Until recently, I have never tried travel hacking. As a member of the financial independence community, I have not looked favorably at credit cards. I saw them as a way for undisciplined people to spend more than they earn. In my opinion, I saw them as tools that banks use to hack high fees and interest payments out of people who have fallen victim to materialism.
My view on credit was to only borrow when it was a must and to pay it back as quickly as possible. Since I started working full-time, I only used credit when I needed it. However, I knew that having a high credit score was important.
My wife and I both have high credit scores but have not borrowed much. I once had a car loan that I paid off in my early 20’s. When I went to college, I paid cash for my first two years and took out student loans for my Junior and Senior years. My wife and I also took out a home equity loan to remodel our house. That is currently our only debt.
For years, my wife and I only had one credit card. We used it for travel, shopping on Amazon, and for other purchases when a credit card was more convenient than cash. We have always just used a basic bank card that paid 1% cash back.
I did not know if 1% was good or not. I was more interested in using the card when it was required and just paid off the balance every month. At the end of the year, I would get $500 back and just use the rewards money for holiday bills.
The focus of my personal finance management and writing has been saving and investing. My approach has been to focus on career growth, saving as much as possible, and capture average market returns by investing in index funds. Hacking has not been on my radar.
Over the past year, I have started reading more and more blogs about people who are taking two or more vacations per year for free. Since some of the most trusted bloggers promote it, I decided to read more about it. It was not until I attended a meet-up in New York City where a group of bloggers from Rockstar Finance got together. At this event, I got turned on to travel hacking and decided to give it a shot.
The idea of taking a vacation or two per year for free excited me. We travel anyway, so why not enjoy our trips for free. I started to do some research. I also took the Travel Miles 101 online course. Travel Miles 101 is a comprehensive course that explains all that a person needs to start travel hacking. I recommend it to anyone who wants to learn more about travel hacking.
After taking the travel miles 101 class and reading many other blogs, the consensus card to start with is the Chase Sapphire Preferred credit card. The Chase Sapphire Preferred card has a $0 introductory annual fee for the first year. The annual fee after that is $95 per year, but as part of the hack, you set it up to never pay that fee.
So, what do you get with the Chase Sapphire Preferred credit card? If you spend $4,000 in 3 months, you earn 50,000 bonus points. Those 50,000 bonus points add up to some nice rewards. The redemption value is worth $625 in airfare, $625 towards hotels, or $300 in cash.
There are other nice benefits With the Chase Sapphire Preferred credit card. A cardholder will receive 2X points on travel purchases. When you dine out, a cardholder receives 2X points on restaurant purchases worldwide. Every other purchase equals 1 point per $1 spent.
Based on all of the suggestions, I opened a Chase Sapphire Preferred credit card. In order to hit the target of $4,000 to earn the points, I set up all of our monthly household bills to be charged to this card. Since it was November, it did not take long to hit the $4,000 with all of the extra holiday spending.
After I reached the $4,000, my wife opened a Chase Sapphire Preferred credit card. We followed the same plan and used the card for all of our bills and spending. It took us less than two months for us to hit $4,000 on her card.
Now for the fun stuff. It was time to redeem our points. We decided that we wanted to visit Dublin, Ireland this summer. To redeem the points, there is a portal to access the travel section on the Chase Dashboard. It is as easy as booking a flight on any other travel website.
We decided to fly out of Philadelphia (PHL) and wanted a non-stop flight. Based on the value of our points, these tickets were going to only cost us about $150 in out of pocket expenses. Before we booked our flight, I decided to check if there was a cheaper flight out of the Newark Airport (EWR). I typed in our travel dates and a round-trip ticket from Newark to Dublin on Air Lingus was only $605 per ticket. We booked our flights and had points to spare. It was that easy.
I do not know if travel hacking is for everyone. If you are not good at paying your bills every month, travel hacking might not be for you. If you end up with a balance and have to pay the high interest, the credit card company is actually hacking you. You also need to have the required spend to earn the points. If you do not spend enough to qualify, you should not just spend money you otherwise would not spend to just earn points.
Does travel hacking hurt your credit score? I have only opened two cards, so I do not have any personal evidence to share with you. Based on many other blogs, there is minimal change and most credit scores increase over time. The most important thing is paying your balance every month.
If you are responsible for paying your monthly bills and enjoy traveling, you should look into travel hacking. Travel hacking also requires a person to be structured and to know when to close a card before the annual fees will be charged. There are many great travel websites and points tracking tools like awards wallet to make the process easier.
I hope you found this post useful. Moving forward, I will share our experience with every new card we open and hack. Please keep your eye out for round two in the next few months.
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