(Editor's Note: This post does contain affiliate links to sign up for credit cards using my referral code.)
My absolute favorite thing to do in life is travel. I love experiencing new places and cultures. Seeing different parts of our world is not only fun, but I also believe it’s a necessary exercise to develop perspective. It’s been enlightening over the years to see how our friends in far away lands live and it makes me appreciate all the comforts we enjoy here in the good ole USA.
Obviously, traveling and going on vacations is expensive. Traveling to other countries can be VERY expensive. But we are personal finance warriors and we don’t let things like thousands of dollars in airfare and hotels stand in our way. Oh no, we find ways to travel on the cheap (or the free)! This used to mean waiting for a great deal to come along via services like Scott’s Cheap Flights, which is how we traveled to Italy for our honeymoon for $1,000. There’s certainly great deals to be had if you keep an eye out, but I still don’t enjoy spending that kind of money and it certainly limits how often and where we can travel. I’m here to tell you, friend, that those days are done and dusted, for I have unlocked the secret of (nearly) free travel! Enter the credit card rewards system!
And here is where I issue a strong warning about the dangers of using credit cards to travel hack. Please do not try this if you have issues managing credit cards/debt. It can be a VERY dangerous game and you MUST be organized and studious to win it. That means you can’t carry a balance (the super high interest rates will cancel out the rewards) and you cannot make late payments. You must pay your credit card bill in full and on time every month. (One tool I’ve found that has been super helpful in this process is Debitize, which allows you to link your credit card to your bank account. Whenever you spend on your credit card, the program immediately transfer funds out of your bank account and into your Debitize account. It then pays your bill for you on time and in-full. Basically, you’re automating your payments and you’re taking the money out of your checking account instantaneously so it’s not a huge number when the bill becomes due.) I would also not advise this method if you are currently in debt. Slay your debt monster, establish positive spending habits, THEN conquer the world of credit card travel hacking. With this warning out of the way, lets get to the meat of the feast: (Almost) free travel!
The name of the game is sign-up bonuses. Reward credit cards will issue large bonuses in the form of points if you meet a pre-determined minimum spend within a certain time period (IE: $3,000 in 3 months). Once you’ve met the spending minimum, you will be awarded sizable bonuses (generally between 30K - 100K points). You can then use those points to book award travel (you can also use the points for hotels, cash back, statement credits, and gift cards, among other things). Certainly, this is an over-simplified explanation of the system, but that’s the long and short of it. There are loads of advanced strategies about which cards to open and in which order (Chase cards are the current best value) and there’s even more strategies surrounding how you might best redeem your points (flexibility is key — when you travel, what airlines you fly on, etc).
I got schooled to these methods via the wonderful course over at Travel Miles 101. It’s a book’s worth of information and it is very thorough and well put together. There is also a corresponding Facebook group with over 20,000 members that has been hugely helpful with specific questions I’ve had along the way.
Here’s how our personal travel hacking strategy has shaken out:
I opened a Chase Sapphire Preferred card (Please use my referral link if you're interested in opening one yourself!) in February and received 50,000 points once I met the sign up bonus ($4,000 minimum spend within 3 months). We tailored our spending to channel everything we could through the card. The only things we don’t pay with our credit cards are our mortgage and a few certain bills that won’t allow us to pay via a card. (Depending on your spending habits and whether or not you can pool two people’s spending together, it may be a wise idea to wait to open a card when you know you have a large expense coming soon.) Once we received the first bonus, we opened a second Chase Sapphire Preferred card for Leanne and channeled all spending through that account: Another 50,000 points (plus the regular accumulation of points via spending). I’ve since opened a Chase Ink Business Preferred card (If you're a business owner and are interested in opening this card, please use my referral link!) and am nearly at the minimum spending required for an 80,000 point bonus. All totaled, we’ve earned over 230,000 points in about 9 months. And we just started spending them!
We just booked a round-trip ticket for the two of us to Cabo San Lucas for 70,000 points (35K each) and $155 in taxes/fees. (That’s the almost free part I’ve been referencing. Also, international trips have higher taxes and fees associated than domestic travel.) The cost of those tickets without points would have been $1,552, a savings of $1,397! (I do think you could find this particular flight for cheaper if you booked further in advance, had flexible dates, and waited for deals to show up on services like Scott’s Cheap Flights.) I don’t know about you, but this makes my inner (and outer) finance nerd do back flips! I mean, why pay thousands of dollars to travel when you can do it for this cheap?!
We have plans to book another flight soon using points (a special girl’s trip Leanne is going on to Sonoma). I expect that redemption to cost anywhere between 22K and 35K points, roundtrip AKA less than the amount of points you would earn from a typical sign up bonus!
The most common question I’ve heard regarding travel hacking is:
“Won’t opening multiple credit cards negatively affect my credit score?”
In the short term, maybe a tiny bit. In the long run, not much at all. In fact, if you’re actively using credit cards (and paying them off in full and on time), your credit score may get a nice boost! One caveat: I would not suggest opening a bunch of new credit cards if you are about to make a large purchase (like a house). Also, if you’re credit score is in bad shape, I would recommend doing some work to improve that before starting with this system.
Again, there’s a lot to know about travel hacking. There’s subtle ins-and-outs (namely centered around redeeming points for maximum value) to learn and I highly recommend the Travel Miles 101 course I referenced earlier. That is, by far, the most in depth writing I’ve seen on the subject. If you read and watch all of that content, you’ll have all the information you need to start your own award travel hobby! I would also recommend reading The Points Guy's blog.
I believe that traveling the world is the single most important thing you can do. This is how to do it for (nearly) free. What are you waiting for? Get out there and live some life!