Getting the Most out of Life
Travel Hacking: How to Pay for Vacation Without Gutting Your Savings
Everyday people who leverage financial tools, such as credit cards, to turn their everyday spending into free flights or hotel stays are called “travel hackers.” Travel hacking is much easier than it sounds.
“Many credit card issuers offer sign-on bonuses to get you to sign up for and use their card,” explains John Schmoll Jr., founder of Frugal Rules. “In most instances, they’ll require you to spend a certain amount of money within a given amount of time.”
Travel hackers often need to spend $1,000 to $2,000 within 90 days to earn the bonus. These bonuses can then be used to knock hundreds or possibly thousands of dollars off vacation spending.
Stefanie O’Connell, founder of The Broke and Beautiful Life and a How Money Walks regular, started travel hacking about a year ago when she used her Barclay Arrival World MasterCard sign-up bonus to book a flight from New York City to Germany. That flight only cost her $25 out of pocket.
John got his first taste of using credit card rewards for vacations five years ago, when he and his wife earned enough points to stay in a hotel for free. Their family hasn’t paid full price for a vacation since.
Travel Hacking Isn’t Right for Everyone
Before you start travel hacking, be sure to consider your finances. Taking advantage of credit card bonuses for cheaper travel may sound incredibly enticing, but it can also lead to a downward spiral.
“Anyone who’s ever struggled with or carried a balance on their credit cards should steer clear of travel hacking,” explains Stefanie. “Free travel is no longer free when you fall into the trap of high-interest consumer debt.”
Those with prior credit card struggles aren’t the only ones who should be wary of entering the bonus-offer game, either.
“If having multiple credit cards would be a temptation to overspend, you should not churn cards,” advises John. “I would also not recommend credit card churning to someone new to using a credit card or to someone who is on a tight budget.”
Tips for Being a Successful Travel Hacker
Part of being a successful travel hacker is working within your budget. While some people are able to churn enough to cover their airfare and hotel stay, Stefanie typical only focuses on airfare.
“I firmly believe in only leveraging the spending you’re going to do anyway to travel hack, and because my living expenses are so low, I don’t meet the threshold spending requirements for many of the larger sign-up bonuses,” she says. Stefanie focuses on bonuses that offer miles in exchange for $1,000 to $2,000 spent within the first 90 days of card use.
Another benefit to opening multiple credit cards to churn rewards is the positive impact it can have on your credit score.
“My wife and I really started actively churning about three to four years ago, and we’ve seen our scores go up over that time,” explains John, who has an 820 credit score. His wife has a just-as-impressive score of 830.
“As long as you’re paying off your cards on time, not using up too much of your available credit, and protecting the age of your credit, you should be fine or see your score go up,” says John.
Travel hackers also know that all credit card bonus offers were not created equally. You should always know if the bonus has any restrictions, such as blackout dates or specific airlines. But once you confirm those details, go forth and fly free.