so that you're always earning points. Okay, that's great advice, because travel insurance can be kind of expensive. And having that triggered for just paying the taxes with the card, that's a pretty good hack. For sure. Okay, how do you keep track of all the different benefits your cards offer so that you remind yourself to use them? There's an app that I use, it tracks a lot of this for me. But honestly, I don't really use it all the time as much as I should.

A lot of it I just keep in my head. Yeah, because it's what you do for a living. Basically, it's been my lifestyle for 11 years now. What I think about the most. Okay, very good. I actually put some notes on my calendar to remind me to use certain benefits before they expire because I had a bunch that went away before I had a chance to use them. And I just hate that. I hate when you get a benefit and you don't get to use it. Drives me nuts. I know. It's because you want to turn your credit card into a moneymaker. And it's hard to do that if you're letting the benefits go unused. All right. Well, do you have any other advice for people if they want to get into this

travel hacking game? I would say start reading beginner guides because there's a lot of information out there, it could seem overwhelming, but start reading beginner guides, get yourself familiar with airline miles, hotel points, transferable credit card points, how do you use them? What is an airline that's close to your home airport? Where do you want to go? How many miles would it cost on what airline? How can you get those points and so on, just start looking based on a specific trip that you have coming up. And that will be an easy way to learn a little bit about this. That's good advice. So Alina, do you have any takeaway tips for us? Yeah, absolutely. I have two. One, it's a great idea to diversify your miles and points

and always be on the lookout for discounted award tickets. And two, if you're paying in cash, always try to earn points. For example, I use the credit card that not only earns points on travel purchases, but it also offers travel insurance, which means that I got travel insurance protection on my flight. And that's all we have for this episode. Do you have a travel or money question of your own? Turn to the nerds and call or text us your questions at 901-730-6373.

That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Also visit nerdwallet.com slash podcast for more information on this episode. And remember to follow, rate, and review us wherever you're getting this podcast. And here's our brief disclaimer, thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general education and entertainment purposes and may not apply to your specific circumstances.

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