Travel Hacking 101 – The Beginner’s Guide to Travel Hacking
Have you ever wondered how some people travel the world so frequently?
We have all sat on our couches scrolling through social media, seeing people’s posts while they travel the world and wondering how they manage to jet-set across the globe so often.
Traveling the world is a dream for so many of us, but the cost often makes it seem that this dream is out of reach.
The answer lies within the art of travel hacking. Often concealed from what we see on social media, a substantial component of the travel strategy for many influencers, business travelers, and frequent flyers revolves around the skillful use of points, miles, and rewards.
If you are from a Latin background, I know what you are thinking… “Credit cards are no good.” “Don’t ever get credit cards.” In many Latino households, we are taught that credit cards are your ruin and that you should never have one. We are often taught to fear credit cards and the uncontrollable debt that they can bring. Why? There are many reasons, stereotypes, and myths surrounding this topic. You can read more about them by clicking here.
You should know that there is a safe and strategic way of using credit cards to your benefit. I know you are gasping in Latina, but leveraging these miles and rewards programs can open up many doors to your travel dreams, and I am here to guide you through getting started. So, keep reading to learn what travel hacking is and how to use it to your benefit.
So what is Travel Hacking?
It is a strategy to accumulate and redeem rewards, miles, and points to make your travel aspirations a reality. The objective? To travel more, pay less, and indulge in extraordinary experiences that were once considered unattainable or reserved for a select few. It requires time, effort, and patience to research the best use of your miles and points.
This blog post is a comprehensive guide that will show you the ins and outs of travel hacking, empowering you with the knowledge and tools to embark on your own budget-friendly adventures that will leave you with unforgettable memories and extra money in your pocket.
Benefits of Travel Hacking
Imagine a world where airfare and accommodation expenses no longer stop you from exploring new horizons because you only pay taxes on the flights and lodging, or lodging is entirely “free”. Travel hacking opens up so many possibilities for budget-conscious travelers.
A fancier travel experience
Do you want to experience the luxury of business class flights or deluxe suites in five-star hotels? With travel hacking strategies, these upgrades can become a regular occurrence.
Bigger travel budget
Flights and lodging tend to be the most significant expenses when it comes to travel. By saving on these two categories, you can allocate more funds for immersive activities like tasting the local cuisine, guided tours, and authentic cultural experiences.
Travel hacking gives you the freedom to explore a broader range of destinations without worrying about excessive costs.
Risks of Travel Hacking
It is vital to be aware of the potential risks and pitfalls that come with travel hacking. Some Latin parents’ myths and misconceptions about using credit cards stem from these risks. Here are six of the most significant risks associated with travel hacking:
Travel hacking requires responsible credit card use, including paying off your balances in full each month to avoid interest charges. If you are unable to manage your spending and credit card balances, you could accumulate debt that outweighs the value of the rewards you earn. High-interest rates on credit card debt can quickly counteract the travel savings you may earn by travel hacking.
Credit Score Impact
If you are new at travel hacking, create a strategy for opening credit cards for the sign-up bonuses. Opening too many cards too quickly may cause a temporary dip in your credit score. You may also be denied new cards as your credit score decreases.
Many premium credit cards with valuable rewards come with annual fees, some as high as $695 per year. While the benefits may outweigh the fees, evaluating whether the rewards you’ll earn will justify these fees is essential. Some travel hackers might find themselves paying more in annual fees than the value of the rewards they earn.
Availability and Redemption Hurdles
Securing award availability for flights and accommodations is a process that isn’t guaranteed. You might encounter challenges when redeeming your hard-earned points or miles for your preferred travel dates or destinations, especially when dealing with peak travel seasons or sought-after locations. Furthermore, certain credit cards offer a companion certificate feature in your annual fee. Regrettably, this feature often falls short of delivering value due to its restrictions. Attempting to use companion certificates can often lead to frustrating experiences. If the companion certificate is less restrictive, it will grant your companion an itinerary that mirrors your own, enabling them to share your travel experience for just the cost of applicable taxes.
Account Closure and Loss of Rewards
Credit card issuers closely monitor accounts for suspicious activity, including excessive manufactured spending or other practices that might be perceived as abuse. Engaging in these practices can lead to account closures, loss of earned rewards, and even make it difficult to obtain future credit cards.
Data Privacy Concerns
Scammers know that travel hackers accumulate miles and points intending to use them for flights and accommodations. This can make travel hackers a target for credit card fraud. If your credit card information or reward account is hacked, you may lose your rewards without being able to recuperate them. Increased data exposure makes you more susceptible to phishing attacks, scams, and identity theft attempts. Cybercriminals can use the information you share to create convincing phishing messages or target you with fraudulent activities.
Sharing personal and financial information with multiple companies and third-party apps increases the potential exposure of your data to cyberattacks or data breaches. If any of the entities you’ve shared information with experiences a breach, your sensitive data could be compromised, leading to identity theft, financial loss, and other security issues.
Third-Party App Security
Some travel hacking strategies involve using third-party apps or platforms to manage rewards, track points, or find deals. Keep in mind that not all third-party apps may have the same security measures in place. Using unsecure apps could expose your data to unauthorized access or misuse.
Is Travel Hacking Legal???
Yes, Travel Hacking is entirely legal. As discussed above, travel hacking involves utilizing various strategies to maximize travel rewards, points, and miles to save money on travel expenses like flights, accommodations, etc. These methods usually involve strategically using loyalty programs, credit card rewards, and promotional offers.
While Travel Hacking is legal, using these programs ethically and responsibly is essential, using legitimate methods to earn rewards and avoiding fraudulent or illegal activities. Some points to keep in mind:
- Terms and Conditions: Always adhere to the terms and conditions of loyalty programs and credit cards. Violating these terms could result in the loss of rewards, account closure, or even legal action.
- Avoid Fraudulent Activities: Engage only in legitimate activities to earn rewards. Fraudulent actions like creating fake accounts, misrepresenting information, or abusing promotions can have serious consequences.
- Be Honest and Transparent: If you’re sharing your travel hacking experiences or tips online, be transparent about your methods and practices. Misleading others could lead to damage to your reputation and potential legal concerns.
- Manufactured Spending Caution: Some travel hackers engage in “manufactured spending,” which involves artificially inflating spending to earn rewards. While not illegal, it can be a gray area and should be approached carefully.
What is manufactured spending?
Manufactured spending involves creating transactions that appear to be regular purchases but are actually intended to generate rewards. This can be achieved through various methods, such as purchasing gift cards, money orders, prepaid cards, or other items that can be easily liquidated back into cash.
Several techniques are used in manufactured spending, including:
- Gift Card Purchases: Buying gift cards with a credit card and then using them to make regular purchases or liquidate them into cash. Credit card companies have caught on to this and will mention that gift card purchases will not count towards your initial spend. Some business credit cards allow the purchase of gift cards to count towards the spend that would earn you the rewards bonus. It is important to read the terms and conditions before you purchase gift cards for this purpose, as you may risk having your account closed. Be very careful when using this technique.
- Prepaid Card Loading: Loading funds onto prepaid cards using credit cards and subsequently using these prepaid cards for regular spending.
- Money Order Purchases: Buying money orders using credit cards, which can then be deposited into your bank account or used to pay off the credit card bill.
- Merchant Category Code (MCC) Manipulation: Identifying merchants that code as a different category (often one that earns more rewards) and making purchases there. Credit card companies monitor for unusual or excessive behavior, and misrepresenting transactions or abusing the system could lead to account closures or loss of rewards.
Want to be a Succesful Travel Hacker?
You will need a solid financial foundation, which includes handling your money like a boss, making smart decisions, and planning your moves strategically.
How to start travel hacking?
Step 1: Have your financial house in order.
You must have a good credit score, pay off your existing debt, manage your current credit card balances, and live within your means.
Start by understanding your credit score and its significance in the travel hacking process. A good credit score increases your chances of being approved for travel and premium rewards credit cards. These travel and premium credit cards come with valuable sign-up bonuses and benefits.
Pay off your existing debt. Keeping a running balance on your card is not really beneficial when it comes to travel hacking. You will pay more interest than you would if you gain travel rewards.
Step 2: Research Loyalty Programs
Review the programs for airline, hotel, and credit cards and understand how loyalty programs work their benefits, and their limitations. Research how to earn points or miles, how the redemptions work, and what fees, if any, you will need to pay to redeem your rewards.
Consider credit cards that offer points that can be transferred to multiple airlines and hotels, such as Chase Ultimate Reward, American Express Membership Points, Citi Thank You Points, and Capital One Travel Rewards. A stash of these points accumulated gives you maximum flexibility in your travel redemptions.
Step 3: Choose the Right Credit Cards:
Focus on credit cards that align with your goals and have large sign-on bonuses and no foreign transaction fees.
Decide what type of travel experiences you want to have. Do you want to focus on earning free flights, free hotel stays, or both? Your goals will guide which credit cards you will apply for.
Pay attention to sign-up bonuses and required spending: If you can’t meet the required spending, do not apply to that credit card. Sign-up bonuses are one of the easiest ways to accumulate thousands of points or miles.
Evaluate whether the benefits and rewards offered by a credit card outweigh its annual fee. Some premium cards come with higher annual fees but offer extensive perks that can offset the cost.
The most important tip I can give you is only open credit cards that you can responsibly manage.
So, What’s Next?
As you can see, travel hacking opens the doors for you to turn your wanderlust into reality. You can redefine how you travel by mastering the art of leveraging points, miles, and rewards. Use the knowledge you’ve gained here to accumulate points that will bring you closer to your dream destinations. Let travel hacking help you live your wildest, budget-friendly, wanderlust-fueled experiences.
Don’t forget to click on to explore the most common misconceptions about credit cards and their use. There are many myths surrounding credit cards in Latino households and it is time that we dispel some of these myths. And while you’re at it, why not subscribe to our newsletter for even more travel hacks, tips, and exclusive offers?