With nearly 1.4 million miles on United, I was pretty proud of myself for not having to pay for my family's vacation flights. Turns out I'm a complete novice. After what I've discovered from the real players, you're going to want to think twice about how you pay for everything -- be it business or pleasure -- in order to maximize your loyalty points and subsequent rewards.
1. Choose your airline, hotel, and rental car companies wisely
This was the first lesson I learned from a business associate nearly 20 years ago and it's served me well. When price is roughly the same, it pays to stick with one airline, one hotel chain, and one rental car company. That's because over the long-run, you can not only rack up rewards points, but also build status that gives you the intangible, but highly desirable extras. On United, for example, my annual 1K status allows me to board the plane first (allowing me to skip the need to check a bag). I also get free upgrades when available and rarely sit in a middle seat unless I'm flying standby (for which I'll also receive priority). Loyalty to some hotels gives you access to club lounges with hot meals, which can save you money on breakfast. And rental car clubs allow you to skip the lines to get your car. The game starts here as you all but need to declare which team you're part of in order to enjoy the maximum rewards.
2. Get the best rewards credit card for each airline, hotel, and rental car company
Most rewards credit cards are free, but some have annual fees. Look for the best credit cards with the biggest reward bonuses when you sign up, and spend their minimum amount to maximize your rewards. This sounds obvious, but to get the free flights, hotels, and rental cars, you need to actually use the card. No point signing up for a free credit card to get points if you don't actually use the card and get the maximum reward that is available to you.
Expert Tip: To get all your stuff for free, you need to see this as the very game that the credit card companies have turned it into. You want to hit all the spending minimums, but often no more. The game is that people are creatures of habit. Once you start spending on a specific credit card, the expectation is that you will continue to do so. Instead, the wealthy maximize the minimum threshold of spending for each card (to get the maximum number of reward points) and then rotate onto the next one. Most important, you must pay off the balance each month, or you're going to pay exorbitant interest rate charges and fall into a debt trap (thereby defeating the entire point of getting your rewards for free).
3. Begin point laundering by using your credit cards to make group payments
Now we're moving from the basics into the more sophisticated moves. Ever see someone volunteer to pay for a group dinner (with their credit card) and then collect the cash from that group? Seems like a nice thing to do for the wait staff, but actually that person is point laundering--turning other people's cash into rewards points, thereby getting even more free stuff.
The masters of point laundering are always offering to buy for their group of friends and get paid on the back-end. As long as you know the people you're vouching for, it's usually a safe bet that comes with all kinds of perks. Now that you're aware of it, watch for the person who usually volunteers to pick up the restaurant tab, music, or theater tickets and says you can pay them in cash (or instant payment such as PayPal, Google Wallet, or Venmo).
Here's the thing: What this person is doing is perfectly legal -- he or she is simply getting the bonus rewards associated with picking up the tab and getting reimbursed. Do this as a matter of course with your friends (assuming they are not deadbeats) and you begin to rack up a ton of rewards that will pay for all your vacation travel, especially if you are rotating the credit cards as mentioned above.
Advanced bonus step: Scale your rewards with paid search
And if you really want to get in the game of point laundering, do point laundering at scale. This takes you in the gray area of point laundering and it's how I first got tuned into this world I knew relatively nothing about. A friend of mine was always offering to use her Uber account. I asked her why and she told me that she had essentially unlimited free rides on Uber. How is that, I asked. She and her savvy friends had figured out how to combine Google's free $100 paid search credit with Uber's free rides when you refer a friend.
Now follow me on this. They take the free Google advertising credit and promote their own Uber account number. When a random person clicks on the Google Ad and signs up for Uber using their account, the random person they don't know gets a free introductory ride with Uber (just for signing up), while they also get a free ride. They have gotten this down to a science and simply rotate each friend's account on the paid search until they all have about a month's worth of free rides.
I admit that this is a little overboard for the average person, but it's a good example how the referral and rewards system can be worked if you're willing to come up with creative ways not originally envisioned by the company (and which still satisfy their objectives). Uber is growing its user base, just not the organic way they were thinking when they offered the free-ride referral reward.
Personally, I'd stick to the simple changes you can make to maximize your reward benefits. But, hey, if you have more time on your hands, there is always a way to get even more points if you're willing to play the game. For great insights into this world, check out The Points Guy.