I was desperate. We only had 4 nights in Jamaica and I had been itching to get there since we bought the flights. Luckily, we used points to buy our flights and hotel. We had a lot of flexibility, which we desperately needed after the trip got delayed due to a TORNADO! I’ll talk about the details about our Montego Bay, Jamaica trip on a future post. But I thought it’d be best for this post to be a quick introduction to travel hacking.
An Intro to Travel Hacking
We planned the Montego Bay trip around December (kinda late) using travel rewards. For the flights, we used Chase Ultimate Rewards points. I had several thousand points from the Chase Sapphire, Freedom Unlimted, and Freedom travel reward bonuses. If you haven’t ever heard about travel rewards I’ll try and summarize the strategy for you. Before we continue here let me throw a disclaimer in. This information will only work for individuals that have good credit card (CC) management habits. If you are not paying your CC statements every month and in full, please skip this article. We’ll be here waiting for you to come back once you’ve figure CC usage! Moving on to Travel Hacking:
- Open a CC that offers travel rewards bonuses
- Banks like Chase, AMEX, Capital One, and others have credit cards with travel reward bonuses. For example, after you meet the minimum spend the bank will award you with 50,000pts which are worth approximately $500 of free travel.
- I typically go to ChooseFI-Reward Credit Cards to stay updated with any new cards, or travel reward bonuses updates. You’ll find a summary on some of the best cards including the bonuses, rating, annual fee, and analysis.
- Meet the minimum spend
- Banks will require to spend a certain amount of money is a specific time frame. For example, in order to receive the 50,000pts, you’ll need to spend $3,000 in the first three months since you opened the card. Once the minimum spend is met, the points/miles/rewards will be credited to your account once the statement closes. Make all of your expenses all in as far in advance as possible, so that you don’t miss the deadline!
- Use your points!
- Once you have your points added to your account the fun begins! To continue with the example, now you’ll have 50,000pts that you can utilize for travel. Typically, you’ll be able to buy travel through your online bank account points portal. Also, banks have alliances with airlines and hotels which allow you to move points you earned to the travel partners. Sometimes, transferring to the travel partner and buying travel directly through them gives you the best bang for your points. Another type of travel rewards is the purchase eraser benefits. With these CCs you just pay for travel-related purchases and then erase the purchase from your statement using your miles.
Don’t let the travel hack you!
Now, in order for this to be a hack and not an additional expense we need to quickly cover how to complete Step 2: Meet the minimum spend. In order to not accumulate additional debt, the hack is to cover your typical expenses with the credit card for which you are trying to meet the minimum spend. If you are going out of your way to try and spend more, this might not be the strategy for you. If you are struggling to meet minimum spends, think about which expenses you can front-load instead of adding expenses. Perhaps you can pay your utilities, insurance, and others for the next quarter or full year instead of the monthly frequency.
Travel Reward Types
As I mentioned in Step 3. there are different travel reward types that can be used in different ways. The travel reward types that I’m most familiar with are:
- Points/Miles Travel Rewards:
- Accumulation: You accumulate points through opening bonuses (strategy discussed above), and then continue accumulating points through general purchases or categories.
- Use: Points/Miles can then be used to buy travel through the bank travel portals. Once within the portal you can search for flights, rental cars, and other types of travel and make your reservations directly through the portal. Many banks have alliances with hotels, airlines, and other travel providers that allow you to transfer your point to these airlines and buy the flights directly with the airline. Verify the point transfer policies as you might not be able to transfer your points back to your account once you have made the transfer to the airline/hotel/etc.
- In this category, we both have the Chase Sapphire, and Chase Freedom. I also used to have the Chase Freedom Unlimited.
- Travel Purchase Eraser
- Accumulation: Similar to the points/miles you accumulate your rewards through CC opening bonuses after meeting the minimum spend and then through your regular purchases.
- Use: This type of travel reward is arguably the easiest one to use. You can just use your CC on travel expenses and once the charge shows on your statement, you can just use your miles/points to erase the purchase. There is one thing to be aware of with this type of travel reward. Not all the expenses that you make on a trip will be coded by the business as travel. Make sure to review your bank’s travel coding guidelines.
Why We LOVE Travel Hacking!
Mr. DMD is actually the one that introduced me to travel hacking many years ago. He creates and plans most of our trips and more times than not we pay for our hotel stays with points. We have focused our travel hacking efforts towards Hyatt and American Airlines, but we have travel loyalty accounts with plenty of other travel providers. Other strategies we are considering are opening some business credit cards, which are known to have very good travel rewards bonuses. Then we are also considering working towards the Southwest Companion Pass. The Southwest Companion Pass allows you to take a partner on any flight free of airline charges (does not include taxes and fees). This can save you a LOT of money if you fly primarily within the US.
Travel hacking allows us to travel all over the world for a fraction of the price, or even free! Travel is the main part of our lives now and it will be a huge part of our life after we achieve FI so we want to try and optimize our travel expenses as much as possible. As I eluded to in our previous post (how we reduced our internet bill) travel is a high-value expense for us. But we also need to save money in order to create our eternal money-making machine. Travel hacking allows us to travel for less so that we can enjoy the journey towards Financial Independence while stile achieving a high savings rate.
Check out our next post where I’ll cover how we arranged our Montego Bay trip using travel rewards. In a future post, we’ll cover how we were able to navigate using the Trip Delay Benefits to cover the additional expenses incurred due to the inclement weather. There are probably many other types of travel rewards out there, but these are the ones I’m most familiar with. Let us know in the comments below what other types of travel rewards you use!
*The content posted on this website does not constitute professional financial advice. Please consult a certified financial planner or investment advisor for professional financial advice*