Everything You Need to Know to Start Travel Hacking
Summer is upon us and travel is blooming with flight deals, hotel promos, credit card offers, and more! It’s hard to ignore all of these opportunities to save on travel, but what if there was one strategy that would triumph over the rest? Enter travel hacking.
What is travel hacking?
Some may know it as travel hacking, credit card hacking, credit card churning, award traveling, or something similar. These terms have different definitions depending on who you ask but the goal for travel hacking is mostly the same: to earn as many credit card reward points/miles as you can to maximize them for a more luxurious, yet affordable travel experience. This usually looks two ways for people:
A few business or first-class experiences on a luxury airline
More economy class seats on any airline
Luxury travel vs frequency of travel. You can do both but it will take more time and effort!
Which credit cards are best for travel?
This comes down to your travel goals! Are you flying twice a year, ten times a year, or more? Are you trying to go abroad or domestic? There are more things to factor in here but it’s safe to say you’ll have your own preference. There are three types of cards to consider when it comes to travel hacking:
Transferable Points Cards
Transferable points cards offer more flexibility with travel because you can transfer points to their partners (Amex to Delta, Chase to United, Bilt to AA, and so on). The rewards you get from these cards act as their own currency. Here are some of the most popular credit card currencies for travel:
Chase Ultimate Rewards (UR)
Amex Membership Rewards (MR)
Capital One Miles (C1)
Citi Thank You Points (TYP)
Bilt Rewards (BR)
Marriott Bonvoy (MB)
Co-Branded Cards
Airline and hotel cards, also known as co-branded cards, are the next form of credit card rewards. These are specific to the airline or hotel you choose; they are not as valuable as UR, MR, C1, TYP, BR, or MB because they have less flexibility since you have to use them specifically for that airline or hotel. They limit your options for transfer partners.
Cash Back
Cash back cards, in terms of travel, have the lowest value by themselves because they offer cash back at a 1:1 ratio. Using the earlier example, 40,000 points is equal to $400. This doesn’t mean you should never get cash back cards, it means you are using a different strategy. Some people prefer cash back and some prefer transferable points. Pro tip: some cash back cards can be paired with a transferable points card to become a transferable currency. Some examples of this are: Citi Custom Cash and Double Cash with the Citi Premier and Chase Freedom Unlimited and Chase Freedom Flex with the Chase Sapphire Preferred/Reserved.
How do I get started with travel hacking?
Credit Card Churning
You can go the route of credit card churning where you chase sign-up bonuses for lucrative earnings while following bank rules and credit score best practice. This is how I amassed over 600,000 points/miles in about 8 months while maintaining a 750+ credit score and zero debt. It requires diligence and discipline, but anyone can do it! You’ll want to track your cards in a spreadsheet, write down due dates, annual fees, available credits/offers on each card, and more.
Organic Spending
Although credit card churning may be the most efficient way to earn points/miles, there is a second, effortless way to set yourself up for success: you can accrue points/miles through organic spending categories. For example, some cards offer category multipliers like 3x or 4x on dining, 4x on groceries, 3x on travel, 5x on gas, 1.5x to 2x on every purchase, and so on. You can find out where you spend the most money per month on average and select cards based around those categories to maximize your earning potential. It is often best to pick one ecosystem (bank issuer) for this type of approach to accrue more points/miles in that program effectively.
Nonetheless, both of these paths pay off in the end! Credit card churning will get you to your goals quicker but organic spending requires much less effort.
What best practices should you follow when opening any new credit cards?
The “Golden Rules” are:
Pay your cards off in full and on time every month before their due date.
Avoid spending money you don’t have.
Practice maximizing your points and miles through organic spend.
Final Thoughts
Every card has a purpose and the best one depends on your travel goal, ability to hit the sign up bonus with your natural spend, your ability to handle credit cards and cash flow, and lastly, but most importantly, your financial situation.
If you have any questions or want to optimize your credit card strategy for travel, check out my website to learn more at travelasf.com, reach me on WhatsApp at 321-209-2588, or schedule a call here.