In the last few years, I have developed a case of “wanderlust”- a strong desire to travel and gain new experiences.
In early 2015, one of my best friends “solo” traveled throughout Argentina for about a month. The trip changed him (for the better), and his experience inspired me to make travel a priority for myself.
Due to my commitment to pay my student loans ASAP, I was (and still am) on a tight budget. I needed to find a way to travel for cheap because I didn’t want to waste my 20s without seeing the world because of Student Loan debt. Through research, I discovered the world of travel hacking.
Introduction to Travel Hacking
What is travel hacking? In simple terms, it involves using credit cards, airlines, and hotel reward programs to earn discounted/or free travel. Travel Hacking will allow you to have those “once in a lifetime” experience because the bulk of the costs (Flights/Hotel/Ground Transpiration) can be minimized or completely free. If you have a credit card that doesn’t allow you to earn (travel) rewards you are missing out on tremendous value.
You can use Airline and Hotel Rewards Programs to help earn rewards as well. However, unless you travel for business regularly, it is tough to gain enough rewards to make it worthwhile.
Before you start daydreaming about your next trip, you should know that there are requirements to start this hobby.
Requirements
1. A GOOD Credit Score
You will need at least one credit card to start travel hacking. It is essential that you have proper credit as the best credit cards won’t approve you for their cards without a good score. For those who aren’t aware your credit score calculates by the following:
35% Payment History
30% Credit Utilization Rate (how much you use of your total credit line)
15% Length of History
10% New Credit
10% Type of Credit
Check your score free on Credit Karma or Credit Sesame. Both sites are free and have great information to improve your credit score. If your credit score is poor or mediocre, first focus on paying off all your debt. Then you can start with a starter credit card with no annual fee. Make payments in full on time each month until you improve your credit score. When your credit score is improved, you can pursue better options.
2. Able Pay your Credit Card off in full (Statement Balance) each month
It is a requirement that you are responsible and don’t accumulate debt. Pay your balance on time and for the full amount each month at minimum. If you are unable to spend within your means and pay off the balance in full each month, you should consider using cash or debit and not pursue Travel Hacking.
3. Able to meet the Minimum Spend Requirements to earn the Credit Card Bonus points
Meeting the Minimum spend requirements might be the most important factor to become an efficient Travel Hacker and quickest way to earn free travel. The main reason that we use credit cards is that the best travel credit cards offer lucrative sign-up bonuses. You need to be able to meet the minimum spend requirements to gain best rewards.
When I signed up for my first travel credit card, I stopped using my debit and put everything I could on my credit card. That meant food, gas, bills, and all my every day expenses. I was also lucky to discover that I’m able to put my student loan payments on my credit card for free, check out my guide Paying Federal Student Loans via Credit Cards. Please note: All credit card spend should always be paid off in full each month. By paying my everyday expenses and my student loans via credit card, I was able to meet the minimum spend very quickly.
Common Questions
How will Credit Cards Affect my Credit?
When you apply for a new card, the credit card companies perform a “Hard Inquire” on your credit. Hard Inquires could lower your score by a few points in the short term but can improve over time (depends on all areas of your credit score listed above). In 2015 I applied for the Chase Sapphire Preferred and Chase Freedom Card on the same day. By applying on the same day, I only had one Hard Inquire on my credit and didn’t have any adverse effect on my score.
As long as you make on-time payments and keep your credit utilization rate low (Recommend under 10%), your credit should improve. Since my first travel credit cards in early 2015, my credit score has improved to the high 700s. My score improvement is a combination of paying down my student loan debt, making on time (in full) credit card payments, keeping my credit utilization % low, and improving the length of history.
Tip: Instead of canceling cards with annual fees, you can downgrade to a free card (If possible). Downgrading rather than canceling improves your length of history, and you avoid paying any annual fee. I downgraded my Chase Sapphire Preferred card in October to a Chase Freedom Unlimited card and avoided the $100 annual fee.
How Many Credit Cards do I need?
It’s entirely dependent on your personal preference and comfort level. You need to be able to meet the three requirements mentioned above. For people just starting out, I would recommend one card and see how it goes for a year.
I don’t like Traveling, can I get Cash back?
Sure, depending on the credit card you have. For Airline sponsored cards (United, American, Southwest, etc.) you won’t be able to get cashback as the bonus is only for the particular airline miles. However, cards from Chase, Amex, Capital One, etc. are usable for cash back. If you have a travel card and are only using it for cash back you are losing value as the majority of the time you can gain more rewards via travel
My Favorite Travel Credit Cards
My favorite credit cards are Chase branded cards. Mainly because they are flexible in that you can transfer to over 11 travel partners; such as Southwest, United, British Airways, Hyatt, Marriott, Ritz-Carlton, Air France/KLM, Korean Air, Singapore Airlines, Virgin Atlantic, and more. Because you can transfer to many different travel partners, you can shop and compare the best deals. Chase also has its ultimate rewards portal where you can book travel using points on at a 1.5 cent per point ratio.
To have access to transfer to travel partners and Chase Ultimate Rewards portal you have to have a premium Chase card (has an annual fee). Premium Chase Travel Cards include Chase Sapphire Reserve, Chase Sapphire Preferred, or Chase Ink Business Preferred for example. However, if you have free cards such as Chase Freedom* or Chase Freedom Unlimited* you can transfer points earned from those cards to the premium cards that have the better benefits.
Amex and Citi offer similar flexible credit cards, but I think Chase gives you the best value.
Below is the YouTube video that convinced me to go with Chase Travel Credit Cards back in 2015 (please note: he created this video before the Chase Sapphire Reserve came out)
BEST Credit Card system for getting FREE Flights (2015)
Current Travel Credit Cards
My current primary card is the Chase Sapphire Reserve. Perks include:
- It offers 100k points sign up bonus if you spend $4k in 3 months.
- You get $300 travel credit every calendar year on travel (includes flights, hotels, taxi/Uber/Lyft, parking, etc.).
- It has a $450 annual fee, but with the $300 travel credit each calendar year it offsets the annual fee if you use it ($300 2016 + $300 2017 – $450 = $150 ahead).
- 3x points on travel and restaurants.
- $100 credit to get Global Entry and TSA Precheck.
- Access to Priority Pass Lounges.
If you can afford the annual fee and meet the minimum spend this card has the best value of all travel credit cards (Over $2k in value according to this). Check out the full list of Chase Sapphire Reserve Perks here.
I also use the Chase Freedom* (5x point categories and 15k point bonus if you spend $500 within three months) and Chase Freedom Unlimited* (1.5x points on everything and 15k bonus if you spend $500 within three months). I downgraded my Chase Sapphire Preferred to the Freedom Unlimited card when I got my Sapphire Reserve card in September. The Reserve card has upgraded perks from the Preferred card, and I was able to avoid the annual fee by downgrading. Both the Freedom and Freedom Unlimited are free, and I can use the points gained from them and transfer to my Reserve card to get the premium Chase benefits.
Now with these three cards I put all travel/restaurant purchases on the Sapphire Reserve Card, anything that is in the 5x category (currently department stores) on my Freedom Card, and everything else on my Freedom Unlimited (1.5x points on everything). This system makes sure I get the max number of points on my everyday spending.
For beginners wanting to travel, I would recommend the Chase Sapphire Preferred Card. Its first year’s annual fee is waived, and you get 50k points if you meet the $4k minimum spend in 3 months. It is a premium Chase card, so you get great benefits. Check out all the advantages here. If you are feeling good, consider pairing with the Freedom or Freedom Unlimited to an additional sign up bonus (50k for Preferred + 15k for Freedom or Freedom Unlimited).
Some others on my list for the future
Hyatt Visa Signature offers two free nights at any Hyatt property for $1k spend in the first three months. Two free nights at any Hyatt property means you can stay at the Park Hyatt Maldives (A top Hyatt property in the world) for example.
Southwest Companion Pass is also very lucrative. You get to pick someone to fly free (on every flight with you) with you for the remainder of the calendar year and also for the following year. You would be able to book flights for yourself with points you earned and bring your companion for no charge. Southwest allows you to change your companion three times too!
To obtain the Companion Pass you have to earn 110,000 points or take 100 flights ( good luck with that!). The most efficient way is to earn 110,000 rapid rewards points. Earning the points can be accomplished by signing up for the Southwest Plus ($69 annual fee) and Premier ($99 annual fee) credit cards. At some times in the year, they offer bonuses of 50k if you meet the minimum spend for these cards. So if you were to meet the minimum spend on both cards you would have (50k plus card + 50k premier card + 4k spend (2k minimum spend each) = 104,000 points so you would need 6k more points to achieve the companion pass.
Take a look at the best travel cards today here.
Trips through Travel Hacking
Since 2015 I have earned over 215k points with the through Chase Sapphire Preferred, Freedom, Sapphire Reserve credit cards. 160k points came from sign up bonuses alone! With these points, I have been able to book trips to Denver, Portland/San Francisco, and Seattle thus far. I am also going on another pacific northwest trip in December and Europe in 2017 (flights paid with points). If I can do this making an average income and paying debt down aggressively, anyone can. It comes down to what your priorities are.
Europe has been on my bucket list for a long time. After researching, I recently booked my flight to Europe for a total of $128. I will be flying from Austin/Chicago to Rome, then Florence to Paris and back to Austin in the first half of 2017. The cost of this trip if I were to pay out of pocket would be over $1750 per person!
My Favorite Resources
Complete the travel miles course on http://www.travelmiles101.com/ and join the Facebook group
Compare the best Travel Rewards cards on https://cards.madfientist.com/
Subscribe to the Points Guy
Join Forums:
*This post includes affiliate links. Please see my disclaimer page for full details.
Gary is the author behind Debt Free Climb, a blog that shows how to live intentionally, pay off their debt, build a side income, and travel the world
Gary's favorite free financial tool he’s been using since 2017 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments.
His favorite way to save automatically is Capital One Performance Saving, a bank that allows him to create multiple high-interest savings accounts and create an automatic savings plans for each account. He uses these features to meet short and long term savings goals.
His favorite way to save money on car insurance is by using Root, an app-based car insurance service. He saved $240 this year after switching from Geico to Root
- DebtFreeClimb v2- Our Debt Freedom Progress Report - June 17, 2020
- Trip Report: Our Honeymoon (not on a budget) - February 7, 2020
- My 2019 House Hacking Review - December 26, 2019
Gary, thanks so much for everything on this blog! It’s really been an inspiring experience to read your posts. My debt is that much more manageable. Let me know next time you’re back in Portland, I’d love to go get tea with you! 🙂
Thanks, Abby! Glad to hear it 🙂