What is Travel Hacking? The Basics…

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Travel Hacking Strategies are strategies that earn miles at a highly accelerated rate and therefore earn free travel at a much quicker rate then normal spending would earn, or using means to find deeply discounted travel.

Hacking, in general, is altering something to make it more useful to the person performing the hack. Computer hackers will hack computers to make them work better for the hacker, car hackers will modify their cars to make them perform better, and travel enthusiasts will hack certain aspects of travel to make it work better for them. Hacking has had a bad wrap, because there are a lot of people who use their hacking skills for bad things. So the word “hacking” should not bring about thoughts of bad things. There is a lot of hacking that isn’t bad.

cash-or-credit-words-on-a-signpostThe most basic, very low level, travel hack is to use an award credit card for every purchase you can. You earn points over the year, and those points transfer into free nights at a hotel, or an airline ticket, or cash back in your pocket. I would guess that this is the most used method of travel hacking, but most true travel hackers would laugh at the thought of this even being called a ‘hack’. It is just so basic. This is the level I have been using for over a decade, up to last year.

Next level up might be paying bills with your credit card. You are probably going to reach the beginner level here. Some bills will allow you to pay with a credit card (cell phone, home phone, internet provider, cable/dish provider, etc), and some don’t (like your mortgage, car lease, taxes). There are ways to pay your mortgage or car lease with a credit card, and earn extra points for those larger payments – but this takes a bit of research. Once you find ways to pay bills with a credit card, especially the ones that don’t take credit card payments, you have probably reached the first step into becoming a real travel hacker… your first step onto the travel hacking train. Why pay my $3,000 mortgage from my bank account, if I find a way to pay with a credit card, I can earn 3,000 miles a month? That is 36,000 more points a year! BETTER YET, pay it with the right credit card and earn 3x or 5x bonus points. That is 15K points a month or 180,000 a year just for paying my mortgage! Yes, it’s possible. In fact, I bet there are people out there that have found ways to earn even more points.

award-shark-credit-cardDuring this ‘beginner’ stage you are researching and find that there are better ways to make your normal spending habits earn you more points/miles. You probably know that you can get huge point bonuses by applying for a particular credit card. Why not double up and have your spouse apply for the same card? Or what about applying for 2 or 3 different cards at the same time, or … “WHOA! Hold on! This is going to trash my good credit! Let me off of this train!” No problem. This is the sentiment I have gotten from my friends and family once I told them how I am doing. They are curious, but hesitant, just as I was when I started. It should be noted that one of the most important things to me over the last 20+ years since high school graduation was my credit score – it has always been very high, and my venture into travel hacking has actually increased my score. Which is why we need to stop here and have a quick discussion about whether travel hacking is something you should do.

First, if you are carrying credit card debt, it is my opinion that these travel hacking methods may not be in your best interests. You should really have spending under control, and be able to pay off your credit card debt every month. Many others may have different opinions, but that is where I stand. Concentrate on paying off your credit card debt, then decide if you want to get into this arena. Second, you need to be comfortable with your finances. If you are struggling to pay your bills each month, then opening credit lines could be tempting – and that would be a fail. Third, if you plan to get a mortgage or car loan in the near future – refrain from applying for a bunch of credit cards. While you may see that your credit score goes up, the activity of opening multiple cards in a short amount of time doesn’t necessarily look good to banks looking to give you a big loan. This credit activity does fall off of your credit report in a relatively short amount of time, but it’s best to know what you are doing before you do it.

Credit card applicationOkay, so we had to stop the train for a minute to let a few weary passengers off. But back to the basics. We were talking about opening multiple cards at the same time to reap the huge bonus points from each card. Many call this an AoR (or “App-o-Rama”). Many will apply for several credit cards at the same time. Why apply for one 50,000 credit card, when you can diversify and open 3 different cards for 150,000 points. Do this a few times a year and you can earn several hundreds of thousands of points. Yeah, this is the next step. A beginner should really research before applying for multiple cards. There are downsides: temporary drop in credit score, could limit the ability to get a mortgage in the near future; and upsides: longer term increase in credit score, tons of award points up front, and new avenues opened to make better spending strategies. Spending strategies…

Now you have applied for a few new cards (hopefully strategic ones). This has opened up new ways to earn points for normal spending. Use one card at the grocery store to earn 3x bonus points, use another at the gas station to earn 2 or 3 times bonus points, use one for business purchases that earns bonus points… the list goes on. Why spend at 1 point per dollar when you can earn bonuses of 2-5 times as many simply for using a different card at that merchant? If you thought you were doing good putting all of your normal spend on your credit card to earn points, now you are making 3-4 times as much by simply using different cards – you are starting to roll in the points. If you had 30K a year in normal credit card spending earning 30,000 points, now you aren’t doing much different and earning 100,000 a year? Wow.

Well, this beginner train is coming to a stop. I am still trying to decide if I want to work on methods that are on the intermediate train, but I am happy with riding on the beginner train. I earn enough awards to meet my needs and I am happy right where I am at. I know there is an advanced train as well. But it is unlikely you or I will never see it. It is highly secretive, and shrouded in mystery so it might as well be invisible. Riding on an invisible train would make me sick anyhow.[/fusion_builder_column][/fusion_builder_row]row]

By | 2017-05-18T12:46:51+00:00 March 17th, 2015|The Basics|0 Comments

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