How you can hack credit cards for cheaper travel
Travel credit cards are crucial to reducing your travel costs and making life easier. These credit cards can get you free stuff and cheap flights, help you save on exchange rates, avoid fees, and make you money.
There are many travel credit cards out there that offer different kinds of rewards, from general points programs to branded hotel and airline cards. I think they are great if you use them right (and pay off your balance at the end of each month). They are better than cash, especially when you can get so many rewards and freebies from them.
No matter how long your trip is, you should have a special credit card for when you travel. Travel credit cards offer too many benefits to pass up. With bonuses, I’ve accumulated probably over a million points. Here are just some of the goodies I’ve earned:
More than 400,000 American Airlines miles
More than 120,000 United Airlines miles
More than 100,000 British Airways miles
More than 50,000 Virgin Atlantic miles
Four free nights at the Marriott
Citibank points for two free flights to Europe and $300 USD cash
Hilton Honors Gold membership and 60,000 Hilton Honors points
A free first-class ticket from London to Hong Kong
Dozens of free hotel rooms at the W Hotel
That’s just for starters. I’ve been travel hacking for so long that the list of things I’ve earned could fill a whole book.
All these points have translated to free first-class flights, free nights at hotels, free upgrades, and free money. And it didn’t take me years to accumulate them either. I received a lot of points through sign-up bonuses and special offers that allowed me to get lots of points within only a few months
You’re probably thinking that while all those points sound good, you don’t want to hurt your credit rating by opening so many credit cards, or pay fees on multiple cards. So let’s discuss that first
First, all the credit cards I’ve ever gotten have waived the yearly fee in their introductory offer. When it comes time to renew the cards and pay the fee, I simply cancel the credit card to avoid the fee. Additionally, if you call up the card issuer and let them know you are thinking of canceling, many times you can get the fee waived for a second year or get your account switched to a no-fee card.
It’s true that “churning and burning” — that is, opening and closing a lot of credit cards at once — can hurt your credit score. But opening a few accounts over a longer period of time won’t kill your credit score. I’ve been opening and closing accounts for years, and I still have a credit score close to 800 and have never been denied a card.
As Brian Kelly from thepointsguy.com, a website that teaches people how to use credit cards to gain loyalty points, told me, “While in its own words, FICO says ‘opening several credit accounts in a short period of time represents greater credit risk,’ that’s because you’re applying for multiple lines of new credit rather than submitting several inquiries for a single new line, such as a mortgage. In general, however, the impact on your score from multiple inquiries is small — and remember that new credit counts only 10 percent toward determining your overall FICO score. So as long as you are strong in the other areas that determine your score, like payment history and amounts owed, you should be fine to apply for new cards."
Matt Kepnes's How to Travel the World on $50 a Day: Travel Cheaper, Longer, Smarter is available from Amazon.
Brian is constantly opening credit accounts and has had the same experience as I have. He recommends that “ideally you should space your applications several months apart.” That’s the key. Your credit score will slightly dip every time there is an inquiry into it, whether that is a credit card or home loan or car loan. It’s how the system is set up. But so long as you space out your applications and maintain good credit, you won’t do any long-term damage to your credit. Your credit rating rises over time as long as you maintain it; you aren’t going to have a bank officer tell you years from now, “Sorry, because you canceled three credit cards in 2012, your loan is denied.” I once canceled four credit cards in one day, and the impact on my score? Nothing.
What Makes a Good Credit Card
So now that that is out of the way, let’s talk about why these cards are important for travelers and how to find the right one for you. Travel-related credit cards are good for two reasons:
First, most travel credit cards offer bonuses of at least twenty thousand points just for signing up. Don’t sign up for a card that doesn’t offer this, because without it, it will take a long time to exchange reward points for hotels, cash, or airfare. Starting at twenty thousand points is a lot better than starting at zero. Most of the time, the points are worth at least a free domestic airline ticket, as most U.S. carriers begin award tickets at twenty thousand points for a flight in the continental United States. The American AAdvantage card offers around twenty-five thousand miles just for joining (that’s a free round-trip domestic ticket). United Airlines gives you around forty thousand miles for signing up. Delta Airlines offers the same. Starwood Hotels often has specials that give you thirty thousand points for signing up with their card. Even general-use cards, like Chase Sapphire, offer a sign-up bonus of forty thousand points. In short, by not getting a credit card, you are leaving free flights and hotel rooms on the table that could be used to lower your travel costs. Free is the best word in the English language after all!
Since offers and bonuses vary from time to time, it’s important to keep track of the latest deals. The best websites for that are the following:
Flyertalk: A forum site where people post the lat- est flight bonuses and miles specials.
Boarding Area: A website that contains a series of blogs that discuss how to fly for free and gain airline miles and elite status quickly.
The Points Guy: Run by Brian Kelly, this site helps people navigate credit card bonus and airline and hotel reward programs
Second, travel credit cards offer many perks besides their sign-up bonuses. Many will give you elite loyalty status. There’s nothing better than getting elite status and the perks that come with it for doing nothing. The American Express platinum card gives you Starwood Gold status, access to airport lounges, and a $200 USD travel credit. The Hilton card gives you gold status. The United card gives you priority boarding and free checked bags. The list of freebies goes on and on.
Most good credit cards also give you extra points when you shop at specific retailers, or, if it is a branded credit card, you’ll get extra points with that particular brand. You’re going to shop anyway, so why not earn something for doing it? These cards are meant to get people to be loyal, so they include lots of perks so you don’t use a competitor. I received triple miles by buying clothes from Gap using an airline’s credit card, since Gap was a preferred merchant. United gives you double points when you use their credit card for booking flights directly on their website.
If you don’t want to be tied down to one company, a general rewards credit card like Capital One Venture Card, Chase Sapphire and Ink cards, or American Express would be best. You will still get points for free flights and discounts, as well as cash back. You won’t get any of the elite status benefits that a branded credit card gives, but you will have access to a wider range of brands and companies while still receiving points that can be redeemed for free travel.
When you are choosing which card to get, it is important to look for the following three things:
A Huge Sign-up Bonus: As mentioned above, most cards offer sign-up bonuses of twenty thousand points/miles. Don’t get one that doesn’t; otherwise it will take you ages to get a free flight. Lately, in a bid to get more people to join their card programs, many airline- and hotel-specific cards are offering bonuses between sixty and one hundred thousand points. I simply won’t sign up for a card that doesn’t give me at least twenty thousand points when I sign up. Most cards have an everyday sign-up bonus of around thirty thousand points.
Extra Points: Most credit cards offer one point for every dollar spent. However, the good credit cards will give you extra points when you shop at specific retailers or, if they are branded credit cards, with a particular brand. This will help you earn points a lot quicker. I don’t want just one dollar to equal one point. I want the ability to get two or three points every time I spend a dollar. Therefore, look for cards that have retail partnerships so that when you go shopping, you gain more points quickly. When I used my AA credit card to sign up with Netflix, I received an extra five thousand points.
Low Spending Minimum: Unfortunately, in order to get the large bonuses these cards give, there is usually a required minimum spending amount before you’ll be eligible to receive the bonus. But sometimes the spending requirement is too high. I love the Starwood Amex card, but you must spend $5,000 USD before you get the reward bonus. While all cards give you six months to reach that spending level, I’d prefer to have a lower threshold. After all, spending money just to get points is not worth it. I want to be able to get the bonus using my normal, day- to-day spending. Only sign up for cards that have a spending requirement of less than $1,000 USD.
How to Leverage Your Cards
With so many choices in credit cards, which ones do you pick? Well, the short answer is, all of them. I mean, grab as many as you can. Why put a limit on how many points you get?
But that being said, if you aren’t a crazy travel hacker and are looking for only a couple of cards, don’t care which ones you get, and simply want the most bang for your buck, consider the following criteria when choosing them.
WHAT IS YOUR GOAL? The important thing to do when you begin travel hacking with credit cards is to come up with a plan. While the most ardent of travel hackers will sign up for anything and everything to gain points, for the casual or new hacker, it’s best to start slowly and focus on a few key goals. The first thing you want to ask yourself is what you want: Free flights? Hotel points? Something else? Then note if you’re loyal to one brand.
For example, if you are a really loyal flier with American Airlines, the best cards to start off with would be the Citi American AAdvantage card (40,000 point sign-up bonus) and the Starwood Amex (25,000 sign-up bonus plus 20 percent transfer bonus) because you can transfer points to your American Airlines account.
If you just want points to spend wherever you choose, get the Chase or American Express cards because you can use their points with a variety of companies. They each have their own rewards programs (Chase Ultimate Rewards and American Express Membership Rewards), and points can be transferred to multiple airline or hotel partners as well as be used to book travel directly via their sites.
Free hotel rooms? Sign up for the hotel cards. By focusing on what you want at first, you can maximize your short-term goals and get the hang of travel hacking. For example, I tend to avoid hotel cards because I rarely stay in hotels. I dislike Hilton and Marriott and would rather focus on getting points related to Starwood (W is my favorite hotel brand) or miles for flying. So unless there is a good sign-up bonus, I focus on what matters most to me: getting free flights.
Therefore, I concentrate my efforts on cards that get me airline miles or have good transfer bonuses to airline programs.
Below is a list of websites that monitor the latest credit card offers:
Credit Card Finder (Australia)
UK CreditCards.com (UK)
Rewards Canada (Canada)
Avoiding Foreign Transaction Fees
If you don’t want to be bothered with points, miles, status, and everything else involved, then you should simply get a card with no foreign transaction fee. The majority of credit cards charge a 3 percent fee when you use them overseas. Credit cards are great to use because you get a good exchange rate from them, but if you are paying a fee every time you use the card, then it doesn’t work out as well.
That is why I recommend the Capital One Venture Card. You get some rewards with it (one point for every dollar spent), but the rewards structure is really, really awful. I use this card for one reason: There are no foreign transaction fees when you use it overseas. I get a good conversion rate and I don’t pay any fees. Between this card and my Charles Schwab ATM card, I never pay any bank fees when traveling outside the United States. Note: Some Chase, Discover, and American Express cards also have no foreign transaction fees.
If you are willing to do a little work, you can use credit cards to gain tons of free miles and reward points before you go on your trip, to keep you in free flights and hotels for a long, long time. It’s never too early to sign up for these cards, and I would begin signing up for as many as you feel comfortable signing up for today. After I got my free rewards, I simply stopped using the cards. There was no reason to. They served their purpose. I use the cards before I leave for my trip to gain points, and I use my Capital One card overseas to avoid transaction fees. I win twice and so can you.
Travel credit cards and the lucrative bonuses and awards they can get you are predominantly an American thing. But that doesn’t make it impossible for non-Americans to use these points and loyalty systems to their advantage.
In Canada, you can find large bonuses on some cards. A link on the Points Guy site shows the latest and greatest card deals near the bottom of the page. Additionally, the following blogs can teach you how you can best use travel credits to your advantage:
Canadian Travel Hacking
The best site in the UK is Head for Points, which keeps its thumb on the pulse of getting rewards and free flights. Australia has some deals once in a while and this website can help you find them, but they are few and far between.
For everyone else in the world, I’m sorry to be the bearer of bad news, but the large credit card bonuses just don’t happen in your countries, and there’s nothing that can be done about that. You just have to accept this fate.
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