Getting into Travel Hacking
Going to Brazil is not going to be cheap. Prices for tickets during the Olympics are over 100% higher than the months leading up to them. Combine that with Fees for the IVHQ program and spending while in country (where everything will be more expensive due to the Olympics) and we’re looking up to $4,000. For this reason I’ve decided to start getting into travel hacking.
What is Travel Hacking?
Travel Hacking is the idea of getting around the world for either very cheap or free by taking advantage of various award programs offered by Credit Card, Airline, and other travel related companies. Through the use of these programs you can turn points earned through your regular spending into free airline tickets.
Credit Cards often offer big sign-up bonuses. These bonuses come in the form of points and can then be used towards things such as airfare. The logistics of getting this all to work gets a little more complicated than that but we will get into that later in the post. First, we got to figure out where to start!
Where to start?
The first step to starting is actually knowing what Travel Hacking is, at least in it’s most basic form. We took care of that in the previous section.
The next step is figuring out your credit score. But first, I think it’s important to say that this is not going to work if you are not already in control of your personal finances. Getting all these bonus points is done by spending usually a few thousand dollars within the span of a few months. That’s a lot of money to be putting on a credit card and if you cannot pay it off immediately than any interest you pay will eliminate the savings you get. On top of that, a huge part of your credit score depends on how much debt you have on those cards, the less the better.
NOTE: If you want to get a better hold on personal finance than I would recommend some great free sources such as Mr. Money Mustache, Afford Anything, and the Mad Fientist to name a few. I would also recommend starting up with Mint to help track your Net Worth, financial goals and budgets.
Ok, with that out of the way, back to your credit score. There are a few easy ways to figure out your credit score. One, is by signing up for Mint which will give a free score every 3 months. The other is to sign-up with either Credit Karma or Credit Sesame which will give a free update. I would recommend these services as they will also help you understand why your score is what it is and what you can do about it. Of course you can always just request your report for free (once a year) from any of the reporting agencies. They are Equifax, TransUnion, and Experian. I personally use Mint and then double check scores with Credit Karma and Credit Sesame as they can vary between the three agencies.
Thankfully, due to my student loans, paying my bills on time (set and forget automatic payments), and a low balance on my credit cards I have a pretty good score(750+). Now it’s time to pick a card.
Picking a Card
With a great score comes a great card. The Chase Sapphire Preferred Card is being touted as the best card to get by all the major sources on travel hacking that I can find. Sites such as The Points Guy and The Faraway Guide are my favorites so far.
The card has one of the biggest bonuses plus includes an authorized user bonus which will come in handy. It comes with 20% off travel purchases made with points which increases the value of the bonus plus it has a 1:1 exchange rate when transferring points to other rewards program. I don’t fully understand this last part yet but it seems to be very important for maximizing value. It would have been great if I had known about this last year when I took Amtrak cross country.The card also has no foreign transaction fees which means I can bring it to Brazil and not worry about getting charged every time I use it. Something I currently do not have access to.
The toughest part about the Chase Sapphire Preferred Card is the spending floor for the bonus, $4,000. It’s not going to be worth getting this card for points if I just try to force $4000 in spending. Wasting money is not a good way to save money 🙂
The Beauty of the Authorized User
Adding an authorized user is a very nice perk to the card. When the authorized user makes there first purchase you get 5,000 bonus points on top of the 50,000. That’s at least another $50 depending on how it’s spent. In addition to that, this will really help towards achieving the $4,000 spending floor to get the bonus. Spending by the authorized user goes towards the bonus. In fact, spending by the authorized user is treated as spending by you.
That last bit is a very important point. Do NOT just add someone as an authorized user. This should be done strategically, with someone you trust and who is doing this to help you achieve the bonus. You are on the line for any spending that is done with this card. Make sure that you are going to get paid back immediately so that you can pay off the card as quick as possible. After you achieve the bonus, you take the card back and then you have a couple options.
The first option is to just remove the authorized user. However, this could negatively impact the users credit so if helping the user get credit was your goal then this second option may be for you.
That second option is cutting up the card or locking it away. It’s not necessary to keep it in hand anymore to get the desired benefit and doing so would just be adding unnecessary risk and possible complications in life.
What I’m doing is probably a little more difficult then how it is usually done. Because I am going to a specific location for a fixed time during the Olympics not only is everything more expensive but I lose a lot of flexibility in how to book which is where a lot of cost savings comes in. I have work before and after my trip so I won’t be able to take advantage of flying during cheaper times like midweek. I’ll be booking on the weekend, which is not very cost effective.
Despite this, I’m excited to see if I can get this to work. It will be interesting to figure out given I am working within an inflexible time-frame. The great part will be knowing that if I can, it will only get easier from here.
I’ll keep you updated with how it goes and, after the trip, what the total expenses ended up being. Wish me luck!