I set and reached a goal of earning one million miles in a year.
Like most people who love to travel, I have a long list of places to go and things to see. Since I don’t have an unlimited budget to go along with my wanderlust, I’ve had to be creative in how I travel. Sometimes this means not going to my first-choice destination. Other times, it means I compromise a little too much on accommodations or cut a trip short.
Last year over lunch, I was lamenting my never-big-enough travel budget with a friend. She quickly disclosed that she never paid for airfare for her family of four on their twice-yearly international vacations–and often didn’t pay full freight for hotels either. I demanded that she tell me her secret immediately.
Even since that lunch date, I have joined the legions of devoted “travel hackers.” I set, and reached, a goal of earning one million miles in a year.
What Is Travel Hacking?
In its most basic form, travel hacking involves opening different credit cards to get substantial sign-up bonuses. Many credit cards offer bonuses of tens of thousands of points that can be redeemed for travel after spending a certain amount of money within the first few months of opening the card, often between $3,000 and $6,000 although this varies by card. The credit card holder also earns points by using the credit card to make purchases.
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Why Not Just Get Cashback?
Since I started travel hacking, the most common question I get is why I bother instead of cash back.
One reason is that points used toward travel are often more valuable than their cash value. For example, although I could get $100 cashback from my credit card, if I redeemed those same points for travel I might be able to get $150 or more in value for those same points. Travel hacking groups are full of people sharing their wins by redeeming their points. A flight that costs $1,000 in cash might cost 15,000 points, which is a redemption of 1.5 cents per dollar. The value of redeeming points varies wildly, but it’s almost always more than the cash value.
Another reason I prefer to use points for travel is psychological. Although I love to travel, I am also thrifty. When I wanted to take a last-minute trip to Paris and London a few months after I started travel hacking, I balked at the price of tickets and immediately decided there was no way I would pay that much. Instead of staying home, because I had enough points to cover my tickets, I went for it and had a great trip I wouldn’t have taken if I had to pay cash. Even though the value of the redemption might not have been the greatest, I took a trip that wouldn’t have been possible without points and I’m happy with my decision.
How to Maximize Points
More advanced travel hackers use some additional strategies to maximize points, although it’s possible to keep things simple. Earning may be a little slower but can still be significant.
Travel hackers can earn even more points by referring friends and family members. People who live in the same house can pool their points. That means it’s easier to rack up points quickly if two players are involved, but plenty of travel hackers rack up points solo and amass a large number of points quickly.
Another way to earn points faster is to pay attention to the bonus categories cards offer. For example, some cards let users earn five times the standard number of points for groceries, office supplies, or for making purchases through the credit card’s portal. This sounds complicated, but it becomes second nature quickly.
How I Amassed My Points
I started by opening an entry-level travel card. At the time I opened the card, the issuing bank was offering an additional bonus for applying at a local branch and also waiving the card’s annual fee. It was a low-stakes way of getting started with the potential for a high reward, so I dove in.
Once I had the card in hand, I started using it for regular purchases. I tracked my spending on the issuing bank’s website. Once I met the spending requirement to receive the sign-up bonus, I sent my partner a referral code to open his own account. We shifted to using his card for our regular purchases. When we reached the minimum spending requirement on that card, he received a sign-up bonus, and I received a bonus for referring him. My partner and I each opened another card using the same strategy.
Then, I discovered that I qualified for business credit cards that come with hefty sign-up bonuses with no annual fees because I earn income from freelance and independent contractor work from different sources. I opened those to cover different business expenses and watched the points add up. If I didn’t qualify for these cards I believe I still would have been able to reach my goal of earning 1,000,000 points, but I may have had to pay more in annual fees.
Additionally (although I wish my expenses were not so high), my regular spending combined with a big bill for home repairs helped me rack up a lot of points. I paid careful attention to which card I used for what purpose to help. For example, one of my cards offers a significant number of additional points when buying groceries, so I was sure to use that card every time I checked out at the grocery store. Another different card issues more points when eating out, so that is the card I reach for when I pay at a restaurant.
Other Benefits of Travel Hacking
There are some benefits of travel hacking beyond racking up points. My preferred travel credit card comes with travel insurance and does not charge fees for foreign transactions so travel hacking has saved me money in those ways. A different card offers insurance for cell phones, which is a nice benefit.
Although I don’t yet have any cards that provide access to airport lounges because they tend to have higher annual fees, my next move will be to open a card that gives me a good sign-up bonus and lounge access. Since I am traveling more, I might as well be strategic about making that travel more comfortable.
Will Travel Hacking Work for Everyone?
As great as travel hacking has been for me, it won’t work for everyone. I am lucky enough to have an excellent credit score. That means I easily qualified for all of the credit cards for which I applied, but that won’t be true for everyone. Starting with a high credit score also means I was not worried about my credit score taking a small hit for opening several cards in a short period of time. That said, I haven’t noticed my credit score go down more than a few points, and so that hasn’t yet been an issue. However, for someone with a lower score, even a few points difference could result in higher interest rates and make it harder to access credit.
I also have enough regular expenses that I’ve been able to spend enough on each card to get the sign-up bonus. While I wish my regular expenses were not so high, I never had to worry about leaving a sign-up bonus on the table. I also had one very large expense this year. I timed the opening of a card with a higher sign-up bonus (and higher spending requirement) to pay that bill. Anyone with lower monthly credit card spending usually won’t gain any benefit if they need to make extra purchases to meet the spending minimum. Rent or a mortgage are the highest monthly expenses for most people. Unfortunately, these usually can’t be paid by credit card at all, or only by paying high fees (negating the benefit), so these expenses shouldn’t typically be considered when figuring out if travel hacking is a good fit.
Travel hacking also requires discipline and organization. It’s important to keep diligent track of your spending and which cards are opened and when. You need to remember which cards to use for which category—this one for groceries, that one for restaurants. You need to consider if your credit score can take the dings from hard inquiries and credit pulls. While some may not find this very difficult, others might not think it’s worth the trade-off. If you can successfully travel hack using points, miles, and credit cards, it can upgrade your travel experience while essentially lowering the cost.