I just booked a flight from San Francisco’s SFO to New York’s JFK and the total I spent for this flight came out to $2.50. What if I told you that you could do the same?
I know that sounds a bit hard to believe, but I promise you it is true and it wasnt due to a Priceline glitch. Today I’m going to show you how to you can do the same.
It’s called travel hacking and it just might change the way you travel for the rest of your life. Before we get started I want you to know that this is a very comprehensive series designed to walk beginners through through the entire world of travel hacking.
It turned out to be a lot longer than originally planned so this is the first in a multi part series which currently looks like this:
- An easy to follow introduction and explanation into travel hacking along with some answered questions.
- A detailed walkthrough from where you are right now to purchasing a ticket for $2.50 (with screenshots).
- Tips and hacks to get more out of your miles and some really awesome resources and tools.
Now let’s get started
Travel hacking is essentially finding ways to travel for super cheap. That’s it. There are tons of ways to do it, but today I am referring specifically to traveling with airline miles.
Airline miles can be exchanged for free flights around the world, but you will usually have to pay for taxes and fees, hence the $2.50. The amount of miles will vary depending on the flight, but they usually start around 15,000 miles.
The actual miles it costs to get to your destination will vary, but as an example you can book a flight through United (or one of its partners) from North America to South America for 20,000 miles and $5 for fees. That’s crazy.
Traditionally you would earn 1 frequent flier mile for every 1 mile you fly. You can also earn miles on your credit card, usually 1 mile for every dollar you spend. This is the slow method and maybe some day you can earn enough to fly to Ohio.
Then there’s the fast way using credit cards bonuses that can actually earn you earn over 300,000 miles in 15 minutes.
After you pick your jaw up off the floor, we’ll continue.
True story, it is actually possible to get those kinds of numbers that fast, but it requires some serious work and I dont necessarily recommend it for the beginner. For now let’s just get our feet wet, and see how we like it.
For those of you that want to step on the fast track and start flying around the world first class, Ill provide some links at the end just for you. I have been doing this for roughly a year now and the results are amazing.
In the first 3 months I earned over 100,000 frequent flier miles, I have been reimbursed for travel expenses totaling up to over $500, and now I am flying to New York in November for the price of 10 quarters (and 30,000 miles that I got for free).
Also keep in mind that I didnt change my spending habits and my credit is actually higher than when I started.
How it works
Basically, credit card companies want more people to sign up so they offer bonuses as incentives. In the case of travel cards, the credit card companies partner with airlines to offer big mile bonuses.
In order to receive these bonuses, you have to open an account then spend a certain amount on that card within a certain amount of time. The bonus will vary depending on the card, how much you have to spend, and if there is an annual fee.
You might be thinking that the card you already have offers miles too, but not like the cards that Im talking about. The cards Im talking about are tailored for travelers. They dont give you cash back (for the most part), you dont earn points to spend on random stuff, and you dont get discounts at gas stations.
Instead, you get deals that you really care about like: 2 airline miles per dollar spent (most regular cards offer 1 mile), preferred boarding, 0% transaction fees on foreign transactions, and best of all ridiculous bonuses for airline miles that can range from 10,000 to 50,000 miles or more.
What are airline miles exactly?
Maybe you arent like me and you were born with the complete understanding of what an airline mile is. Cool! But I know for me, the concept was a bit confusing.
Are they actual miles a plane flies so If I have like 500 miles I can fly from SFO to LAX? …No.
Think of them more like travel credits. They are very similar to the points that other credit cards use for things like camping tents or rocking chairs, but these credits are specific for travel.
So are they different than other points earned from credit cards? Yes, because they are AIRLINE miles. They are not limited to the crappy marketplaces that credit card companies offer for point redemption.
There are some other benefits and neat things that you can do with airline miles, but like I said this article is just to introduce the beginner. We’ll touch on more advanced stuff later, but for now…
An easy to follow rule of thumb is that 10,000 miles is kind of like $100 for travel.
So a card that gives you 30,000 miles after you hit their spending requirement is basically saying:
“Here. Have yourself a one way ticket to Europe on us. You’ve earned it!”
NOTE: Some cards do not give you actual airline miles, but instead give you travel points. These credits can be cashed in for various things including reimbursements on travel related expenses AFTER the fact. They arent as good because they cannot be transferred and will not be usable after the account is closed, but sometimes you can exchange them for standard airline miles so theyre still cool.
So which card do I get?
There’s tons of travel cards out there to choose from, but getting the right card is very important. I cant tell you which one to get because the best card for me may not be the best card for you. Spending habits, current credit, convenience, and travel goals are just a few of the variables that will play into your choice for the right card.
The application process is super easy and you can have an answer within 5 minutes. Sometimes they have to get back to you in about 10 days though. Here’s what an application looks like.
I created an awesome spreadsheet of every travel card I’ve found separated into 3 tiers based on the annual fee (free, mid-range, and high), listed in descending order, highlighting their key points, and includes application and login links. You can have your own copy if you share this article by clicking here.
Here are the things that I take into consideration when I decide one which card I will get next. They are more or less in this order:
- Is there an annual fee? If so, is it waived for the first year? I dont like to pay up front, and I usually cancel the card before I have to pay the annual fee anyway.
- How many bonus miles am I lined up to get? This is the reason we are here after all. More is better
- How much do I have to spend to get that bonus and in how short of a time? Does this align with my NORMAL spending habits? I dont always average $1000 per month so…
- What are some of the other perks or bonuses available by having this card? Many cards offer some nice extra miles bonuses by transferring an existing credit card balance onto the card, but I rarely transfer so it doesnt play into my decision much.
- What is the foreign transaction fee? There is a chance that I will be using it while abroad.
For those of you that just want the industry standard, here are two of the most commonly recommended cards from other travel hackers:
Starwood Preferred Guest from American Express: Earn 10,000 Starpoints after your first purchase on the Card and an additional 15,000 Starpoints after you use your new Card to make $5,000 in purchases within the first 6 months. $0 intro annual fee for the first year, then $65
Chase Sapphire Preferred: Earn 40,000 bonus points when you spend $3,000 on purchases in the first 3 months. No foreign transaction fees. $0 the first year, then $95.
Be aware of when you might have a large purchase or payment to make (such as a new computer or car maintenance) and use this as an opportunity to get a card with a higher spending requirement because these usually have better bonuses.
There are also some pretty clever ways that people have come up with to meet the spending requirements without actually spending that much money. I will get to those later. For now let’s just keep it simple.
I found a card, whats next?
Unless you decide upon a card that awards points just for signing up, then you’re going to have to spend some cash now. Your goal should be to spend just enough to satisfy the spending requirement for the card, and that’s it. You might get a few extra miles for spending more, but that is the slow way and those extra dollars could go towards another card.
The easiest thing to do is just spend as much as you normally would on thing that you would normally buy, but pay special attention to put everything that you can on your travel card. You can get SUPER efficient by tracking how much you have spent on it, then meet the spending limit exactly, but that can be tedious.
In any case, you’ll be surprised at just how quickly those spending requirements are met when you put every expense possible on the same card instead of spread out. Later on I will show you how to easily hit those requirements.
You can put all sorts of things on your card; rent, student loans, EVEN TAXES.
After you meet the requirements and get your miles, you can sign up for a new card to get even more points, cancel the current card, or hold onto it if it gives good rewards.
One thing I dont recommend doing is spending MORE than you normally would in order to meet higher spending requirements. This kind of defeats the purpose of getting flights for free. So try to have a feel for your spending habits BEFORE you get a card, then get one that is appropriate.
Canceling a card
If you end up as addicted to travel hacking as I am then you will eventually have a lot of credit lines open. This probably isnt a good idea because you will have to pay a lot more in annual fees, and you put yourself at higher risk of fraud.
So the best thing to do is to use your card just enough to earn your bonuses, then cancel the account. Here’s a couple things I recommend you do when you cancel a card:
- Pay off ALL of your cards in full and make sure there isnt any credit on any of them. This is important!
- Either cash in all of your miles, or transfer them to an account where they will not be lost after you cancel.
- Cancel over the phone and make sure that everything is payed off. Sometimes there is some residual interest fees.
What about my credit score?
Travel hacking like this requires you to churn and burn through a lot of credit cards, and most people will tell you that this is a fast track ticket to crappy credit.
Well, before even getting started, I did a lot of research into this because I dont want to ruin my credit any more than the next guy. I read tons of posts on it both from travel hackers AND credit experts.
I asked some of the bloggers for their experiences with it. But finally I had to find out for myself, and as with other bloggers, my credit score one year later actually increased from 758 in August 2013 to 769 in July 2014. Here’s a screenshot form my Credit Karma account.
The truth is that your credit will probably take a bit of a hit at first, but if done right, it will actually improve over the long run.
Here’s the facts:
- Your credit score drops any time you have a credit inquiry.
- Any time you apply for a credit card, the company requests your credit history which leads to an inquiry.
- Your credit score strengthens as you maintain a longer credit history without issue.
- Your credit score also strengthens as you open up more lines of credit without issue.
Your credit score drops if you close a line of credit.<– That’s not true…which is why I scratched it out 😉
- Your credit score drops any time your credit ratio increases.
Let me explain that last two points because where there is confusion. People think that when you close a line of credit, your credit score drops. This isnt necessarily true.
Your score only drops if closing that line of credit affects your CREDIT RATIO. But what’s your ratio?
Your credit ratio is the amount of credit you currently owe (whatever you have spent on your card that you have not yet paid off) vs. your total potential credit (the sum of your maximum allowed credit for all your cards).
Here’s an example: let’s say I have two cards and their maximum credit allowance are $5,000 each, or $10,000 total. Then I use one to buy some sweet new soccer boots that cost $100. Well my ratio is now at 100/10,000 or simplified to 1/1,000.
NOW, if I close one of those credit lines while I still owe $100 then my ratio become 100/5,000 or 1/500. Simply by closing a line of credit, my credit ratio doubled, and this would result in a drop in my credit score.
Ok, so then closing lines of credit DOES hurt your score, right? WRONG!
Let’s take that same example only this time let’s say that before I closed my other card, I paid off my sweet new boots. Suddenly my ratio before is 0/1000 and after it’s 0/500 which in essence are both 0. The take away is…
ALWAYS make sure you pay off your cards every single month. Especially when you are about to close a line.
Travel hacking is a really cool and fun way to travel for super cheap, but it’s not for everyone. I think that it is definitely worth looking into and at least getting one card to earn a free flight somewhere, but it can get addicting.
If you are already in bad credit standing or if you are looking to make a major purchase within a year then you might not want to do this because your credit will be affected, but as long as you keep paying off all your statements in full every month, then your credit will probably increase over time.
I hope you enjoyed this article. In Part 2 I will walk you through the step by step process on how I booked my flight from SFO to JFK for $2.50. It will cover the card that I signed up for, how I signed up for the frequent flier program, and how I booked the flight using my miles.
Please remember to share it if you liked it, and if you have any questions, comments, or concerns I would love to hear them in the comments.