I don’t know anyone that does not want to save money when it comes to traveling. I know that I don’t want to pay full price for airline tickets, hotel rooms, or rental cars. You may be asking if this is even possible. The short answer is yes and it is through a process called travel hacking.
I first dabbled into travel hacking when Tonya and I took our daughter Makenzie on a California trip. The goal was to get free hotel rooms. I did this by signing up for credit card offers which gave us points to redeem for free rooms.
Another time I did some credit card hacking was on a trip out west. Tonya and I took our daughters and their husbands to Arizona and Utah. I was able to book hotel rooms and flights. The points and miles we earned saved us nearly $9,000 on the trip.
This post is not an exhaustive take on travel hacking but it is an introductory take on the subject.
What is travel hacking?
Travel hacking is basically using credit card sign ups and collecting credit card points, hotel points and airline miles which you can cash in for free flights, hotel rooms, and more.
In simple terms, it is the process of continually accumulating credit card points and redeeming them for travel.
For example, a credit card issuer will offer 75,000 points if you spend $4,000 in a three month period. Once you earn the points, you can redeem those 75,000 points to help pay for travel.
Is travel hacking legal?
In today’s world, the term hacking has a negative connotation. For most people, it brings to mind someone on their computer breaking into websites to do illegal activity.
When it comes to travel hacking, there is no illegal activity going on so the short answer to the question is a resounding yes. Travel hacking is 100% legal.
Steps to Travel Hacking
1. What is your goal?
It can seem very daunting when it comes to figuring out where to start when it comes to travel hacking. There are tons of travel credit cards to pick from.
The best first step is deciding what your goal is. Do you want to take your family on a big vacation? Is lounge access your goal or are you looking to travel in style in business or first class?
Do you want to take a week-long vacation to Hawaii with your wife? Have you decided that you want to travel to Europe for two weeks?
How you answer these and other questions can help you decide what your credit card selection and spending strategy will be.
2. Pick a Card to Rack Up Points and Miles
Once you have your goal in mind, you need to start racking up miles and points. The way to do this is by signing up for credit cards.
There are tons of travel credit cards to pick from. When starting out picking cards one strategy is starting out with Chase credit cards since they have an unwritten rule called 5/24.
I have a post titled the “Introduction to the Chase 5/24 Rule” that explains what the 5/24 rule is. You can access the post by clicking this link.
The rule in simple terms says that you cannot get a Chase credit card if you have received 5 personal cards in a 24 month period from any credit card company. Chase has many useful cards and many people start with them first.
Many people like to start out with general travel credit cards since the points from those cards can be transferred to many different airlines or hotels. For example, the Chase Sapphire Preferred credit card is a popular starter travel card.
You can also get co-branded credit cards for airlines and hotels. This is especially useful if you fly or stay in a particular chain of hotels often.
The best travel credit cards are going to have annual fees that range from $95 to $695. Some will waive the fee for the first year and others you have to pay with the first statement.
As with anything in life there is no perfect credit card. You just need to choose one that aligns with your goals and you are getting a good value from the amount of the annual fee.
3. Hit the Minimum Spend
As I previously mentioned, for most travel credit cards there is going to be a minimum spend that you must reach. In simple terms, if you can’t reach the minimum spend for a card then there is no reason to get the card.
Ideally, you want to make purchases that you normally do to meet your minimum spend. You can also wait until you know there is a major purchase that you need to make to help you reach the minimum spend.
For example, we have a minimum spend to reach right now and we have been able to reach the spend much quicker since we are buying items for a house remodel.
You can also ask friends or family members if they have a large purchase that they are going to make in which you can use your credit card to help you reach the minimum spend.
4. Make the Most Out of the Spending Categories
Some common spending categories for travel credit cards include: eating out, supermarkets and gas. There are more but these are the most common.
To get the most earnings out of the cards you have, you just want to make sure to know which cards have the biggest bonus category for a particular purchase.
5. Tracking Points and Miles
As you start to earn and use miles and points, you will want to keep track of the points that you have. You can go old school and use a simple spreadsheet.
If you like a little more of a high tech approach, you can use an app like AwardWallet. I use AwardWallet to help track my points and miles. They can track over 600 loyalty programs and it is easy to link your accounts.
6. Redeem Points
After you have accumulated points or miles, you now will want to redeem them. If you have a general travel card, you can redeem points in the card’s travel portal or you can transfer the points to specific hotels and airlines associated with the card.
Most of the time to get the most value out of the points that you have you will want to transfer the points and not use the travel portal. This is not always the case but most of the time it is going to be.
Points and miles are not all equal and you can checkout the value of different points with the Points Guy for all the different hotel chains, airlines and credit card companies.
If you have a co-branded card, you can redeem points or miles on the specific hotel or airlines website.
Some Traits of Good Travel Credit Cards
- Large Sign Up Bonus- Sign up bonuses for travel credit cards can range from 40,000 to 150,000 points. All points or miles are not created equal but the larger the bonus the quicker the jumpstart for your travel hacking journey.
- Low Minimum Spend- There are a few travel credit cards that give you a bonus for getting the card or after making one transaction on the card. These are the exceptions to the rule.
Most travel cards will give you the points and miles after you have met the minimum spend. For example, the Chase Sapphire Reserve card will give you the sign up bonus after spending $4,000 in the first 3 months.
High minimum spends are okay but you just want to make sure that you can meet the minimum spend whatever it is to earn the points and miles.
- Travel Perks- Each travel card is going to have certain perks that come with the card. Some will have free checked bags, TSA Precheck or lounge access. Look for cards that you will benefit the most from the perks that are being offered.
- Spending Bonus Categories- Most travel cards are going to offer you a point for each dollar spent. The better cards are going to offer you bonus categories to earn more points in.
There are cards that offer 4% on groceries or 3% on eating out. Seeing what the bonus categories are and seeing what ones you use the most can help you build more points in the long run.
- Low Annual Fees- Credit card fees are like taxes in the fact that no one likes them. There are many great cards that have an annual fee of $95 which is on the low end of fees.
There are other cards that have fees close to $700. The higher fee card has many more perks and if you can use them it just may be worth getting the card.
Will Travel Hacking Hurt My Credit Score?
Almost everytime that you apply for a credit card, the credit card company is going to do a hard credit inquiry on your credit. Hard inquiries on your credit score account for 10% of your score and are considered low impact.
This will drop your credit score by a few points. Your score will rebound in a couple of months if you use your credit responsibly.
The score over time will rise because of your credit utilization. Credit utilization is the amount of credit you are using versus the amount that you have. The utilization makes up 30% of your score and is considered high impact.
For example, if you have a credit card with a limit of $10,000 and you have $4,000 charged on the card your utilization would be 40%. 30% and higher is considered high and it will lower your score.
If you get another credit card with another $10,000 limit, you will now have $20,000 of available credit. If you have $4,000 charged in total on the cards your utilization would be 20% which lowers your utilization and raises your score over time.
Final Thoughts
Travel hacking can seem like an intimidating endeavor and it does not have to be that way. It is just a way that you can get more out of your travel for less. If a person starts doing travel hacking, they may dive head first to start. Another person may open a few cards to get their feet wet before they start opening more cards.
While another person may just want to open up cards every once in a while to help fund a trip here and there. No matter how you are going to approach travel hacking you will want to remember to select a card, earn the sign up bonus, and use the card for specific bonus categories.
If you want to learn how to save on travel, travel itineraries, other ways to earn and maximize credit card points and more, go to my blog Travelwidstom.