If you’re looking to travel the world on a budget – or even travel for free – using credit cards to start travel hacking is the way to do it!
By taking advantage of sign-up bonuses and using reward points to book nearly-free flights and hotels, you can save thousands of dollars on your next trip. In this article, we’ll show you how to get started with travel hacking and teach you everything you need to know about earning free flights and hotel stays.
So what are you waiting for? Follow the steps in this guide to start travel hacking with credit cards, and then pack your bags!
6 Credit Card Hacks to Save Money on Travel
1. Apply for a credit card with a sign-up bonus
One of the best ways to eventually get a free flight is to sign up for a credit card with a generous sign-up bonuses.
Many cards offer bonus points or miles for signing up, and some even offer a bonus for spending a certain amount of money within the first few months – this is called a “minimum spend” or “minimum spending requirement.”
Decide what kind of points and miles you want to earn
There are many types of points out there that you can earn with credit cards. But not every airline and hotel will take the same points and miles. So it’s important to know what kind of points you want to earn.
Airline points and miles
These are points that are offered directly from airlines. Some examples are American Airlines AAdvantage miles – which are affiliated with Citi credit cards – and Delta Airlines SkyMiles – which are affiliated with American Express cards. Airline rewards credit cards will earn you points and miles with a single airline, and cannot be transferred to other airlines.
Hotel points and miles
These are points that are offered directly from hotels. Some examples are Hilton Honors points – which are affiliated with AmEx credit cards – and Marriott Bonvoy points – which are affiliated with Chase credit cards. Like airline rewards credit cards, hotel branded cards will only earn points from that hotel chain. The points cannot be transferred to other hotels.
Transferrable points and miles
Credit cards that earn transferrable points and miles include Chase, Citi, American Express and Capital One. The points earned on these cards can be transferred to travel partners to earn the best value per point. For example, you can transfer Capital One points to Singapore Airlines; you can then book tickets through Singapore Airlines for either their own flights or for flights in the same airline alliance. In general, transferrable points are the most flexible and most valuable – but airline and hotel points cards can also offer great bonuses!
Find a card with a good sign-up bonus
The easiest, fastest way to earn rewards points and start travel hacking is to earn a sign-up bonus. These are the points and miles that banks offer as an incentive to sign up for their card.
For example, at the time of writing, Chase is offering 75,000 Chase Ultimate Rewards points for their Chase Sapphire Preferred card.
Meet the minimum spending requirement
Once you’ve applied for the Chase Sapphire Preferred card we’re using as the example here, the spending requirement that Chase has established to get these points is $4,000 in three months.
If you meet that minimum spend, Chase will give you 75,000 bonus Chase Ultimate Rewards points. A pretty great deal!
Understand the annual fee
Keep in mind that most cards will have an annual fee associated with them – in the case of this card, it’s $95 per year. Just make sure that the value of the credit card points being offered exceeds the annual fee.
Chase Ultimate Rewards will give you a minimum value of $750 (but when used for travel rewards can be much more valuable than that), so this significantly offsets the $95 annual fee.
If traveling internationally, avoid foreign transaction fees
Foreign transaction fees are sometimes charged by banks when you make a purchase in a country different from your own.
You don’t have to physically be in the other country to be charged these fees – I’ve been charged foreign transaction fees for online purchases! If you are traveling internationally, you will save a lot of money by choosing a card that states that it doesn’t charge foreign transaction fees.
2. Use your credit card for everyday purchases
In order to meet your minimum spending requirement, you will likely need to use your new card for your everyday purchases. If regular travel is one of your goals, you will get the best bang for your buck if you put all eligible purchases on credit cards that allow for earning points.
Many credit cards offer rewards for spending money on things like groceries, gas, and dining out. So make sure you use your credit card whenever you can to maximize your rewards.
Spending on irregular purchases
Occasionally you will have an irregular large purchase that helps you to meet your minimum spend or earn bonus points. This is a great way to maximize your points earnings.
Some examples include:
Medical expenses, such as dental work
Holiday spending on gifts
Home repairs or redecoration
Car repairs or car registration fees
Regular spending
Most of our spending comes in the form of charges we make regularly, such as grocery shopping. Make the most of your regular spending by doing the following:
Move your utility payments to your card (if the company allows for card payments)
Pay your rent or your mortgage with a card (again, if the company will take a credit card)
Charge your monthly entertainment services, like Netflix or Hulu, to your card
Purchase all your groceries, household items, and restaurant trips to your card
Make sure to track your spending
Using a credit card this way means that you have to get used to using your credit card like it’s a debit card. That means only spending what you actually have the cash to cover.
You must never go into debt in order to meet a spending requirement, or charge more than you pay off in full! I have never paid interest charges or late fees on my card, because I always make sure that I am only spending what I can afford to pay off every month in full.
3. Be aware of your credit limit and credit score
It’s important to be aware of your credit limit and make sure you don’t go over it. If you do, you could end up incurring expensive interest charges. So be mindful of your spending and make sure you stay within your budget.
Travel hacking with credit cards is a long-term strategy requiring careful care your personal finance, and you’ll want to open multiple cards – the best way to ensure success is to keep your credit score high.
So, watch for things like foreign transaction fees and recurring subscription charges that could cause you to go over your limit.
Factors that impact your credit score
Payment history – Make sure that you regularly pay your bills on time
Amount of debt owed – Only charge what you can afford to pay off that same month
Length of credit history – This is an aggregate of how long you’ve had your cards open, so don’t close cards that you no longer want! It shortens the length of your credit history.
New or recent credit – Limit your card applications to every 90 days or longer
Debt to credit ratio – Banks like to see that you have used only a small percent of your available credit
There are other factors that impact your credit score, but these are the most important and the ones that have the greatest impact on your score. For travel hacking, you want to maintain good credit – ideally a credit score of 750 or higher, in order to qualify for the best travel rewards credit card for you.
4. Pay off your balance each month
I truly can’t stress this enough – in order to be a travel hacker and get regular free travel, YOU MUST PAY YOUR FULL BALANCE EACH MONTH. Am I yelling?! Yes, I am!!
Don’t carry a balance – ever
Carrying a balance on your card will incur interest charges on your purchases. Interest charges will wipe out any value that your credit card rewards might offer. Similarly, late charges that are incurred if you miss your payment due date will be more than any of your points are worth.
Use your credit card like a debit card
Use your credit card like a debit card and track your purchases to ensure you have enough cash to cover your monthly bill. Set up auto pay on your cards so that you simply can’t forget to pay the statement balance on the due date. It’s vital that you keep track of your spending if you are to get any value out of this hobby.
Interest rates shouldn’t be an issue
The only thing that I don’t keep track of when it comes to my cards? Their interest rate.
If you are travel hacking responsibly, you should never pay interest. When you pay your full statement balance each month, interest is never charged. So you never need to worry about your interest rate.
5. Take advantage of bonus spending opportunties for extra points and miles
Many credit cards offer bonus points or miles for spending money in specific categories, like groceries or travel. So make sure you take advantage of these bonus categories whenever possible to maximize your rewards.
When accruing points for travel hacking, you’ll want to go beyond the welcome bonus, and use shopping portals and bonus categories to continually earn points.
Bonus categories
Bonus categories are specific to each card, but in general they will offer you a multiplier on points per dollar spent.
For example, a card might offer 3x points per dollar spent on groceries. Or another card might offer 3x points when you use their card at a restaurant.
One great way to keep track of which cards earn you bonus points in specific categories is the MaxRewards app. When you list your cards in this app, it will tell you which bonus categories the card offers, and help you decide which one to use for your purchase.
Shopping portals
To earn even more points, use a shopping portal or cash back website before you shop online.
Sites like Rakuten provide links to online shops that you likely use regularly, and will give you a percentage back on each purchase. With Rakuten, you can choose to earn your rewards as American Express Membership Rewards instead of cash.
Most airlines have shopping portals as well. For example, you can use the United Airlines MileagePlus Shopping site to earn United points when you click through before you shop at your favorite stores.
I recommend using CashbackMonitor.com to check which sites will offer you the best rebate depending on the store you’re planning to shop with.
6. Use a co-branded credit card for travel expenses
A co-branded credit card is a card that’s affiliated with a specific hotel or airline chain. These cards often come with generous rewards programs and discounts on travel expenses. So if you’re planning a trip, be sure to check out the co-branded cards offered by your chosen hotel or airline chain.
As discussed above, non-transferrable hotel and airline points can be earned by using a co-branded card. Unless you are working on meeting a minimum spend, it’s almost always best to use a co-branded card if you are staying at that specific hotel or flying on that specific airline.
Co-branded credit cards will typically give you a great points multiplier when you use the card to book their hotels directly.
For example, at Hilton you can earn up to 12x points when you use one of their credit cards to book your room through their website. If you spend $1,000 on hotel nights, that’s 12,000 points towards your next stay!
Using credit card rewards has been a major game-changer for me when it comes to affording travel. For the cost of an annual fee, you truly can get a free flight, hotel night or rental car.
The average consumer will earn a few points here and there, or maybe an elite status with a hotel. But once you know the secret to travel hacking for consistent travel rewards, you’ll be able to redeem points for regular trips to wherever you want to go.
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