Travel Hacking Basics Part I: Credit Cards

Part I: Credit Cards
Part II: Points and Miles
Part III: Aspirations, Earn and Burn

I discovered “travel hacking” in 2011 from an article on cnn.com. I had no idea it was an actual thing and I got so excited when I realized what it meant. For those of you who aren’t familiar, travel hacking is basically a way to travel while spending as little money as possible, usually by earning miles and points that can be redeemed for flights or hotels. Since I don’t have a trust fund and work doesn’t send me on travel, the idea of travel hacking was immediately appealing to me. I’ve since spent a lot of time learning and thinking about the best ways to hack my trips and I’ll cover the basics over the next few posts.

Credit Cards

The easiest way to start earning miles and points is to begin by collecting credit cards. Most people are skeptical of this because we have always been taught to somewhat fear credit cards and to protect our credit score. The funny thing is, most people don’t even know what their credit score is based on. For those of you who don’t, your credit score is based on the following factors (in order of importance): 

• Open credit card utilization
  
• Percent of on time payments
  
• Derogatory marks
  
• Average age of open credit lines
  
• Total number of accounts
  
• Hard Credit Inquiries

What this means, is that as long as you pay your credit cards on time and keep track of what you owe, having more credit cards than less can actually help to improve your credit score. Shocking, I know. 

Now that we have that out of the way, it’s time to start earning. There are many credit cards out there that allow you to earn huge sign-up bonuses just for opening the card and spending a bit of money on it during the first few months. For example, signing up for the Chase Sapphire Preferred Visa will net you 40,000 Ultimate Rewards points after spending $3,000 in the first three months. Those Ultimate Rewards points can be transferred to one of Chase’s travel partners like United Airlines or Southwest Airlines on a 1:1 ratio, and can be equivalent to two round-trip domestic flights or nearly one round-trip flight from the US to Europe or Asia. By signing up for a credit card and spending money you would already be spending anyways on that card, you’ve just fought half the battle when it comes to travel - you’re getting there for free!

A lot of travel hackers do what they call “churns”, where they sign up for 3-5 credit cards every 3-4 months, closing old cards from time to time as well. I haven’t quite gotten to this level mostly because the sign up bonuses and the time limits associated with them mean that you’re going to need to spend thousands of dollars in a short period of time (something that I rarely do). Fear not though, signing up for one or two credit cards every so often can mean wonderful things for your travel bucket list!