- 1 Introduction
- 2 Travel Hacking With Points
- 3 FAQs
- 4 Looking Forward
Many people dream of travel but find it to be an unrealistic goal. Some find it difficult to find the time and money to make it a dream. While travel hacking won’t help you with the time, travel hacking will allow you to travel for cheap. No, travel hacking isn’t hacking into an airline website to change the prices, it is strategically searching and utilizing ways to get travel for cheap.
Travel hacking isn’t about just travelling to obscure destinations so you pay little money. And it isn’t about being minimalist and staying in the cheapest accommodations possible while getting the seat next to the bathroom on the plane. Travel hacking is about making enjoyable travel affordable. With time and dedication travel hacking can even get you travel that many people think impossible.
Thanks to travel hacking, I have taken vacations to Siesta Key, Florida – one of the best beaches in America – for under $500. I have spent time trekking Central America, particularly Nicaragua, staying at resorts perched on the slopes of an imploded volcano that has filled in and formed a lake. I’ve hiked multiple volcanoes, toured coffee plantations, visited freshwater lakes filled with sharks while staying in 5 star accommodations for under $1,500.
These examples aren’t even some of the best travel hacks I’ve pulled off! This summer I’ll be flying to Hawaii for $22.40 to celebrate my fiancee’s graduation from law school and completion of the bar exam! And I am also in the process of planning a $20,000 honeymoon that will cost us about $400!
Travel Hacking With Points
Travel hacking with points is the easiest way to hack your travel. Many people open a frequent flier account when they fly, but rarely accumulate enough points to get anywhere substantive. Unless you’re a business traveler, you may only get 2-3,000 points for a single flight. Getting a round trip ticket across the US may take 10-15 years of flying to get enough points! Travel hackers know how to get thousands of points without ever having to step on a plane or stay a night in a hotel. A one-way ticket to Europe on an American Airlines partner flight in coach costs 30,000 points.
The easiest way to accumulate points is using credit card sign up bonuses. Many travel and reward credit cards will give you a large amount of points after spending a certain amount of money in a given timeframe. For example, the Citi AAdvantage Platinum card will get you 50,000 AAdvantage miles after spending $3,000 in 3 months. That’s almost enough miles for a round-trip ticket to Europe from anywhere in the US.
Travel hacking with points can be very lucrative very fast, and is the best cheap tip for dream tips. Many dream trips may require long complicated flight itineraries though. Instead of spending $2,500 per person for a 30-hour flight to the Maldives in coach, you could use points awarded from sign on bonuses to spend those 30 hours in business or first class seats that would normally cost $10-$15,000 per person!
Step 0 – What to Know Before You Start
Before you start, you should know travel hacking with credit cards is certainly not for everyone. It requires discipline, organization, and being honest with yourself. If you know you will use credit cards irresponsibly and drive up your balance, you should not get involved with travel hacking using credit cards. There are plenty of other ways to get cheap travel, which you can see in my soon-to-be-published second part to this guide.
Paying interest and fees on a credit card can quickly wipe out the value of the points you have earned. It isn’t worth it to earn a bonus worth $500 if you spend $600 in interest for it. If you know you cannot regulate your spending well with credit cards, this is not the right path to travel hacking for you.
If you can regulate your spending, remain organized. Using an excel spreadsheet to track your loyalty programs, what cards you have, when you need to hit minimum spending requirements, and whatever else you think you will need is key to stay on top. A great tool to keep track of your different mileage and points programs is AwardWallet. Through cooperation with AwardWallet, I have some free upgrade codes available for a limited time to upgrade to be a premium user. Send me an email to request one.
You do not want to make a late payment. A great way to make sure you never miss a payment is to set up auto-pay on all of your accounts. While you should be paying off your balance in full, this will at least prevent a negative mark on your credit report in case you accidentally miss one. To keep track of all of your accounts, I love using Personal Capital. It is a great financial tool that you can use to link all of your bank accounts, including credit cards.
Finally, you should have good credit. Banks don’t want to lend money to people who will get awards but never pay the bank back. Most travel rewards cards require a high credit score. Generally 700 or higher to be eligible for nearly all cards available, but you can get started if you are in the high 600s. You’ll find – as many have – that travel hacking with credit cards will actually cause your credit to increase. Use a free website like Credit Karma to check your credit and keep track of what accounts you have open. If your score is significantly below 700, work on repairing your credit first and then look into travel hacking.
Step 1 – Sign Up for Loyalty Programs
You should first sign up for different loyalty programs. These include hotel and airline loyalty programs. American Airlines has the AAdvantage program, Delta has Skymiles, Hyatt has Hyatt Gold Passport. You want to sign up before applying for any cards for a few reasons. When you are a member, you will receive offers for credit cards. Some that have special bonuses that are higher than what is publicly advertised.
As you apply for different cards, you will often be asked for your account. If you don’t have one already the banks will set one up for you. While it may seem like a nice gesture, it can be a tedious process to find out the account information that they set up for you. Setting it up first will allow you to avoid the hassle. You can then add the account to your AwardWallet account or to your own spreadsheet to keep track of your points.
Step 2 – Sign Up for Your First Credit Card
Let the fun begin! Once you are organized and have your credit sorted out, you are ready to start travel hacking with points. It is time to sign up for your first credit card! If you have a specific trip in mind, search through my trip guides to find out what cards I recommend for your dream trip. But if you aren’t sure, or you want more help through the process I have put together a step by step guide for beginners.
My step by step guide will show you what cards to sign up for, and walk you through the process from getting the points to booking your travel. Following the guide will get you enough points for a dream trip to Hawaii in 6 months for 2 people for $22.40! It will quick start your travel hacking with great information about different programs, and how to get the best value possible from your points!
If you aren’t sure yet, or think you may not want to start with Hawaii that’s okay too! For first timers I recommend signing up for the Chase Sapphire Preferred. It has a modest minimum spend requirement, an introductory $0 annual fee, and has points that are very flexible to use.
Step 3 – Meet Minimum Spending
Meeting minimum spending requirements often seems like the hardest part of travel hacking with points. If you’re already using credit cards, you likely are using it to pay your groceries and for general shopping. If this is you, then $4,000 seems like a lot in 3 months! Travel hackers know that this isn’t the only way you can use a credit card, and that you should use it to pay as many of your bills as you can.
Paying your bills is a great way to achieve sign on bonuses for a few reasons. First, your bills are often some of your largest expenses! Imagine putting a monthly rent of $1,000 on a card. In 3 months that is $3,000 towards minimum spend. Many of your bills that normally can’t be paid with a credit card can be paid using a check. And Plastiq will charge your credit card (along with a small fee) and will cut a check. I use this to pay my rent, student loans, car payments, and other bills that normally can’t be paid with a credit card. This makes it extremely quick and easy to hit minimum spending requirements! Even for some of the cards with higher requirements of $5,000.
The more you can spend, the easier it will be. But travel hacking with credit cards is possible even with a modest budget. There are cards where you will get a sign on bonus for just making a first purchase, ranging to $15,000 minimum spends and more. But most fall within the $3,000 in 3 month range, which is realistic without having a lot of disposable income to spare.
Step 4 – Use Points for Travel
Once you accumulate the points you can use them for travel! The biggest flaws many people make is cashing out points for money deposited into their bank account. The dollar signs are enticing, and that is because that is what banks want you to do.
The 50,000 point sign on bonus from the Chase Sapphire Preferred is worth $500 in cash. It can seem like quick and easy cash. Unless you need it, this is often the worst value you will get for your points. This gets you an exchange of 1 cent per point. Comparatively, I used 30,000 points to book a round trip ticket to Hawaii that would have cost $1,200. This has a value of 3.8 cents per point. By using my points for travel I got 380% more value. Unless you need cash, you should always try to use your points for travel to get the maximum value out of them.
The biggest key about using points for travel is to be flexible. If you have a specific trip you need to go on at a certain time (such as a honeymoon), don’t assume points will get you there. Award flights may not be available on the dates you want, or the hotel could be out of award rooms. Being flexible with your travel plans is the best way to maximize the opportunity to use your points.
If you must travel on a specific date, keep in mind most flights release award space about 330 days in advance of travel dates. So do your best to book 330 dates in advance. Award space may be available later, but if you are travel hacking with points for a specific trip this is the best way to get the dates you need.
Step 5 – Sign Up for Multiple Cards
My biggest cheap tip for dream trips is to sign up for multiple cards. You don’t have to do it all at once, but don’t get just one travel card. Many people with travel reward credit cards sign up for one, and then put all of their expenses on it. If your card earns 1 point per dollar, and you are spending $1,500 per month on it then after your bonus you will get 4,500 points every 3 months. But if you use that spending to get another sign on bonus you could get another 50,000 points on top of the 4,500.
Over the course of a year, the person who got just one card will have 68,000 points. The person who got a new card every 3 months would have 218,000 points. If you used those for one trip, the 68,000 points could get you to Boston in coach. But you are a smart travel hacker, and will be using your 218,000 points to fly to Paris in first class.
As you get more used to the hobby, you can begin signing up for multiple cards at a time. I’ll apply for 3-4 card at a time. I do this because it limits the amount of hard pulls on my credit report. The credit agencies will see multiple checks on the same day and view it as shopping around for credit. This reduces the impact it has on my credit score, so I can keep getting multiple cards.
One of my favorite tricks is applying for business cards. Many people don’t even think to apply for these cards because they don’t own a business. You may be eligible for a business card without even knowing it! There are many businesses that are quick to start – reselling textbooks on Amazon, reselling items you have previously bought, etc. Even if you aren’t making money from them yet, you may need the credit to help finance the items. Banks are happy to lend to up and coming businesses, especially in the form of credit cards. You can get them for the bonuses as well without a business income, just let them know you are planning on starting this business and you may be eligible.
Step 7 – When to Cancel Cards
Some of these cards will carry hefty annual fees. You may not be able to get the full value out of them after the sign up bonus. Other cards you may just have wanted for the sign on bonus now, but you want to be eligible for it again later. Knowing when to cancel the cards is important to maintain a good relationship with your bank.
I recommend waiting until after the first year to cancel a card. Most banks will refund your annual fee for the second year if cancelled within a reasonable time (usually 30 days). It will also let the banks see you are keeping products for a good amount of time. Banks want you to be their customers, but they don’t want to lend to people who are abusing their products. Keeping cards for a year will help maintain good relationships with them. This will allow you to keep travel hacking with the various banks for years to come.
Cancelling isn’t always the best bet. You can also perform a product change. A product change is done where you change an annual fee card to a lesser card without an annual fee. For example, after the first year you could cancel a Chase Sapphire Reserve. Instead, you could product change it to a Chase Freedom. You would pay no annual fee. It would also give you a card on your account longer, improving your average age of credit. It also allows you to do more travel hacking with the banks because it improves your relationship with them.
Won’t having a lot of credit cards hurt my credit?
Having a lot of credit cards certainly has the potential to hurt your credit. The mere act of having lots of credit cards will not be bad for your credit itself. What hurts your credit is late or missed payments. Carrying a large amount of debt on your credit cards. Or cancelling old credit card accounts. What will harm your credit is not being organized or honest with your ability to be responsible with available credit when travel hacking with credit cards.
There are multiple key factors that affect your credit. The six largest factors that influence your credit score are
- Credit Card Utilization – this is the amount of available credit you are using. You want this value to be low. Carrying a debt makes it higher. If you have a card with a $20,000 credit limit, and you have $10,000 on it, you are utilizing 50% of your credit limit. This is bad, and is why you don’t want to carry a balance month-to month.
- Percent of On-Time Payments – having multiple cards open actually helps this! Since you will be paying them all off every month, you will improve the amount of on-time payments. You are a smart travel hacker, so you will set up autopay on your accounts to make sure you don’t accidentally miss a payment.
- Number of Derogatory Marks – this can include collections, or accounts that are delinquent, and others. Having multiple cards open won’t affect this unless you fail to make your payments.
- Average Age of Open Credit Accounts – opening multiple cards will affect this. This is why you will keep open accounts that have no annual fees. It will help offset the impact you make by opening multiple cards. But this is a smaller factor compared to utilization and percent of on-time payments.
- Total Number of Accounts – the more accounts you have open the better it is for your credit. This is travel hacking with credit cards helping your credit.
- Total Hard Credit Inquiries – when you apply for a new credit card, the banks will make a “hard pull” against your credit report. This is another small factor on your credit score, and won’t stop you from having an 800+ score. If you increase the level you are travel hacking with credit cards, remember to apply for multiple on the same day to trick the agencies into thinking you only had one hard credit pull.
So, unless you aren’t responsible with your credit use, there are two small factors that will be harmed by travel hacking with credit cards. But three factors that will be benefited. This is why many travel hackers report their credit scores going up.
If you want more proof, check out My Wallet. Here I will keep you up to date about what cards I’m travel hacking with at the time, as well as stats like my credit score. I remain transparent so you can see how travel hacking as impacted me financially.
Won’t I pay a lot of money on the credit cards?
There are only two times when you will pay money to credit cards. First, when you have an annual fee. I will never recommend a card to you where the travel benefits are not more valuable than the annual fee. Second is if you are paying interest or fees such as a cash advance. You are a smart travel hacker, and you will pay off your balance in full every month, so you won’t pay interest.
What gets people in trouble with credit cards is having a balance roll from month to month. When this happens they begin paying large sums of money in interest. You do not want to be this person. But we appreciate these people. Their interest is paying for our free travel!
Why should I pay a fee to the bank to use their credit card?
This is a mindset that many people have in regards to credit cards. As always, I will never recommend a card where the annual fee is not offset by the rewards. But consider when Chase released the Sapphire Reserve card in August 2016.
The Sapphire Reserve is a high-fee card, costing $450 a year to use. But this card comes with a $300 travel credit that you can use every year. So your travel credit really makes the card a $150 annual fee. People who managed to meet the minimum spending requirement of $4,000 in 3 months received 100,000 Chase Ultimate Reward Points. With this card, each point is worth 1.5 cents each. Meaning from the sign on bonus they received $1,500 worth of points (at a minimum!). Without considering any of the other benefits the card gives, this means you paid $150 to get $1,500. That is one of the best returns on investment you could ever get. That is the equivalent of paying $150 to get a round trip ticket to Venice with $300 to spend while you are there.
If travel hacking with credit card sign up bonuses sounds interesting to you, give it a try! Follow my beginner’s guide to travel hack Hawaii for $22.40. You will only need to open two credit cards to do it. This will allow you to see how it impacts your credit. It will let you learn the tricks to hit minimum spending, and it will let you see if the hobby is right for you without a big time commitment. I walk you through everything, so you don’t have to figure it all out. When you finish your Hawaii trip, come back and use another one of our guides to get another trip for nearly free!
If you ever need help booking an award trip, or finding the flights don’t worry! I am happy to help. You can contact me via my booking service and I’ll put together an itinerary for you. Give you all the information you need to book the trip. You won’t have to do any research at all. All you’ll need is to call the numbers, provide the information, and confirm your booking! I’ll make travel hacking with points even easier – you just have to get the points. That’s the easy part. Let me do the hard part for you for a small fee. For a slightly larger fee and more information, I’ll even book the entire trip for you. You won’t have to make any phone calls.
Stay tuned in, as I’ll soon release how to travel hack with cash. Most travel hackers focus on points, but in my next part of Travel hacking 101 I’ll show you how to do travel hacking with money. It will cover how to book travel for extremely cheap!