In September, I will be providing complimentary airfare to both myself and my travel companion so that we may visit Rome. When February rolled along, I repeated same process for Costa Rica. And the year before, I was able to fly nonstop to Jamaica for a price that was almost nothing.
Can you keep a secret? Travel hacking.
The best way to explore the globe on a budget is to learn how to maximise savings via travel hacking. Additionally, getting started is far less difficult than you would imagine it to be.
As a result of the hundreds of dollars I’ve saved via various forms of travel hacking, I’ve become an advocate for the practise. To get money for which you are not responsible, all that is required is some forethought and preparation.
This is a simple, no-nonsense introduction to travel hacking for people who want to save money without spending hours poring at rewards charts. This tutorial is for those who want to save money. Continue reading to take the first step toward winning the vacation of your dreams for free.
The Best Bag for Travel Hackers
Travel hackers are always looking for ways to save costs, and avoiding the bag check is one of the most effective methods to do it.
The Outbreaker Backpack from Tortuga was created with the well-traveled adventurer in mind. Its rectangular form makes the most efficient use of packing space, allowing you to travel with just a carry-on bag and speeding up your exit from the airport.
It opens up like a suitcase, allowing you quick access to all of your belongings, yet it can be worn like a backpack, allowing you to move about freely between locations. It is the ideal backpack for every kind of travel, from staying in hostels to going on island vacations.
What is Travel Hacking?
The practise of accumulating credit card points, hotel points, or airline miles and then using those points or miles to pay for travel expenses is known as “travel hacking.”
A quick rundown of the most straightforward approach to save money when travelling may be found here:
- It is common practise for rewards credit cards to provide new customers with point or mileage bonuses that are comparable to the value of travel rewards worth hundreds or even thousands of dollars.
- To qualify for the bonus offered by the majority of credit cards, you will need to make a particular number of purchases during the first few months (often between $2,000 and $5,000 over the course of three to six months).
- Sign up for a new rewards credit card, make sure you satisfy the minimum spending criteria, and then utilise the bonus you get to plan a vacation. This is a travel hack. Stop using the card or downgrade your account before the annual fee is assessed, and then open a new card in its place. This practise is also known as “churning” credit cards.
Once you get the fundamentals down, it won’t be difficult at all. But before we go into how to get started with travel hacking, let’s dispel some fallacies that are often believed.
Is it OK to cheat on a trip?
The term “travel hacking” does not violate any laws. It is not against the law to cash in on credit card incentives. It is within your legal rights to cancel credit cards that you no longer use.
The term “hacking” is really a misnomer since banks are aware of what they are doing, which is why they establish certain regulations around how one might earn these enormous incentives. For instance, many will only let you to receive one bonus on each card throughout the course of your whole career.
Employ some common sense: don’t apply for ten credit cards all at once, don’t cancel a card the second your bonus hits, and don’t be late with your payments.
Does taking advantage of travel discounts damage your credit score?
Not if it is done in a responsible manner. Your credit score will only drop by roughly five to ten points when you open new cards, but you can rapidly reclaim those points by utilising your new card and paying off your bill in full every month. Opening new cards will just reduce your score.
Continue reading for additional advice on preserving a healthy credit score.
Does travel hacking require a significant financial investment on your part?
It’s understandable if the necessity to spend $3,000 makes you feel uneasy, but you shouldn’t alter your usual spending or saving patterns only to satisfy it.
When you know you are going to have a lot of spending coming up (for example, during a home remodelling project or wedding season), apply for a new card and put all of your expenses on that card.
At dinner, offer to pay for everyone’s meal and then ask them to reimburse you. Complete your Christmas shopping in a timely manner. Invest in gift cards for stores where you already purchase often, such as Amazon or Nordstrom.
Do not use a credit card to pay your rent or mortgage since doing so nearly always results in a convenience charge being assessed. The same is true for a great deal of medical costs. The purpose of travel hacking is to find ways to make money without spending any.
What about the costs associated with credit cards?
The finest credit cards that provide rewards include annual fees, but they make up for it in other ways, such as via mileage bonuses. The annual charge on certain cards is waived for the first year. You may also apply for cards that have no annual charge, but the benefits on these cards will be less generous.
Does time management for travel hacking need a lot of effort?
Even though you will need to be organised and remain on top of your expenditures as well as the accumulation of points, travel hacking shouldn’t take you more than a few minutes each and every month.
How to Travel Hack: Earning Points and Miles
Travel hacking begins with earning points and miles. Bonus points can be earned quickly by following these steps:
- Sign up for a credit card that offers rewards. Consider the reasons you want to go. If you want to save costs on airline tickets, the best strategy is to rack up airline miles or points that you can then exchange for other travel rewards. Regarding hotels, you should concentrate on hotel points. Stick to cards that provide at least 40,000 extra points or miles, and make sure you read the small print to understand the qualifying requirements. Below you’ll find a rundown of the top beginning cards available.
- Attain the minimum required spending on the rewards card. Again, put everything on your card, or fabricate spending by purchasing gift cards to stores where you usually shop and putting them on your card. Avoid making transactions that require you to pay a fee for using your credit card.
- Maintain an accurate record of your points, fines, and due dates. Make sure you never miss a deadline for a bonus or be charged an annual fee for a card you no longer use by keeping track of it. You may do this by keeping a spreadsheet, setting calendar reminders, or signing up for one of the monitoring tools listed at the conclusion of this book.
- Make sure you pay off your amount in full every single month. If you can’t achieve this, you shouldn’t even bother starting to hack travel. Your history of on-time payments is the single most important component in determining your credit score, and these cards often have exceptionally high interest rates. The purpose of “travel hacking” should be to find ways to travel for free, not to rack up travel debt.
- (Optional) After a year, you should either cancel or downgrade your credit card. Cancel the card before the annual fee is assessed if you decide that using the card is no longer worthwhile after you have received the incentive (many cards will also refund you if you cancel within 30 days of being charged).
- Do not cancel the first credit card you open if you do not presently have any credit cards in your possession. Your credit score will suffer as a result of this action since it will reduce the average age of your credit accounts.
- You’ll be able to maintain the credit history you’ve worked so hard to establish if you downgrade to a card with fewer advantages and no annual fee from certain financial institutions. Keeping your previous credit cards helps keep your total available credit at a higher level and maintains your credit usage at a low level, both of which are additional variables that contribute to a healthy credit score. On the other hand, if you get the downgraded card, you won’t be eligible for any kind of special signup incentive.
The Best Credit Cards for Travel Hacking
Start with a generalist card that allows flexible redemption of points for those new to travel hacking.
Among the best starter cards, Chase Sapphire Preferred and Capital One Venture stand out. The following is a brief comparison of the two:
Preferred status with Chase Sapphire
- You will get a bonus of 80,000 points after making a purchase of $4,000 during the first three months.
- The annual cost is $95
- Earn double points on eating out and delivery via Chase, triple points on travel booked with Chase, and double points on all other travel purchases
- Booking flights, hotels, and rental cars directly via Chase’s travel site is one way to redeem points; another is to transfer them to one of Chase’s 14 airline and hotel partners.
- You will get a bonus of 60,000 points after making purchases totaling $3,000 during the first three months.
- The annual cost is $95
- How to earn five times as many points on hotels and rental cars when booked with Capital One, and two times as much points on all other purchases
- Extras: One hundred dollars applied toward either Global Entry or TSA Payment required for precheck applications
- Booking flights, hotels, and rental cars directly via Capital One’s travel site; paying yourself back for travel expenditures made elsewhere; transferring points to one of 18 travel and hotel partners
My first experience with a travel credit card was with Capital One Venture, which I highly recommend to anybody who values ease of use above all else.
There is no need to keep track of certain spending categories if you have the Venture card since you will receive two points for every single dollar spent. The minimum spending requirement and bonus for the Chase Sapphire Preferred card are both higher than those for the Venture card.
You also have the option of using a statement credit to reimburse yourself for any travel-related expenditures you make. Because of this, using the Venture card is an exceedingly simple process. What’s the catch? Chase has a much larger number of domestic transfer partners compared to Capital One.
You really can’t go wrong with either card, so choose the one that meets your requirements the most effectively.
What about credit cards offered by airlines?
If you have a credit card that is branded by an airline, you will be able to build up a significant number of miles, but you will only be able to use those points for flights on that airline or one of its partners.
If you decide to transfer your points to another airline, this reduces the number of available trip possibilities and necessitates further study on your part.
The majority of consumers make their flight reservations not based on the airline’s reputation but on price and convenience. Because of this, I do not advise novice travel hackers to follow this path, unless they are already dedicated to one airline and seek elite status.
What about credit cards for costly items?
Your adventure into travel hacking should begin with credit cards that have minimal annual fees (less than $100) or cards that do not charge annual fees for the first year. In this manner, you won’t have to worry about spending a lot of money right away as you get the feel of things.
After you have some experience with hacking, you should evaluate whether or not luxury credit cards, with their similarly opulent annual fees, are a good fit for you.
How to Spend Your Points and Miles
Cards may provide cash redemptions or opportunities to spend online using points, but redeeming for travel expenditures will give you the most value for your money (airfare, hotels, Ubers, train tickets, etc.).
When they are redeemed for travel, for instance, points earned with Capital One are each worth one cent. If you have 60,000 points, you may redeem them for $600 worth of travel.
When redeemed for cash in the form of a check or general statement credit, each of those very same points is only worth 0.5 cents, making the total value of the cash reward $0.5. Those 60,000 points will only get you $300 at this time.
Cards may sometimes conduct limited-time special promotions in which certain point redemptions are worth more than usual in certain categories. However, as a general rule, you should plan to redeem your points for costs associated with your vacation. There’s a reason why some refer to it as “travel hacking.”
How to Make the Most of Your Credit Card Points When Traveling
A strategy that delves deep into the weeds is required if one is to get every last penny from their rewards points.
Keeping things simple and choosing one of the following options is recommended since this tutorial was created for those who want to spend less time with spreadsheets and more time actually travelling.
Make travel arrangements by using the online travel booking gateway provided by the card issuer (or, for branded cards, directly on the websites of participating airlines and hotels).
You may arrange your vacation by transferring your points to one of the card’s hotel or airline partners, and then booking it via them.
Transfer ratios are not always 1:1; in certain cases, they are not even close to that number. Here’s a wide list of credit cards and their transfer partners to review before making any judgments.
You may also use the statement credit feature of your Capital One card to reimburse yourself for travel expenditures made elsewhere.
How to Maintain a Strong Credit Score
Most rewards cards require credit scores above 650; the best require scores between 700 and 850.
Travel hacking can negatively affect a credit score, which is often a concern for people. There are two main reasons for this:
- The hard pulls. Applying for a new line of credit will result in a “hard pull” on your credit. You can lose up to five points on your credit score after a hard pull stays on your report for up to two years.
- The credit history. The average age of your credit will decrease as you open more cards, which can also lower your score.
The following steps will help you protect your credit:
- Spread out your application submissions. Keep a gap of at least three months between credit card applications, and don’t submit an application for a new card if you are in the process of doing anything else that will require a hard pull on your credit report (for example, if you are about to submit an application for a new job or apartment or if you need a background check for the new job).
- Never cut up your oldest credit card and start a new one (s). These help maintain a healthy credit history average. Again, you have the option to sometimes downgrade your credit cards to fee-free versions in order to maintain your credit history without incurring any further expenses.
- Keep your payments on schedule and don’t go over your budget in terms of what you can spend. Your history of making payments is the single most essential component in determining your credit score. Always pay your payments on time, no matter what. A low credit usage ratio is another component that contributes to high credit ratings; maintaining a low ratio may be accomplished by paying off your amount in full.
Keep Track of Your Points and Miles
These tools and software will also be of use, however the most common method to keep track of your rewards points and miles is using a simple spreadsheet.
Award Wallet may be used without cost and is simple to use. It has been in existence for more than a decade and provides support for more than 600 different loyalty schemes.
The app from The Points Guy (TPG) allows you to keep track of credit card sign-up bonuses and the minimum spending requirements associated with them. This ensures that you won’t miss out on a 50,000-mile bonus simply because you miscalculated when the window for meeting the minimum spending requirement would close.
To get started with travel hacking, it is not necessary to put in hundreds of hours to manage your points and miles.
First, choose the kinds of trips you want to take, then sign up for credit card incentives, and last, make the most of the travel rewards you’ve earned. You won’t even have time to realise it before you’ll be packing your bags and preparing to board your next free trip.