I was pretty much born with wanderlust. I remember visiting the local library with my grandpa when I was in grade school and checking out as many Italian language books as I could so that I’d be “prepared” when I finally got to go to Rome. I joined the Army at 18 excited at the possibility of living overseas. And when Chris got the option to be stationed in Korea, we jumped at the opportunity.
That’s why, when we first started down this path of financial independence almost a year ago, the ability to travel was a non-negotiable for me. I’m cool with saving most of our paycheck, but I still want to take my family vacations. Enter travel hacking.
Simply put, travel hacking is the ability to travel WITHOUT spending your own money or spending much less than you would normally. While there are several ways to go about it, from booking MAC flights for military personnel to couch surfing for the single and brave, the way that our family goes about it is through the strategic use of credit card introductory offers.
Before I go into detail, I want to caution that if you are currently knee-deep in credit card debt or don’t have a good credit card score, this is probably not a hack that will work for you. For everyone else, let’s begin!
First, everyone sees those credit card offers in the mail- you know, “$500 cash back after spending $4,000”; “100K points after spending $3,000!”….you know what I’m talking about. But have you ever stopped to think about the actual dollar amount and cost of those offers? Let’s take a real-world example.
Chase Ultimate Rewards
Currently, Chase is offering 60,000 Ultimate Rewards points on their Chase Sapphire Preferred card after spending $4,000 within the first 3 months of opening the card.
As you can see in the ad, that’s $750 toward travel redeemed through the Chase Ultimate Rewards portal. Assuming you were planning on spending that $4,000 anyway, and that you can pay the card off right away, that’s $750 of free money that you can use for travel, just by funneling your spending through this card.
But wait! There’s more….
The way that Chase allows you to redeem points on their site is at a 1:1.25 ratio (the ratio for the Sapphire Reserve is 1:1.5). So, for every $1 you spend, you can redeem $1.25. Not bad, right? But not optimal, either. Occasionally, hotels on the Chase portal have sales that allow you to redeem at a much higher ratio. Think 1:1.75 or 1:2. So, the dollar you used to get $1.25 is now worth about $1.75 or $2. And if you’re travel hacking properly, you didn’t spend ANY additional money to earn those points. So you’re really just stretching the $750 that you were given for spending money you were going to spend anyway! Cool, huh?!
The idea behind the rewards points version of travel hacking is to strategically open up credit cards and meet the minimum spend with spending you were planning on anyway. That’s key! If you blow $5,000 shopping to meet the minimum spend on a credit card for points, the interest you pay on those purchases negate the benefits of travel hacking.
But what about my credit score?
Right there with you. This was what had Chris and I most worried when we started. However, if you have a strong credit score to start out with, opening new credit cards won’t have a significant impact on your credit score, assuming you pay them off on time (seeing a trend here?). After opening 3 cards in 2 months, my credit score dropped a whopping 2 points (774 to 772).
Hopefully this intro has you eager to learn more- the travel hacking rabbit hole can go pretty deep! For more strategies and a great beginner’s plan to travel hacking, stay tuned for sections 2 and 3- Introduction to the Chase Gauntlet and Redemption Values.
But if you can’t wait, feel free to check out these other great resources on travel hacking:
Happy travels!
~Jasmine
