If you’re reading DINKing Around Finance, you’ve probably heard of travel hacking. Maybe you’ve dismissed it as too good to be true … getting significant amounts of essentially free money just for signing up for a new credit card.
Well after a year of travel hacking, I’m here to testify that this concept is very real. Travel hacking has saved me an incredible amount of money during the last 15 months, including $2,600 from a single credit card, which detail here as a case study to prove the power of this strategy.
My Most Recent Travel Hacking Credit Card
My most recent travel hacking experience was the British Airways Visa Signature Card, which is offering a 100,000 Avios sign-up bonus for spending $20,000 in the first year of the card. Specifically I received 50,000 Avios for the first $3,000, then another 50,000 for hitting a larger threshold of $20,000.
Our typical household spending naturally reaches this threshold, but I recognize is out of reach for many. I acknowledge my privilege in this regard, but the lessons from this article apply to other travel hacking credit cards too! In my experience typical sign up bonus only require about $3,000 in spending over a three month period.
One reason I selected this credit card before other options is that Avios is one of the most valuable reward programs around! This is because Avios rely on distance-based reward pricing, which means that number of points paid for a flight are based on the distance traveled, not on the retail price of the trip. Translation: expensive flights including those booked last minute, cost the same number of points as if you booked months in advance.
For example, I booked a flight home to the Midwest with one day notice for 18,000 Avios points, when the retail cost was nearly $1,000. This is obviously an extreme example, but here I received $.055 per mile, which is nearly unheard of! Of course this assumes that flights are available through Avios rewards, which is not always the case. There are only a certain number of reward seats available on any given flight, so booking early certainly has its advantages.
You may ask, isn’t British Airways … well you know … British? What good are Avios points if you live in the United States? Great question. The short answer is that British Airways partners with American Airlines, so you can book all your favorite American Airlines flights through British Airways. The longer answer is that British Airways also flies to many amazing locations around the world and they have partnerships with other international airlines such as Japanese Airlines, Iberia, and Aer Lingus. So long as you like traveling, you’ll be able to find a useful way to spend your points
Math Behind a $2,600 British Airways Value
Typically I redeem reward miles to travel home to the Midwest. This costs 18,000 Avios round trip, plus $11.80 in taxes. So for 100,000 Avios, I can get around 5.5 flights. Additionally, the $20,000 minimum-spending requirement will provide an additional 20,000 in normal spending rewards, contributing an additional flight.
A typical non-stop round-trip ticket to the Midwest costs between $300-$500, with the higher end of the range offering more desirable flight times and airports (there are three airports in DC). So in summary:
- 120,000 points = 6.5 typical flights (for me)
- $400 average flight cost
- 6.5 x $400 = $2,600
My Other 7 Travel Hacking Credit Cards
I realize I sound like a true believer, and that’s because I’ve become one by experiencing the power of travel hacking! In a little more than one year, I’ve signed up for many credit cards that each different value/rewards, with no noticeable impact to my credit score (about 10 points in movement). These include:
- Sapphire Preferred (me) (50,000 Chase points)
- Sapphire Preferred (spouse) (50,000 Chase points)
- Marriott Rewards Premier Plus (me) (70,000 Marriot Points)
- Marriott Rewards Premier Plus (spouse) (75,000 Marriot Points)
- The World of Hyatt Credit Card (me) (60,000 Hyatt Points)
- Ink Business Preferred (rental business) (120,000 Chase Points)
- Ink Business Preferred (side hustle) ($500 Cash bonus)
Chase points transfer to many different reward programs, including British Airways, along with Marriot, Hyatt, and South West. I could go into vast details about how to best leverage these points, but for everyone’s benefit, let’s cut to the final figure:
Total Rewards: $20,000!!!
It’s unbelievable to see this number on paper, but it is very real, and it has made me a true believer in travel hacking.
Advice for Travel Hacking: I encourage you to follow these very simple rules to ensure you have a positive travel hacking experience.
Rule #1: Start Slow. It’s easy to sign up for a credit card. It’s much harder to leverage credit cards responsibly, using them to your benefit rather than having them become a detriment. If you’re going to go down this road, start small, testing this strategy with only one card at first.
Rule #2: Select Your Cards Carefully. You only can only typically work on one minimum spending threshold at a time, and in the long term have cards that provide value beyond the initial sign up bonus. So select your cards carefully! The cards mentioned in this article are a great starting point of course, but do your own research. I recommend The Points Guy.
Rule #3: Study Rewards Programs. These programs can be confusing and complicated. Think of studying travel hacking as a side hustle. Every hour you spend will increase the value you receive from these programs, which is money you can spend elsewhere.
Rule #4: Plan Your Spending To Maximize Value. This works in tandem with the previous rule. Once you have this knowledge, use it to maximize your rewards through diligent planning. Sometimes I still pay cash for flights, because the cost is so low. For hotels, I use different rewards programs (Hyatt v. Marriot) in different cities, depending on facts on the ground. Be diligent, and you will be rewarded.
Rule #5: Don’t Over Travel. Sometimes people use travel rewards as an excuse to travel more that they should, resulting in higher out of pocket spending on all the associated wrap around costs. Don’t get stuck in this trap. Determine what travel you want to take, then plan your travel hacking strategy accordingly to meet your needs. Don’t let the rewards control your travel!
Follow these simple rules and you too could save thousands of dollars on travel costs, as soon as within the next few months.