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Buying Stocks for Frequent Flyer Miles

Stocks for Miles

Warning: This is an advanced travel hacking strategy that is definitely not for everyone. Most travel hacking is risk-free and available to anyone. This strategy can work (and has worked well for me so far) but it does contain risk. Be sure to do your own research before pursuing it.

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Two months ago, I earned 60,000 extra Frequent Flyer miles and points from purchasing blue-chip stocks.

This travel hacking strategy existed because of Loyal3.com, a service that allowed users to purchase up to $2,500 in stock from a selected group of companies for no fee using a credit card. You could then sell the stock as soon as one day later, though it was usually much better to hang onto it for at least a few days to avoid having your account cancelled.

My basic strategy was:

  • Choose 8-10 companies that don’t fluctuate much in value (technical term: low beta)
  • Purchase $2,500 of each company’s stock (up to $25,000 in total from the ten main stock options, though I didn’t purchase that many)
  • Sell all that are profitable or break-even after five days of holding (but less than twenty-five days of holding)
  • Purchase again in the next month

I used my Lufthansa Premier Miles and More Mastercard and my Chase Ink Plus for most of these purchases, although at first I used one of two Citi AA Executive Mastercards to reach the $10,000 minimum spend (this card is still available, but no longer offers a big 100,000 point bonus).

I have a much smaller balance in Lufthansa than with other programs—but hopefully that will change soon.

There are no fees to buy or sell, though of course there is always risk that the shares will decline in value. (There’s also the possibility that the shares will increase in value, which is what tends to happen with most stocks over time.)

Note as well that I didn’t start with large purchases. I started with two orders of $2,500 each for Berkshire Hathaway and Starbucks. After those were accepted with no problem, I gradually began ramping up.

Midway through the experiment, Loyal3 changed the rules and began allowing credit card charges of only $50 per day per stock. This was a big blow to the overall strategy of essentially charging $20,000 a month or more, but it’s still possible to earn some miles every month—and in some ways, perhaps it’s a lower-risk approach.

Once the change kicked in, I switched over to using my trusty Chase Sapphire Preferred card for the ongoing purchases.

So far I’ve pursued this opportunity for 60,000 miles and points with no problems. It could end at any time, as some opportunities have, or it could keep going for a long time, as plenty of other opportunities have.

Again, read the disclosure at the top! This strategy isn’t for everyone. But as I’ve done with the Frequent Flyer Challenge for years, I thought I’d document it for those who are interested.

Helpful resource: this thread from Mr. Money Mustache.

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Image: Herval

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