The best definition I’ve found of travel hacking comes from a post I found on Mom and Dad Money:
Travel hacking is essentially the process of signing up for a new credit card, spending enough to earn the sign-up bonus, using the points you earn to book free travel, and basically repeating that process over and over again.
Using credit cards benefits to earn free flights, free hotel stays, and other travel benefits is a popular way to save big on travel expenses. Travel hacking has been around for a while, but these days it typically involves using multiple cards at the same time to reap the most benefits. Most major airlines offer big rewards when you sign up for one of their credit cards and reach a certain spending goal during a specific period (usually within three months of signing up). Bank cards also offer similar big travel rewards: every iteration of the Chase Sapphire card, Capital One’s Venture, and American Express Gold Card, among others, all offer substantial travel rewards after signing up and charging a certain amount within a set period of time. Hotel chain credit cards rewards include free stays, discounts, and other perks for signing up and charging a pre-set amount within time limits.
These deals are especially easy to acquire when signing up for the first time. We know of people who set out on their travels with over 500,000 airline miles banked, all acquired from sign-up bonuses they received. Of course, they had to spend quite a bit to get those bonuses, and they also risked damaging their credit score because of all the new card sign-ups (multiple hard credit inquiries in a short period of time, and greater credit risk because of multiple credit lines). If they use the cards responsibly though, neither of those should be a problem. Experienced travel hackers however recommend signing up for different cards over a long period of time versus all at once or within a few months.
There is no “perfect” travel card – each one offers something different and the goal in getting started should be to find ones that work best to achieve whatever travel goals have been set. There are some important things to look for though when applying for a travel card:
- No fee or low annual fee
- No foreign transaction fees
- A large (i.e. huge) initial bonus
- Low required spending minimum
- Special perks for travel-related items
- Added points for special spending categories (i.e. groceries, gas, restaurants)
- The bonus is something that can actually be attained.
Travel hacking is a great way to acquire some significant travel benefits but only if you already use credit cards responsibly and pay off your balances every month. If you don’t, they’re an easy way to quickly descend deeply into debt. Tracking all open cards and their accompanying expiration dates and spending limits also requires real effort, although a newer app, Award Wallet, helps track all awards in one place, including deadlines, and notifies the user when deadlines are approaching.
Besides free travel benefits, the big pro of travel hacking is that it’s easy to get started and find good deals; lots of points to cover flights and other travel costs can be acquired quickly.
A big reason against travel hacking however is that after acquiring the good upfront deals, finding new ones gets harder and harder. Points earned can become more difficult to use and the money spent to acquire all the upfront points may be more than expected or afforded. If too many sign-ups are done too quickly, one’s credit rating can be damaged, and credit card companies have been known to cancel accounts for those using too many cards of the same brand.
Our primary credit card when we travel is the Chase Sapphire Preferred. We took advantage of its sign-up bonus years ago, but we still use it to rack up generous reward points (which we usually redeem for a cash deposit to our bank account). It also provides some serious benefits that match those that come with travel insurance (car rental insurance, missed or cancelled flights, lost luggage, and a few others). Every month since we’ve been back on Kaua’i we’ve received a sign up offer for the Delta American Express card, with a bonus of 75,000 miles if we spend $2000 within three months after receiving the card. Delta is our preferred airline but we haven’t bitten. All Delta flights only go to and from the U.S.; we can’t use them to fly between international destinations. Also, we’ve had American Express cards in the past, but rarely used them, and honestly don’t think we need another card to track while we travel. Still, we think from time to time that it would be nice to have those miles banked if we need them.