By Dr. Kelly Wright, Guest WriterOver the past decade, I’ve redeemed 6.4 million points and miles for $380,000 worth of travel. Travel rewards earned through credit cards (and, to a smaller extent, actual travel) have allowed me to take vacations I’ve never dreamed I could, to see far-reaching corners of the planet, and to stay in luxurious places for next to nothing.
Travel influencers may hawk the idea of these luxury trips as “free.” But travel isn’t free; there is always an opportunity cost. In a world where the simplicity of 2% cash back credit cards exists, does the math of travel rewards really work in my favor? More importantly, does it help me build wealth? Let’s look at the numbers and evaluate whether the time and effort of managing credit card points and miles is worth it.
Why Credit Card Points Are Inherently Valuable
Understanding the world of credit card points and miles requires an understanding of the hospitality industry. In 2005, frequent flyer miles were worth more than all the US dollars in circulation. With a value more than four times the actual value of its company, American Airlines leveraged its loyalty program to secure $4.7 billion in funds from the federal government during the COVID-19 pandemic and avoid bankruptcy.
Today, airlines and hotels are points banks that provide hospitality services on the side. Because of the high value of travel rewards, airlines and hotels sell their points to credit card companies—which, in turn, give them as “rewards” to credit card customers. These rewards not only include points for using the card for regular everyday expenses but also welcome offers, category bonuses, referral bonuses, and additional points through engaging in shopping and portals.
Using credit cards to earn points only works if you have the mindset to pay your credit card in full every month. If you pay any interest on your cards, you completely negate the value of any points. Interest rates are so high on credit cards that no amount of return—cash or points—will ever beat an interest payment.
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Credit Card Hacking for Travel
Ways to Earn Credit Card Points and Miles
Understanding the world of points and miles also requires an understanding that earning is not just about the amount you spend. When it comes to earning credit card rewards, there are fast ways and slow ways. Most travel hackers use a combination of both, based on their earnings and travel goals each year.
Fast Ways to Earn Points
Credit card welcome offers: Also called “sign-up bonuses,” these are offers for new customers who open a card and spend a certain amount on it, usually within the first 3-6 months. Welcome offers on travel reward cards often range from 60,000-300,000 points, which can turn into thousands of dollars of travel.
Referral bonuses: Have friends or family who also want a travel rewards card? When you refer your card to someone else, you can be rewarded with 15,000-30,000 points for each referral. Referring cards to a spouse or adult child—who, in turn, gets a welcome offer—and combining points into a family pool can exponentially grow your points.
Medium Ways to Earn Points
Bonus categories: Most travel reward cards offer multipliers on every dollar you spend. An example is the American Express Platinum card, which offers 5x points on airfare, or the Chase Sapphire Reserve—which offers 3x points on all travel, transit, and dining. By using a card that gives you a multiplier on your biggest spend categories, points earning can go up quickly.
Shopping portals: Shopping portals can easily be added as extensions to your internet browser, so when you click through the portal or activate the extension, you earn an additional multiplier on your expenses. A popular shopping portal is Rakuten, which normally gives cash back. However, if you hold an American Express points earning card, it will return points instead. This gives you a multiplier on top of the credit card you are using, which is a process called “stacking.”
Slow Ways to Earn Points
Everyday spend: Everyday spend is what you spend money on that doesn’t fall into bonus categories. All of the things you need to be a physician—like licensing, board exams, etc.—are examples of everyday spend. Travel reward cards have options for 1.5-2x points per dollar on everyday spend.
Special Circumstances
Travel reward cards also allow traditionally off-limits expenses, like rent and student loans, to be paid with a credit card, opening up our biggest expenses to rewards earning. You can even pay your income taxes with these kinds of credit cards.
In comparison, cash back cards earn one way—slowly. Cash back cards rarely have lucrative welcome or referral offers, they don’t have bonus categories, and they don’t engage with other programs to increase earnings. The key is in their simplicity of earning a set value on every dollar you spend—most popularly, it’s 2%. While airline and hotel loyalty programs want to aggressively distribute their points to increase their engagement and leverage, cash back rewards are limited by bank interchange fees or interest rates, so they will always be kept low.
The Staggering Number of Credit Card Points I Earned in 2024
Redemptions
I keep close track of my yearly spending, points earning, and redemptions. I am a W-2 employee, so my yearly spending and expenses are less than a typical practice or business owner.
2024 was a big year in international travel for me. I returned to mainland Europe for the first time in over a decade, took amazing trips to India for a tiger safari and South Africa for a traditional “Big 5” safari, and even found time to hike across Scotland. When I first started travel hacking in 2015, one international trip per year was the norm. As our incomes and expertise grew along with my PTO amount (which accumulates per pay period and caps at 320 hours that cannot be cashed out or rolled over), we started taking 2-4 international trips per year.
In 2024, I redeemed 2.211 million points for $98,417 in travel expenses, while paying $4,870 in airline taxes and fees. This resulted in a value of 4.23 cents per point, essentially what would be considered a 4.23% return on every point redeemed (travel expenses – taxes and fees/points). Since I book trips 6-18 months in advance, these points were accumulated sometime in 2022 and 2023.
What if these points were 2% cash back instead? That would have equaled $44,220 in cash.
Now, wouldn’t taking the cash result in more wealth? The problem is that it relies on the assumption that all points are only earned in slow ways. Since cash back can only be earned in slow ways, I would have to spend $2.211 million to earn $44,220 in cash. To cover my travel expenses of $98,417 with cash back alone, I would have to spend nearly $5 million on a 2% cash back card!
The secret here relies on the accumulation. Let’s look at a sample of what I accumulated in 2024 compared to the spend.
Earning
In 2024, I earned 1.87 million credit card rewards across multiple systems and even more airline and hotel rewards through actual travel. Of those rewards, 1.09 million were American Express Membership Rewards, the transferable points currency that allows the cardholder to transfer points to a myriad of airline and hotel programs.
Of that amount:
- 970,000 points were earned through welcome offers on four cards, requiring $70,000 in spend
- 50,000 points were earned through 5x points on $10,000 in airfare
- 48,000 points were earned through 4x points on $12,000 in dining and groceries
- 22,000 points were earned through 2x points on $11,000 in everyday spend
So, 1.09 million points were earned through $103,000 in spending, an earning of 9.4 points on every dollar spent. Since I know my average redemption is around 4.5 cents per point, I’ll expect to earn around $49,050 in travel from these points earned from $103,000 in spending. If I had spent $103,000 on a single cash back credit card, this would return a measly $2,060 in cash.
What about credit card annual fees and my time spent to maximize this process?
It’s true that credit card annual fees can add up; the banks aren’t offering these rewards for nothing. For the above scenario, I spent $2,950 in annual fees. Let’s subtract $2,950, and we have a net travel value of $46,100.
What about the time needed to search for cards and to use the right one for spending? It’s actually not that complicated. Welcome offers can be found with simple google searches, and most of the points blogs have “highest offer available” sections that can be easily found. Additionally, cycling through new cards to meet welcome offers adds some simplicity to your spending—you only use one card at a time until you meet a certain amount, and then you switch.
For argument’s sake, let’s say I spent 20 hours in 2024 managing credit cards (as an expert, I spend much less time than that, but let’s take a novice points hobbyist). That means 20 hours x $300 per hour would be $6,000. Subtract that, and now we’re down to a net travel value of $40,100.
What if I’m not getting 4.5 cents per point? This average is pretty modest for points hobbyists. But it’s true that redemptions can go from an absolute low of 1.25 cents per point all the way to 20 cents per point at the high end (usually long-haul first class on international carriers). Take the baseline redemption of 1.25 cents per point for a brand new points hobbyist. A 1.25 cents per point value usually represents booking through a travel portal, which is no different than doing a google flight search through your bank, and it requires no knowledge or skill to do. That 1.09 million points would equal $13,625 in travel. Subtract annual fees, and we’re down to $10,675 in travel. This should take no time, but even if you accounted for $6,000 in time spent, we’re down to $4,675, which is still more than double the cash back rates you’d earn on the same spend.
Why does this work? It’s simple math. Earning over 9 points per dollar on your spending, even when accounting for the lowest value redemptions and all the time you spent optimizing earnings, will always have a higher return than 2% cash back.
Savings
My spouse and I invest 50% of our take-home pay. This would not be possible if we spent the cash value of our points. Take the $98,417 in travel expenses we offset with points in 2024. Subtract the annual fees (an average of $4,000 per year) and my time (20 hours at $300 per hour), and you’d get $88,417 in true offset expenses. This additional money invested in one year reduces my financial independence timeline by 1.8 years.
Comparison to the Early Days
You might be saying, “Doc, that’s an extreme example. Let’s be real. Most physicians take less than three weeks of PTO each year (despite an average of five weeks PTO in physician contracts, according to the 2024 Medscape physician survey), and they don’t want to manage multiple credit cards.” OK, let’s look at the numbers for a beginner. In my first year of tracking redemptions, I redeemed 452,000 points and $95 in taxes and fees for $12,925 in travel expenses, a value of 2.8 cents per point. This was for one week-long trip and a few weekend trips. At this time, my spouse and I only had three credit cards between us for a total of annual fees of $315. I spent less time managing cards then, and my time was much less valuable. But for argument’s sake, say I spent the same 20 hours but at a value of $100 per hour. That $12,925 minus the taxes, annual fees, and time would equal $10,610 in travel value. This amount, invested post-tax in the S&P 500 in December 2017, would now equal $21,015 in inflation-adjusted returns.
Our take-home pay that year was $174,000, and we invested 50%. If we had spent every remaining dollar brought home on credit card expenses on a 2% cash back card, we would have earned $1,740. Today, that would be worth $3,446 in inflation-adjusted returns from the S&P 500. That’s not much to move the needle.
Even as a beginner, with a lower-end physician income and only a few credit cards, offsetting travel costs always beats a cash back return.
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Travel Hacking for Students, Residents, and Those Entering the World of Credit Card Rewards
How Credit Card Points Earnings Can Grow with You Over Time
This is the great thing about credit card rewards—they can grow and change as your income grows and travel situation changes. As an early-career surgeon 10 years ago, I didn’t need to travel in business class. Now that I’m thousands of surgeries into my career with the overuse injuries to go with it, it’s painful for me to sit for eight hours in an economy seat. Using points to pay for premium seats allows me to start my vacation sooner in comfort, rather than spending two days “just getting there.” That’s more of my enjoyable time back, my greatest commodity.
During training, travel rewards can be used to offset costs completely by booking through travel portals. As income and skill grow, they can be used to pay for better and more comfortable experiences—and then experiences you could never otherwise afford. And when you reach proficient levels, credit card strategies allow you to earn rewards on even more of your expenses—from rent and HOA costs to taxes and student loan payments. They can take the opportunity costs of these expenses and turn them into something that can reduce burnout.
Protections of Travel Reward Cards and Points Bookings
Another overlooked benefit of travel reward cards and points bookings is the protections they offer.
Travel reward cards routinely come with no foreign transaction fees and robust travel delay, cancellation, medical evacuation insurance, and interruption insurance built into the card. This allows travelers to forego additional insurance offerings and to save money when things go wrong.
Premium travel reward cards come with credits that often offset 50%-200% of the cost of the annual fee, such as $300 in travel credits on a $395 per year annual fee card. The above calculations subtracting the full cost of annual fees do not account for any statement credits that would wipe out most of these.
Additionally, points bookings, especially for domestic airlines and hotels, are nearly completely refundable. That means if you need to cancel a trip or something goes wrong, you’ll get all your points, taxes, and fees refunded. That means that points redemptions are significantly undervalued. My redemption spreadsheet compares point values to the cash equivalent price on the day the booking was made. However, a better comparison would be the fully refundable cash price, which is always significantly higher.
As an example, I recently redeemed 12,000 American Airlines points and $11.20 for a round-trip ticket for my dad to fly from Austin to Los Angeles for a flight priced at $250, a value of 2 cents per point. However, when we needed to cancel this flight, it was fully refundable. American charges an extra $50 each way to make a cash ticket refundable, so the actual value was $350, which brings the point value to 2.9 cents per point.
Lastly, points bookings allow you to book one-way international tickets at no additional cost, compared to cash bookings. One-way international cash tickets are often highly inflated and the equivalent in price to a round-trip ticket, which means that cash buyers are locked into a specific airline’s round-trip offerings for the entire trip. By booking one-way points tickets, travelers have more flexibility to maximize their limited PTO by flying into one city and home from another, combining two trips into one.
Time Investment Required to Learn These Credit Card Rewards Techniques
Savvy white coat investors know that spending time on this website, listening to podcasts, or reading Dr. Jim Dahle’s books can return huge dividends on their financial future. When accounting for whether to fire your financial advisor, one may need to take into account the opportunity cost of their own time at $100-$500 per hour to learn the concepts needed to implement a financial plan.
Early in my career, I spent hours reading the WCI website and even attended WCICON later in my career. This investment in my time saved me from a 1% AUM advisor and taught me to automate investments according to a financial plan. Similarly, early in my points hobby, I spent many years reading points blogs, listening to podcasts, and reading airline terms and conditions, which resulted in six figures of value in return over a decade.
Today, just as there are condensed financial courses to take a wide swath of information and distill it into an optimized resource for physicians, there are also points courses available to take someone from novice to proficient in as little as 6-8 hours. Jumping from proficient to expert typically takes several points bookings, which can take several hours each. But once you are an expert, booking a trip with points takes no longer than booking a trip with cash.
An example is a trip I took to Mongolia in 2023. Mongolia has one international airline called MIAT Mongolian, which has a total of five planes that connect to nowhere near the US. This is not the kind of vacation where you’ll simply type your origin and destination into Google Flights and buy the first flight you see. These types of itineraries are equal in time and effort, whether you use points or cash.
Logistics
Many travel hackers will have multiple cards, but few stay in our wallets. Cards that earn big welcome offers may go into the drawer for the rest of the year and then be closed or downgraded (changed to a lower or no annual fee card) if the value is not present on an annual basis. In general, cards that are opened need to stay open for at least one year so that any welcome offers you receive are not reversed.
There’s a myth that opening lots of credit cards will ruin your credit score. However, the components of a credit score might actually surprise you. Credit scores are based on the following categories:
- Payment history: 35%
- Credit utilization: 30%
- Length of credit history: 15%
- New credit inquiries: 10%
- Credit mix: 10%
As you can see, your bill-paying track record is the single most important factor in your credit score. Credit utilization is the amount you owe vs. the amount of credit you have, which is why your score goes up when you have more cards. The length of your credit history is also important. This is why we may downgrade a card instead of cancelling—it preserves the credit history. New credit inquiries, or opening new credit cards, are only 10% of your score. When you open a card, your score may decrease briefly. Hard inquiries occur when a lender checks a copy of your credit report. Some banks only do soft inquiries when you already have a relationship with them. Hard inquiries appear on your credit report for 24 months, and soft inquiries do not appear at all.
It is important to understand your credit report, as your ability to open cards depends on maintaining a good score. Certain banks only allow you to open so many cards over a period of time, so checking your credit report is important each time you want to open a card. Opening five cards in two years is too many for some banks (any card, not just theirs), and some banks only allow you to open a card every 3-6 months.
When you open a card, make sure to screenshot the welcome offer, note the date the offer expires, set up autopay, and enroll in any benefits.
Mental Load
What about the mental load component? Does it take a lot of work and time to manage these cards and redemptions? I recommend keeping track of your redemptions in a simple spreadsheet, just like you might keep track of your finances. Keeping track over time allows you to see what kind of value you’re getting from travel reward cards. Additionally, there are several apps available that can help you manage your credit cards, show you the best offers and when annual fees are due, and show you which card to use to maximize each purchase. These free and low-cost tools take the guesswork out of managing cards.
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Can Travel Reward Hacking Really Contribute to Financial Wealth?
The 2024 Medscape physician survey found that 95% of physicians thought that travel was important to their mental health and happiness. Unfortunately, a 2024 JAMA article showed that nearly 60% of physicians took three weeks of vacation or less per year. This was associated with higher rates of burnout.
The best investment you can make in your financial future is your ability to prevent burnout and keep earning a physician income. Burned-out and tired physicians have less empathy and even prescribe less pain medication for patients who are hurting. All the while, the literature shows that taking frequent vacations reduces the risk for metabolic syndrome, cardiovascular mortality, and depression and anxiety. If you don’t do it for your financial future, at least do it for your health and the care of your patients.
One of the reasons cited in the JAMA article for why physicians do not use all their PTO is due to financial stress. What if travel hacking offset these costs enough to reduce that stress?
Want a Cash Back Credit Card?
What if you don’t like to travel? That’s OK! At least get something from your cards. Credit cards are loaded with tons of consumer protections, including built-in insurance, purchase protection, price “rewinds,” cell phone coverage, and fraud protection. If someone fraudulently charges your credit card, the charges can be easily reversed. Conversely, once fraud has occurred to your bank account, that money is extremely difficult to recover, if it can be recovered at all. Use the inherent protections built in from the interchange fees to prevent direct access to your accounts.
If you’d like to earn cash back on all expenses, make sure to look for a baseline of 2%. You may find your local credit union offers a higher rate, and some banks will even offer 3% or 4% cash back if you have six figures of investments or savings with them. Additionally, make sure to get the credit limit you need. Many travel rewards cards are charge cards, so they have no credit limit. This can be particularly important for practice owners who need to charge six or seven figures in spend each year. Look for a cash back card that is a charge card if you’re in this situation.
The Bottom Line
If travel is important to you (and physicians say that it is), then travel rewards can offset the costs of travel and contribute to greater wealth, health, and longevity in your career. Learning the complexities of credit card rewards is no different than learning principles of good financial management, and it can set you up for a lifetime of success. This system can return an order of magnitude more value than cash back cards, so it’s worth the time and investment.
Do you use credit cards for travel hacking? How much money have you saved? How much time do you put into it? Do you feel less burned out because of your travels?
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