The Very Basics: Using Airline Rewards Credit Cards to Fly for Cheap
Travel Hacking: It's a way to use the rules and loyalty programs put in place by airlines, hotels, and credit cards, to your advantage to travel the world and fly anywhere while spending very little. I follow some travel bloggers who get round trip tickets to Europe, Asia, Australia and South America for free… not to mention, they're sitting in first class. And their hotels during the stay? Completely free too.
How did they do this? Well, they're master travel hackers.
Travel hacking is a fairly simple process, but believe me when I say I'm a complete novice in the field. Although I've booked myself a few free flights (or really really cheap flights) domestic and abroad using the points I get from travel hacking, I am still figuring it out myself.
The good news? I'm going to help you all learn from my successes and failures because, we all love a good struggle story, and when I do succeed? Well, you'll then be equipped with the knowledge to book your own round-the-world flight, and that will be a great story to tell as well.
So here we go.
This is my very basic, dip-your-toe-in-the-water, Intro to Travel Hacking. (But I promise, there is much more to come.)
Let's Begin, Class.
Like I said, travel hacking leverages the loyalty programs, rules, and systems put in place by hotels, airlines, and credit card companies to earn points and use them toward free flights and accommodations around the world.
Almost every airline and hotel chain has a rewards system so…
Step One: Sign Up For Rewards Programs
Let no point go unclaimed.
Now, you don't have to go signing up for every single program you can find in your Google search right this minute. But, every time you stay at a new hotel or fly a new airline, that's when you must sign up for their rewards program. (Get those points darling!)
Once you've signed up for a number of rewards programs, you will want to put a system in place to track your points, their expiration dates (ugh, why do expiration dates exist?), and anything else that relates to the loyalty programs you're a part of.
If you are a more organized person than I am (which is probably most of you) then you'll be smart and get a system in place before you sign up for your first or, at least, your second rewards program… especially if you're taking this travel hacking thing seriously.
Personally, I'm not there yet. I only have airline loyalty programs to keep track of thus far, but if I were to get started today, I would just use a simple Excel Doc (but then again, I'm a big nerd). Another option is this nifty little platform called Award Wallet. People rave about it. Someday, I will have my life together and start using it. You'll be the first to know.
Step Two (a.): The Slow and Steady Loyalty Method
Once you are a part of these loyalty programs, every time you stay at a hotel or fly your loyal airline, you will be rewarded with points. Sticking to one program will help you points multiply faster. (I guess that's why they call it a loyalty program, right? <wink>) After a while, you will have accumulated points for free stays and flights.
Remember the trip to Europe I took with my better-half and packed like a minimalist in my 2-week Travel Capsule Carryon? During that trip, we used the boyfriend's hotel points to book some pretty swanky hotel stays. He travels for work, at least once a week, and racks up those hotel stays with the two loyalty programs he is well, loyal to. He also was able to book his flight based on his loyalty to the airline he has been flying with for the past 2 years.
A perk of the job I suppose. I haven't yet dabbled in the world of hotel rewards credit cards, but when I do in coming months, you'll be the first to know how to get hotel points even if you don't travel for work.
And as far as airline points go? Well, I had to book my own flights using my own points from my travel hacking tactics, and that didn't include the slow-and-steady loyalty that my boyfriend has established.
So, how do I fast-track the process to get free flights?
Step Two (b.): The Expedited Credit Card Rewards Method
Find a great credit card offering a sign-on bonus with boat-loads of airline points.
Now, before I divulge the awesomeness of how Credit Card Rewards work, you must make a pledge to me. After all, this is primarily a personal finance blog, so I need you to promise to be on your best behavior here when you're taking on the challenge of travel hacking.
Pledge: “I <insert name> promise to use my rewards credit card responsibly. Which means, I will pay my credit card balance on-time and in-full every. single. month. until death (or cancelation) do us part.”
How do reward credit cards work?
Let's say you see an awesome credit card with your favorite airline on it touting their “Get 30,000 miles by signing up for this card!”
The subtitle reads: “after you spend $1,000 in the first 3 months your account is open.”
What that means: When you apply for this rewards credit card, whether it's directly linked to a specific airline or gives you points (30,000) to use at your choice of airline, you must fulfill a minimum spending requirement (the $1,000) within the given period of time (first 3 months upon open) before you can get your 30,000 points.
This was the first credit card rewards program I ever signed up for.
Once you hit your minimum spending requirements within the time limit, your rewards account will be credited with your points. Then, all you have to do is book your flight using points through the airline website. Just. Like. That.!
Don't Do: Do not, I repeat, “DO NOT” just spend money to get your free points. That will be the most expensive airline flight you will ever buy. The point is to spend on things you would normally pay for and use your credit card. It shouldn't be hard to hit the minimum spending requirements (tips on how to do so, below).
Must Do: With that said, you must hit your minimum spending requirement within the given period of time. So look for cards that offer the highest number of reward points or miles that requires the lowers dollar amount for minimum spending.
Tips for Hitting the minimum spending requirements:
Living in Chicago, it was pretty easy to hit the $1,000 in 3 months, but if you sign up for a credit card with a higher minimum spending, or $1,000 in 3 months seems difficult for you, here are a couple ways you can hit that limit:
Time your applications:
Apply for a credit card right before you plan to make a big purchase. Whether you're buying a new computer, camera, or some piece of equipment for work, these larger purchases can help you hit that limit. You can also pay your insurance up-front using your credit card. Having a car in Chicago gives me quite the significant insurance bill, so this is something I do that every 6 months that gets me close to those minimum spend requirements.
Friends and Family “Loans”:
This can be as small as offering to cover dinner and having your friends Venmo you, or you could offer to buy holiday gifts for your mom and have her pay you back. Make sure you really trust your friends and family to pay you back on this one, and don't offer to pay if it seems like a time of desperation, you will need to be repaid within the month so keep it light.
*One option I've considered, but have never done, was to offer to make a business purchase for my dad's company and have him pay me back. This is an option if your parents or other family members are small- to mid-sized business owners. Make sure they do have liquidity to pay you back and that you have the credit limit to support the magnitude of the transaction.
Large Monthly Expenses:
It is possible to pay your student loans or rent using a credit card. You may be charged an extra fee for doing this, so make sure it is worth it to you. (I would weigh the price of a “dream vacation” airline ticket to the amount I'll end up paying in fees before hitting the minimum spend requirement to test if it's going to be worth it.)
Small Monthly Expenses (that add up):
We all gotta eat, access the internet (what would we do without it?!), and thrive in a livable space. Pay those utility and cable bills, gym memberships (or other monthly memberships), and groceries all on your credit card. They are smaller expenses that you know you will be paying every month, and after 3 months, they could really add up.
For more options to meet those minimum spending requirements, check out this post.
REMEMBER: Do NOT put something on your credit card that you aren't able to pay for out of your bank account. Actually, if you can't reasonably see yourself meeting those minimum spending requirements, then don't even apply for the credit card yet. Because, if you don't meet the min, you won't get the points. So just hold off until your bank account is ready.
But, what about my credit score? Ahh yes, this is a personal finance blog, and I do love to protect my credit score like it's my own flesh and blood. Here's the deal, any time your credit is pulled by a company, whether you're applying for a credit card, applying to rent a new apartment, getting approved for a mortgage, etc. your credit will dip slightly. Not by much, but inquiries do that to your credit. Using good practices, especially with credit cards (paying them on-time and in-full!) you can get your credit to be even higher than it was before.
Be smart, don't apply for more than a couple credit cards at a time, check up on your score if you're planning to travel hack more seriously, and if you're looking to apply for a mortgage or loan in the next 1-2 years, then maybe stay away from the travel hacking process. You will save TONS of money on a mortgage or loan if you credit is in tip-top shape. So just keep that in mind.
There it is! Your dip-your-toe-in-the-water travel hacking guide. Curious about more aspects of travel hacking? Have questions? Specific things you want me to research and write about for you? Leave a comment below!