Buzz
There are entire online communities devoted to the craft of using credit card points to unlock thousands of dollars in free travel, known as travel hacking. People get really passionate about it, which led me to believe it was a tedious hobby, much like couponing, that only paid off if you were obsessed with it. Turns out, I was wrong. Travel hacking is actually quite simple.
Although I’ve been using credit cards for cashback rewards for a long time, it wasn’t until 2014 that I opened a card specifically for the purpose of travel hacking. Since then, I’ve managed to book flights to places like Hawaii, Tokyo, Texas, New York, Copenhagen, and probably several other destinations I’ve since forgotten.
I don’t spend hours figuring out which card to use for every individual purchase. I don’t engage in card churning (open a card, close it, repeat). My credit has actually improved over time! (But we’ll cover that later.) That said, the world of travel rewards can be a bit risky, so if you want to dive in, make sure you play by the rules. We’ve got a few important tips to follow.
Look for a Card with a Generous Sign-Up Bonus
In 2014, I booked two flights, one from Los Angeles to Hawaii, then to Tokyo, and back to Los Angeles. Without the stop in Kauai, the whole trip would’ve been free, but I still paid very little. The total cost for all six flight segments was $400 and 45,000 points.
I used the Chase Sapphire Preferred card to earn the massive sign-up bonus of 40,000 points. That huge bonus is the main way travel rewards hackers score free flights. The catch was that I had to spend $3,000 within the first 3 months of opening the card, so I put nearly every purchase on it: groceries, bills, and pretty much everything except rent. The card also offered an authorized user bonus. By adding an authorized user and having them make at least one purchase, I’d get an extra 5,000 points. So, I added my now-husband, and we earned even more points.
There are numerous websites that help you compare cards and find the best one for you, but the truth is, most travel rewards enthusiasts recommend a few of the same cards:
Chase Sapphire Reserve
Chase Sapphire Preferred
CapitalOne Venture Card
Starwood Preferred Guest Credit Card from American Express
Amex Everyday Preferred Credit Card
Each of these cards offers tens of thousands of points as a sign-up bonus, and some also come with perks like lounge access, free Global Entry, and similar benefits. However, be mindful of the annual fee. For instance, our Chase Sapphire Preferred card had a $95 annual fee (which was waived for the first year). We eventually canceled the card to avoid the fee, but not immediately since we were still accumulating a lot of points...
Put Every Expense on Your Card (But Pay It Off Each Month)
While sign-up bonuses are fantastic, many cards also reward you with points for your spending. You can earn 1-3 points for every purchase, depending on what you buy. I didn’t expect these points to add up, but they really did. I ended up earning about 10,000 points in the first year of using the card, which was enough for a couple of free domestic flights.
The key to making this work is putting all your expenses on your credit card. As a personal finance writer, the idea of doing this makes me cringe a little, but when done carefully, it’s actually quite easy to come out ahead. Here are the guidelines I follow when budgeting with my credit card:
Pay off the card in full and on time each month
Always ensure that my checking account balance is higher than my card balance. However, I don’t rely solely on this comparison as my budget, so I also:
Use Mint.com to track all of my spending.
It should be obvious, but if you’re racking up late fees and interest charges because you're not paying off your card in full and on time every month, the 'rewards' are essentially useless.
Many rewards enthusiasts use different cards for different types of purchases. Rewards cards often feature 'bonus' months, where you can earn double or triple points on certain expenses, like dining out. Some people go as far as writing down these categories on their individual cards to keep track of which one to use for what. Personally, that’s too much effort for me. It feels like shopping at five different stores just to save $10 on groceries. I prefer using one solid card for all purchases and still manage to rack up enough points for a couple of domestic flights by year’s end.
Sign Up Before Making a Big Purchase
Another way to maximize rewards? Take advantage of a card’s sign-up bonus before making a big purchase. My husband and I signed up for the well-known Chase Sapphire Reserve, which offered a huge 100,000-point bonus if we spent $4,000 within the first three months. With our wedding expenses coming up, hitting that bonus wasn’t an issue. (We had already saved up for the wedding, so we paid the card off immediately.)
If we really wanted to maximize our rewards, we could have applied for a separate card in my husband’s name to earn another sign-up bonus, paid for the wedding on two cards, and then paid them both off in full. But that can be tricky with fees and budgeting.
Our 100,000 points covered two flights from Los Angeles to Denmark, Sweden, Norway, and back to Los Angeles (basically our honeymoon). This would’ve otherwise cost us $2,000. However, Chase has since reduced the bonus to 50,000 points, which is still quite good (around $1,100 in value). On top of that, the Reserve card offers other fantastic perks (and it better, given the hefty $450 annual fee): $300 travel credit, free lounge access, and $100 credit to cover the application fees for Global Entry or TSA Pre✓. The points-per-dollar rate isn’t bad either: you earn triple points on travel and dining, which means in addition to our honeymoon, I’ve earned enough points in the past year to score two free domestic flights.
Whether it’s a wedding, home renovation, or any other significant purchase, any time you're planning to spend a lot of money is a great opportunity to cash in on credit card sign-up bonuses. Just remember the golden rule: don’t spend money you don’t have just for the sake of earning rewards.
Look for the Most Affordable Flight
Cheap flights usually come with fewer reward points, which is actually a good thing, as it means you can save more of your rewards for future travel.
I’ve also found that sometimes it’s more cost-effective to book flights through a credit card’s rewards portal rather than booking directly with the airline. For our trip to Denmark, for example, booking through Swiss Air would have cost us several thousand more points than booking directly through Chase.
A word of caution, though: it’s generally better to book directly with the airline in case you need to make any changes. We had a mistake with our booking that Chase couldn’t confirm was their fault, so they charged me $50 to fix it. Also, it was a real hassle to select seats and manage things through Chase’s portal.
Some people spend much more time than I do opening and churning card after card to get free travel, and they travel frequently, often in luxury! However, if you’re too lazy for that, it’s entirely possible to benefit from travel hacking without dedicating too much time to it. Over the past three years, I’ve only opened two cards and still saved thousands in travel.
Opening cards can definitely impact your credit, but not always in the way you might think. Thanks to a concept called credit utilization, my credit score actually increased after opening these cards. This is because I paid them off in full, so although I had a lot of available credit, I wasn’t using any of it, which kept my credit utilization low. To keep your score (and your spending) in check, it’s important to maintain a low utilization rate.
One last piece of advice: if you plan to buy a home or take out any kind of loan, it’s best to avoid opening a new card until the entire process is complete. When you apply for a new card, that activity appears on your credit report, which can cause a temporary dip in your credit score. Lenders, like mortgage companies, don’t like to see this. It makes them nervous, as they might think you’re about to accumulate a lot of debt and possibly default on your loan.
