Updated on September 5, 2016
Updated on September 5, 2016
This post is for anyone who arrives at this site expecting a traditional travel blog and has no idea what to make of any of the posts here.
So let’s get to it. What is all this talk of credit cards and frequent flyer programs and all this “travel hacker” stuff?
Travel hacking is a strategy for travel that includes (among other things) signing up for credit cards just for their bonus of miles (frequent flyer miles) or points (could be anything…hotel points, airline points, travel reimbursement points, etc.)
Now, of course we wouldn’t be “travel hackers” if we didn’t have a few tricks up our sleeves. The basic idea is that we try to be as informed as possible about the travel rewards cards that exist. We like to know what we’re earning and what those miles or points can be used for, whether or not there’s an annual fee, what the other perks of the cards are, etc etc. And we like to make sure that we’re winning, not the credit card company. Credit card companies do these things because they want to win long-term users who will spend with them forever and ever.
But you don’t have to.
The credit card bonus…
Let’s say a credit card gives you a bonus of 50,000 points. Well, with nearly all of these cards, there’s a catch. You won’t usually receive that bonus right away. In fact, most times you won’t receive it at all if you don’t meet the stipulations for that bonus. What are the stipulations? Usually it’s this: Spend X amount of money in X amount of days or months.
The reason the credit cards set up this stipulation is pretty obvious. They want you to get used to using their card. If you’re choosing that card for the first three months you have it so that you can reach that spend requirement, they believe you’ll likely use it the next months too, either out of habit or because you’re noticing the other miles or points you’re earning for your spending.
Earning as you spend…
You see, the bonus isn’t the only thing you earn. You earn a certain amount of points per dollar spent too. Generally this is 1 point or mile per dollar spent for general spends, and then perhaps more for special categories. Like 2 points per dollar when spending with our airline or our hotel or something like that. Or even 5 points per dollar spent at an office store or something.
So back to our scenario. Let’s say you’ve diligently been using your travel rewards card for all your spending and you’ve earned the bonus. Keep using that card to keep earning? You can if you want to but you don’t have to. Especially if there’s another great card out there for you to get…
One of the first questions we get when people find out we get so many credit cards is “isn’t that bad for your credit score?
I talk about this more in my having a good credit score post, but I’ll go over some basics here.
Let’s set the first myth straight. This myth about “too many credit cards” being a bad thing.
It is not bad for your credit score to have lots of credit cards. In fact, (and here’s the most important part,) if you are responsible with them all, it is better for your credit score to have lots of open lines of credit (lots of credit cards or multiple types of credit). We’ve seen this proven time and time again that a person’s credit score will go up as they start to get more credit cards.
I can’t stress it enough though, a good credit score depends on being responsible with credit.
What does “being responsible” mean specifically?
Being responsible with your credit means ALWAYS making on-time payments and not carrying high balances on your card. If your credit card has 80% of it’s credit limit in use…well..then maybe you SHOULDN’T be getting lots of credit cards because the goal is to have little to no balance on your cards.
You can have lots of cards, but you still have to be smart…
So we’ve already said that having lots of credit cards can be a great thing for your credit score. Another thing that’s good for your credit score, however, is having old lines of credit (credit cards.) It’s like being a long-term customer. If you have a no-annual-fee card that you’ve had since college but never use any more, don’t cancel it just because there are other cards you’re now interested in getting. Keep it. It may be your most important card even if you never use it again because it’s the card that will increase your average length of history.
For more information about that, read my post on no annual fee cards and why they matter.
Back to travel rewards cards.
Travel rewards cards do not all earn the same thing. I talk more about this in my post about “what are these cards earning us anyway?” so try to read that if you are confused, but we’ll talk about it here too.
I like to think of travel rewards currencies in three categories:
1.) Frequent Flier Miles
Cards created by an airline (in cooperation with a bank of course) are going to earn miles or points for that airline’s program. To make things a bit more confusing, airlines call their points different things. Many of them use the word “miles” but there are other terms. British Airways uses “Avios”. Delta has “SkyMiles” etc etc.
These miles are not literal miles. In other words, earning 10,000 miles does not mean you can now get a free flight to someplace 10,000 literal miles away. Each airline has it’s own award chart that will tell you how they price various tickets.
Generally, an airline’s mileage program will be priced either by zone or by distance (again though, not a literal 1 mile in currency= 1 mile in flight kind of thing). Also, I won’t go into it here, but most of these airlines are part of alliances and will let you use their miles for partner flights.
2.) Hotel Points
Hotels have jumped on the loyalty program band-wagon and have their own “frequent traveler” programs too. They too partner with banks to create credit cards that earn towards their loyalty programs. These are almost always called “points.”
Many hotel cards will offer “free night certificiates” instead of point bonuses, but you will find lots of point bonuses too.
3.) Bank Points
As boring as they sound, bank points are very important to us travel rewards enthusiasts. Basically banks too have created a rewards system that earns points for their own little rewards, but many of them have partnered with airlines AND hotels so that their members have an ability to transfer the bank points to a different program. So, you can earn bank points and as you make travel plans, you can trade your bank points for “Soandso” miles or “soandso” hotel points, based on that bank’s transfer partner list.
These transfer partners differ from bank to bank. For instance you could transfer American Express Membership Rewards to British Airways and Chase Ultimate Rewards points to United miles.
An extra note about Chase…
It’s important to understand that this is an actual transfer, sort of like exchanging money. Chase offers a service in which it will let you book travel with your points from their website. This is not the same as transferring however, and is not a good value for you! Instead, you must actually transfer the points to the program of your choice first, and then after they show up in your other account, book your travel via that airline or hotel program. Read more about the intricacies of Chase’s points here.
Reimbursing bank points…
Some bank points have a different approach to travel rewards. Instead of allowing you to transfer, they simply tell you that they will reimburse your travel. Barclay Arrival Plus is one such card. You earn their points as you spend on their card. Then, if you have a travel expense at some point, you can use your points to reimburse that travel at a 1:1 ratio.
How do you spend these miles and points?
When you visit an airline’s website or a hotel’s website, most often you will simply navigate to the same booking area you would use for any other reservation. Somewhere on this online reservation/search form, there should be an option to select “awards” or “rewards”.
That’s where I come in with my blog posts. The simple act of booking your award travel has its own nuances. For instance, finding availability, booking with partners, etc etc. Using miles well is something Drew and I post about alot.
So for now, i’ll leave you to digest this chunk of info. Hopefully you and the hipster kitten above can feel a bit less confused now. If not, go to the right hand side of this site and sign up for our newsletter, after which point you’ll receive our Complete Guide to Miles Earning with Credit Cards.