In August I asked whether or not travel hacking was worth the time and effort.
I got responses on both sides but I’d say most were in the “yes” camp.
Good thing since I had already started my travel hacking adventure. 馃檪
More on that next week when I’ll share my results so far and what I think of travel hacking in general.
Today I want to cover what I consider to be the keys to travel hacking — the steps needed to make the most of it.
I’ll probably leave some things out since I’m still a newbie, but I’m sure those of you who are more advanced will fill in the details.
Making the Most of Travel Hacking
The way I see it, there are seven steps to making the most of travel hacking:
- Set a goal
- Develop a strategy
- Apply for credit cards with big bonus points
- Spend the minimum amount to get the bonus points
- Move on to the next card
- Accumulate enough points to take action
- Redeem points to get the most possible from them
I’m going to cover these briefly and explain the general issues involved in each.
Step 1: Set a Goal
Your goal for travel hacking simply may be “save money when I travel.” (This is mine, BTW. I didn’t really have a focused goal.)
That said, the more specific a goal you have, the better your results.
What are some examples of specific goals? A few ideas:
- Pay for a large portion of a trip to Disney
- Fly my daughter back and forth from college
- Save on hotels during an around-the-country car trip
These will give you better results since they will help define which steps you should take next and which ones are wastes of time.
Step 2: Develop a Strategy
Now that you know what you want to accomplish, it’s time to map out a plan to get there.
As you might imagine, there are a large number of points programs, multiple partners within each (check out this chart if you don’t believe me), and a variety of other factors that can get you off track if you’re not very specific.
For instance, you’d hate to rack up a ton of points in program A if it turns out your savings would be best in program B.
So once you know what you want to achieve, take some time and list out your plan for getting there.
Step 3: Apply for Credit Cards with Big Bonus Points
There are entire sites dedicated to helping you select the best cards with the highest bonuses.
Of course what is “the best” is determined by what you’re trying to accomplish. There’s no one-size-fits-all solution for every plan.
My recommendation is to simply go to Google and search for “best points credit cards and bonuses for _________” where the blank is where you’re trying to accumulate points (Disney trip, free flights, free hotel stays, etc.)
By the way, many of the cards with the highest point bonuses come with an annual fee. Some of these are waived for the first year and some aren’t. If you pay an annual fee, you’ll need to take this cost into account when determining whether or not a card is worth it.
Step 4: Spend the Minimum Amount to Get the Bonus Points
Each of the cards will have a minimum spend and a time frame to get the bonus.
For example: “Earn 50,000 bonus points when you spend $4,000 in the first 90 days.”
Obviously, you’ll need to hit these spending thresholds to get the bonuses.
It helps to have your potential spending in mind before you apply for a card. There’s no use in getting a card that has a $4k requirement if you only have $1k of spending the next three months.
It goes without saying that you should NOT spend anything you wouldn’t normally spend to get a bonus. It kind of defeats the purpose of saving money.
In addition, you’ll want to pay off your cards every month or it’s also a bad idea.
And this seems to be the place to address the credit score issue. According to the “experts” who do this, opening a new card hits you with a temporary 5 to 15 point drop in credit score.
Supposedly it rebounds after a short period of time.
I don’t know if this is true or not (I didn’t check) but if you are planning on borrowing soon or have a low score already, travel hacking probably isn’t for you.
Step 5: Move on to the Next Card
Once you reach the minimum spend on card #1, it’s time to move to card #2.
Then after card #2, go to card #3.
Churn those cards out as fast as possible to rack up the rewards.
One caveat: you are limited if you go with cards issued by Chase.
Chase has a 5/24 rule which in its most basic form means “You will not be approved for a new card if you have opened 5 or more bank cards in the past 24 months.”
There are a whole lot of asterisks associated with this statement (like which cards are included in 5/24 and which ones aren’t), so check the fine print before you get any specific card.
BTW, you can work around 5/24 and make it 10/24 if you have a spouse. You each get five cards in 24 months.
Step 6: Accumulate Enough Points to Take Action
If you need 80k points with a certain company (airline, hotel, etc.), work until you reach that, then that’s all you need to do.
With a more-general “save money on travel” goal, it will be a bit harder to decide when to stop, but to do anything meaningful you’re probably going to have to have at least 100k points.
If you’re going for a more vague goal, my suggestion is to have some sort of point-related objective in mind. Something like “accumulate 200k Ultimate Rewards points.”
Step 7: Redeem Points to Get the Most Possible from Them
This is where you can REALLY make some big money.
It’s also the biggest headache of this entire process IMO.
The reason it’s such a mess is that there are a gazillion ways to spend your points. It’s often so complicated you need to consult a site like Award Hacker to help yourself out.
That said, here are some general guidelines for consideration:
You can redeem the points directly with the entity you wish to use (i.e. American Airlines). This is generally seen as the least-effective way to spend the points (in many cases, not all).
If you go with Chase, you can usually get a bonus for booking through their portal (not sure if other aggregators do the same). So a flight that would normally cost you 30,000 points might cost 25,000 or less.
You can find a partner company of the entity you wish to use and book through them. This is common for airlines. For example, you might see an American Airlines flight for 30,000 points but find out that British Airways (an American Airlines partner) has a flight that uses the EXACT SAME PLANE and it only costs you 15,000 points. Big, big savings here.
As for getting the most value out of your points, this seems to be the general consensus from what I’ve read:
- If you get 1 cent in travel value for every point, this is considered weak.
- If you get 1.5 cents in travel value for every point, this is considered decent/acceptable.
- If you get 2 cents (or more) in travel value for every point, this is considered good.
Here’s the above information with examples:
- A flight costs $300 and you get it for 30,000 points (i.e. each point is worth 1 cent. Weak.)
- A flight costs $300 and you get it for 20,000 points (i.e. each point is worth 1.5 cents. Decent.)
- A flight costs $300 and you get it for 15,000 points (i.e. each point is worth 2 cents. Good!)
I see all sorts of points/values debates, but I believe these general guidelines are accurate.
So, that’s what I see as the keys to travel hacking. Did I miss anything? Did I get anything wrong?
Submit your comments below to add some intelligence to this post. 馃檪
Mrs. Adventure Rich says
We are just dipping our toes into travel hacking, so thank you for the tips! So far, we are sticking primarily to the Chase cards due to the bonus from booking flights through Chase Ultimate Rewards, but we are developing a further strategy as well.
Jim Wang says
One thing to emphasize (and you briefly mention it) for folks on the verge of getting a big loan (mortgage, auto, etc.) is that all those credit card applications will ding your credit score because they’re hard inquiries. Hard inquiries will lower your score temporarily, so I would avoid applying for all those new cards until after you get the loan. It makes no sense to get ~$200 in rewards only to pay a few extra G in interest. 馃檪
I’ve only briefly dabbled in travel hacking (I would classify if more like promotion hunting, since I hacked nothing), mostly to get the Southwest Companion Pass. That baby has saved us thousands, especially as Southwest expands their international routes!
Pete McPherson says
This point is valid.
Source: Guy who had just opened two cards RIGHT before applying for a mortgage.
(note: Guy has since learned a tad more about what he’s doing.)
Mike says
Nice overview. We just started as well this year. We’re going to Disney next year and got the Southwest cards for the sign-up bonus.
Chris @ Duke of Dollars says
Absolutely love taking advantage of credit card points and sign up bonuses. In the last two years, I have made at least 2.5K by doing this – racking up lots of free flights!!
The steps are right on and useful for those just beginning the journey for sure!!
Amy @ Life Zemplified says
I’ve not yet focused on travel hacking so thank you for these steps. I’ve had the Delta AX card for years and Capital One’s Venture card and use their benefits but would like to do a better job using the cards to earn and redeem points.
Accidental Fire says
Thanks for this post. I’ve dived into the travel hacking websites and although I appreciate their passion and info, they sometimes have too much info! This is more like a cliff-notes version and breaks down the steps nicely.
I need to get on this as it’s been on my list of to-dos for a while. I think the hardest part will be simply tracking all the dates etc. When the card starts charging the annual fee, how much you’ve spent, how much to go etc etc. A simple spreadsheet could probably fill that gap
FullTimeFinance says
Tracking the dates doesn鈥檛 tend to be that big a deal. Most cards remind you of upcoming fees in the prior statement. Many also prorate or waive he fee if you cancel the card shortly thereafter. Your mileage may vary on the last one though.
Accidental Fire says
Thanks very much for the reply!
Dave says
Very relevant post for me. I just started travel hacking this week. The first card I opened was the chase sapphire preferred card. I added it to all of my monthly auto payments. We spend about $2500 per month on everything, so I will hit the $4k quickly. Plus with holiday shopping, I might be on to my next card by early January. My goal is to take one or two decent vacations per year from travel hacking. There is a little bit of work, but it seems worth it. Now I can add all of the money from our vacation fund to the general asset allocation.
pat says
I have different cards with different points already but don’t know how to maximize them–put them all in one portal or something so that I get the benefit of the points added together? Anyone got direction on this?
Jason@WinningPersonalFinance says
Nice Travel Hacking 101 post. I started playing the game a little this year and expect to benefit from it next year. It’s been fun so far without any negative consequences.
Jeff Olive says
I agree with Jim Wang that the best Travel Hack is Southwest Companion pass. Fairly easy to get normally when Premier and Plus cards are offering 60K sign up bonuses. Current promotion for California residents makes it even easier (available through 11/30). Especially valuable for families when both parents get companion passes and sign-up kids as companions. A close second for most valuable credit card hack is the Chase Sapphire Preferred. Sign-up points, $300 in travel credits, and credit for Global Entry make the $450 fee easy to justify at least for the first year.
MoneyValueTime says
I’d suggest looking at each airline and hotel program points value differently. Avios are usually not worth as much as Aeroplan points for instance due to their redemption chart, but they are worth more than Club Carlson or Marriott hotel points. Starwood Preferred Guest points seem to offer the most value of all (can get over 3 cents per point in value). THis will allow you to assess the value of each program more accurately and go after the bonus’ that offer the most value first.
Several of the big travel blogs go into depth with their point value calculations.
Another way to travel hack is to try to target the various quarterly bonus point programs that the hotels offer. I.e. IHG Accelerate, SPG/Marriott double/triple take, etc. If you know the value of each point program then you can calculate an effective “discount” by earning these extra points.
Lastly, Best Rate Guarantee offers for Starwood in particular can be a huge savings. SPG I find works best – they for instance will beat the best available rate found on other sites like Expedia by 20%, or give 2000 bonus points (which I value at $50-60). For a 1-night stay I take the points usually, otherwise the discount for longer stays.