5 things you can do right now to start traveling for less.
If you’ve ever seen the movie “A Beautiful Mind,” you might have experienced the awe of someone who just gets numbers. Yeah, that’s not me. The good news is that unlike calculus, manipulating points for inexpensive travel only looks complicated. Get started with this seven step guide to effortless travel hacking for the overwhelmed, lazy, or (like me) a little of both.
7 Easy Steps for Effortless Travel Hacking
1. Automate Everything
It’s easy to get overwhelmed by all the moving parts of travel hacking. The less you have to think about, the simpler it will be. Link your credit cards to dining rewards programs that credit you automatically for eating at in-network restaurants. Set up the full-balance of your credit cards to be paid from your bank account every month. This will help you avoid paying interest or late charges (which can easily wipe out any gains from travel hacking!)
Obviously you should keep enough in your checking account to pay your bill. Never spend more than you can afford. Credit cards often offer bonus points/miles when you spend X amount within a few months. It’s easy to get caught up in trying to make the bonus, but you should never spend beyond your means. A basic understanding of compound interest is useful for anyone with credit card debt, because nothing will decimate your travel hacking gains faster than interest payments.
2. Set Up The Right Credit Cards
The Minimum 2-3 Cards You Need:
– No foreign transaction fees (one that is widely accepted like Mastercard or Visa)
– One with a flexible and lucrative travel rewards program
One of the most daunting things about getting into the travel hacking game is the number of credit cards to choose from. Over time, you’ll find the mix of credit cards that work best for you but these are the ones I recommend getting right away. You should have at least 2 cards, one that offers cash-back, and one that offers rewards/points/miles. The value of cash and points will fluctuate with time, devaluations, inflation, etc. Having a mix of both allows flexibility to decide which method pays back the most.
You will also need a card with no foreign transaction fees. My Chase Sapphire Preferred has an annual fee of $95, which more than pays for itself in a year just from foreign transaction fees saved. My Discover It card (no annual fee) also doesn’t charge FT fees. However, Discover isn’t as widely accepted so I find myself using the CSP (which is a Visa) more often.
3. Spend (Points) Wisely
How you spend the points you earned is another opportunity for getting more value. For example, you should pretty much never redeem points or miles for cash back. That usually results in a 1% return (i.e. You get $0.01 for every dollar you spent). You may have earned those points at 5% ($0.05 for every dollar you spent) then sold yourself short by redeeming too cheaply.
Look out for special (sometimes targeted) offers for using your points. For example, Chase might allow you to transfer your points to a partner hotel at a ratio of 1:5 instead of 1:1 which means you just quintupled the number of points you have. Similar deals with airlines are rarer, but they do happen.
4. Have a Benchmark
When you’re first starting off, it’s hard to know what a “good” rate of return is. Getting even 1% back on things you would have bought anyway seems better than none. However, 1% return is a pretty standard reward for most credit cards. I like to aim for at least 4-5% on all my spending.
Some cards like the Chase Freedom and Discover It have rotating categories every quarter of purchases they’ll give you 5% back on. If there’s something I can wait to buy, I’ll postpone it a few months to get the most cash back. For example, my Discover It card has had at least one quarter of 5% back on Amazon.com every year for the past 2 years. If I don’t need something right away, I keep it in my Save for Later section until I can get a better return.
5. Double or Triple Up Whenever Possible (Layer Benefits)
It isn’t always possible to get 5% back from a single card, and you may want to shoot for an even higher rate of return. In that case, it helps to layer your benefits. Rewards can come in many forms, including coupons, bulk discounts, and store loyalty programs. Anything that either saves you money or gives you more value is a reward.
Many programs are aware of their customers layering benefits, and may prohibit combining benefits. (e.g. REI doesn’t give you a member dividend if you buy an item on sale!). The point is not to figure out how to get around these rules, but work within them to maximize your gain.
6. Use Shopping Portals When Buying Online
Shopping portals as basically online malls with a variety of participating stores. You usually get some kind of reward for going through the “mall” instead of to the store’s site directly. Some airlines have portals that let you earn miles from shopping online. For cash back, I like Ebates, which gives you a percentage “rebate” on whatever you spend at the store you click through to.
I like that they include sites I already shop at, including Amazon.com, Banana Republic, and even Groupon. Before they removed REI as a participating store, I got a 5% “e-bate” on my purchases, on top of the member dividend I got directly from REI! (See #5 about layering benefits).
7. Be Flexible, and Decisive
Hold out for a knockout deal, but be ready to act quickly when you find it. The first time I visited Europe, I had a ticket for an epic three-part flight. The first leg was a redeye flight from NYC to Milan. The second leg, 2 weeks later, picked up from Prague, then Singapore via Amsterdam.
How much do you think the ticket for all 3 flights cost me?
That’s in cash, taxes and fees included. And it didn’t cost me a single point or mile.
It was a mispriced flight, and corrected by the airlines within 24 hours. I only found out about it because I subscribed to travel hacking blogs like The Points Guy who picked up the story. With millions of TPG readers looking at the same deal, there was no way this deal would last. There was no time to call friends or corroborate plans, I just bought it. If I had waited a day, the deal would have been gone. Be decisive. Snag the deal, figure out the rest later.
What’s stopping you from becoming an effortless travel hacking pro?