Jeez it’s been a long time since I’ve blogged. I should definitely do this more often. Whatever, this is something that I just want to put up because I haven’t written anything in a long time.
So lately I’ve been into what is called “travel hacking”. For those of you who don’t know, it’s a matter of taking trips basically for free, or at very very low dollar costs.
This requires one to earn points and miles that will be redeemed on airlines.
If you have bad spending habits, fix those first then come back.
(Learn Excel while you’re at it. You’re going to need it to track everything.)
It’s a huge shit show, and I’ve been scouring FlyerTalk forums, Boarding Area, and The Points Guy and 12038210 other websites for the past few weeks to try and figure out how to break down the process.
Here is the breakdown of the process:
- Earn points through spending (usually on a credit card)
- Use those points and redeem through airlines
- Have an awesome time and save some $$$.
That’s about as simple as it gets.
I’ll go through mainly stage one and two since stage three, well..you probably know how to do that.
For the first part, the strategy is simple enough. If you’re an employee, it’s pretty simple. You have a fixed set of expenses (which can usually meet the minimum spend for signup bonuses) and that’s the 80% solution.
You just want to utilize your existing spending habits and gain some rewards as a bonus.
Apply for a few cards at a time depending on your monthly spend in specific categories and take your vacation trip for free.
There are cards that earn you 2x-3x points for grocery purchases, entertainment purchases, shopping on Amazon, and even using transportation services like taxis and Uber.
For example, my (now defunct) Citi Forward card gives me 5x points on entertainment, restaurants and Amazon.
I can use these points (called Citi Thank You points) on anything from Amazon purchases to travel rewards.
As a general rule of them, don’t ever use your points for any purchases. I mistakenly did that a few years ago when Citi TYP’s were worthless(womp).
Now you can “transfer” them to airline partners at a 1:1 ratio, where 1,000 points = 1,000 miles.
Let me give you a bit of an overview on the Rewards programs that you can earn points.
Citi’s pretty behind, but the 3 big dogs when it comes to earning points are
- Starwoods Preferred Guest(SPG)
- Chase Ultimate Rewards(UR)
- American Express Membership Rewards(MR)
- Citi Thank You Points/Rewards (TYP)
Citi is a recent addition because last year it revamped TYP program.
The value in these 4 programs are all in their airline transfer partners. It’s important to diversify your point sources and, ideally, earn points in all of them.
I’m only earning in SPG and TYP at the moment, but plan on getting MR and UR in the next year or so.
You can find all of their transfer partners by Googling the above.
Each company (AMEX, Chase, Citi, and sort of SPG) have credit cards that directly earn points in each other’s respective programs. SPG is technically an AMEX card, but it has it’s own rewards program(and you can still get both and earn for each.)
These credit cards entice you with sign up bonuses for getting a large amount of points for a minimum spend. This is a staple in point earning and can really kick start your travel hacking. (The practice of repeatedly signing up for credit cards and then canceling them is called “churning” and will be discussed a bit later on.)
The best cards to get will depend on your situation so again, do your homework. Look at your expenses and see where you spend the most. I use Mint.com to track my category spending. Some reasons to get a rewards card:
- If you eat out/get Seamless alot
- If gas and groceries are a big chunk of your expenses
- If you’re already a traveler (you should probably know a bunch of this stuff by now, if not, shame on you.)
So how do you decide which program you want to favor over the other? I have this problem since I’m relatively new and don’t fly a lot.
So, I probably should have prefaced everything with finding out where you want to go. Having a goal in mind will easily make everything much more clear.
For example, because my girlfriend who might be moving back to Japan, I’d like to go and visit her using miles.
Once you have your goal, you have to find out what is your closest airport and if they are a major hub of a specific airline.
Next, you want to determine how easy it will be to earn those miles(based on your spending categories and cards you choose.)
Through my research, I found that American Airlines miles are the best to Tokyo because during offpeak miles you don’t pay that much. A close second is ANA
The problem is, AA miles are relatively hard to earn(unless you sign up for specific cards for the miles) and it’s not a hub where I plan to be(SFO). The benefit of having a major airline as a hub near your home is that there is more flight availability.
Turns out United is a hub where I am, and while they aren’t the cheapest, they are easy to earn points directly using Chase (they are a 1:1 transfer partner).
So it seems that I should be earning United miles for the forseeable future.
For this particular trip though, I’d like to use my Citi Thank You Points, and they are a 1:1 transfer partner with Singapore airlines, which has a well known first class seat and okay availability depending on where you’re flying out from.
The team at Abroaders has mentioned in their great travel podcast that when planning out a flight, it’s important to figure out your long-haul(the longest segment of your flight) first, and then figure out the shorter ones.
One thing to look out for, which is beyond this post is how to time your credit card applications and they will affect your credit score. I’ve heard anecdotally that you can’t have more than 2 Citi applications every 90-92 days and it’s better to space out the applications at least 8 days apart.
With Citi, I applied for 2 in 2 days (one on one day and one the next day) and was approved for both with a credit limit high enough to do what I want. The Customer Service Rep(CSR) at Citi told me that “hypothetically” the more spaced out you are the higher credit you’ll be approved for so take it with a grain of salt.
I’ve had a friend who says the ding on your credit isn’t that bad as long as you have good credit. Again look into this to make sure.
I’m spacing mine out every 3 months in order to meet the minimum spending requirements for the bonuses.
As a normal employee it’s pretty simple to meet minimum spend to get the credit card signup bonuses.
However, in order to get at the heart of travel hacking, you’re going to want to minimize spend while maximizing point earning.
And that’s when the can of worms opens up.
Things like credit card churning and manufactured spending come up.
Credit card churning consists of reapplying for the same cards to get the sign up bonus again. The Big 4 above have gotten much stricter on this. Flyertalk has plenty of resources on which cards are churnable or not.
I wouldn’t do manufactured spending because you consistently have to be on top of the latest “cons” since it’s highly frowned upon and various tricks continue to be shut down. It’s honestly not worth it IMO.
As a recap here’s what you should do:
- Figure out where you want to go & when
- Find out how many miles it will take you to get there
- See which cards get you to that # of points
- Long-term strategy: See which categories you spend most in and see if you can get a card that has a relative sign up bonus & excellent point per dollar for the specific category.
- Sign up for those cards and meet the minimum spend
- Book the flight, take your trip and treat yoself.
That’s sort of the very vague overview of how travel hacking works. By no means is this comprehensive. Things like routing rules and figure out the flight are a whole other thing, so here are some resources I look at on a daily basis:
I use Feedly to consolidate all of this.
Until next time (hopefully sooner than 2 years.)