If something sounds too good to be true, it generally is. So it’s no wonder people hear stories about travel hacking like this one and figure it can’t be done.
If you’ve never heard of it, travel hacking is using credit card rewards to virtually eliminate travel expenses. It definitely sounds too good to be true!
I used to think so, too. Every time I saw another of these stories, I blew it off with the assumption that it was too good to be true. However, I recently decided to explore travel hacking further. I’d like to share what I’ve found and why maybe you should explore it, too.
I’m always skeptical of any tip to save money. For example, let’s assume you could use travel hacking to get two free flights to Paris valued at $1,500 and two free nights at a 5-star Paris hotel valued at $1,000.
You could say you “saved” $2,500. However, I have little desire to ever go to Paris. If I did go there, I would want to be out seeing Paris rather than sitting in a fancy hotel, so I would never spend $500/night for a 5-star hotel. And despite spending nothing on the hotel or flight, I’d still have to spend money on other aspects of the trip. So this trip really wouldn’t save me any money I would have otherwise spent.
I also viewed playing games with credit card rewards as a hassle. I’ve always used a simple cash back reward card which simply refunds 1‒2% of my purchases. This simple strategy generally yields a reward of $400‒500/year for our household. I crave simplicity and feel that saving money should not be seen as work or sacrifice.
I also assumed that the travel rewards would basically cancel out most if not all of the cash back rewards. Even if I could do twice as well with the travel rewards, is it worth the hassle for a few hundred dollars a year? I always thought not.
About a year ago, I read this guest post from the site Budgets Are $exy, one of my favorite blogs. The writer sounded a lot like myself. Except that he was using travel hacking to do some amazing things with his family. I was intrigued and shared the story with my wife. But she still was not sold that this was a good idea.
We then listened to this Dough Roller podcast interview about travel hacking with expert Scott Keyes. It contained some very actionable advice and simple principles. After listening to this interview together and discussing it, my wife and I agreed to try an experiment to see if travel hacking could really work for us.
Our experiment was to see if we could pay for our flights, hotel, and car rental for a four day ski trip to Utah this February. We were very specific about what we wanted to do. We wanted to fly direct from Washington D.C. to Salt Lake City. We wanted to fly in early on a Saturday morning and fly out late on a Tuesday afternoon. We chose this location and these times so we could ski for four days while only being away from our daughter for four days. It would also allow us to burn only two vacation days because my wife had limited vacation time to use.
We also agreed that we wanted to stay in a central Salt Lake City location. Since we only had four days to ski, we wanted to give ourselves the best chance to go to whatever area had the best snow on a given day. Conditions vary considerably at different elevations and in different canyons around Salt Lake City. This meant we also had to rent a vehicle with 4WD.
Again, we were not looking for the “best deal,” which may have been to go to a different location in the country, travel mid-week, increase travel time with indirect flights, or use a stay-and-ski package that would eliminate the need to rent a car but would commit us to a specific resort.
We started our “hack” in late October for this trip in early February. Was it possible for a couple of rookie travel hackers to travel for free on our first attempt? Read on.
Prior to looking to book our flights, we checked if we had already accumulated any miles in our airline customer loyalty accounts. This was one tip we learned listening to the Scott Keyes interview. We realized that without doing anything, my wife had already accumulated enough points through work travel for one free domestic flight with Delta and another free flight with United. We already were potentially halfway to our first goal without doing anything!
This made me begin to suspect that part of the reason that credit cards can offer such lucrative rewards is that many people simply never pay attention or forget about airline rewards and miles, as we had. The miles then simply expire or devalue, costing the airlines and credit card companies nothing since they’re never redeemed.
When looking at our flight options, we had two excellent choices that fit our criteria with Delta or Southwest. We found we could use the Gold Delta SkyMiles® Credit Card from American Express to get us our second free flight with the 30,000 mile welcome offer or the Southwest Rapid Rewards Premier Credit Card, which could get us two free flights with the 40,000 mile welcome bonus they offered (they currently offer 40,000 after spending $1,000 in three months).
We chose Delta because we already had the miles for one flight, which could expire or devalue if we didn’t use it. The Delta card also had the annual fee waived for the first year, versus a $99 annual fee for the Southwest Rapid Rewards Premier Credit Card.
After meeting our $1,000 spending requirement to earn the 30,000 miles, we simply booked the flights we wanted directly through the Delta website. The Gold Delta SkyMiles® Credit Card from American Express also comes with a perk of getting your first checked bag for free. This applied even to our oversized ski bag.
Our total cost was fees of $11.20 each for a total of $22.40 to fly two people round trip across the country. While not technically free, this saved us over $1,100 in flight costs and an additional $100 in baggage fees. We now plan to cancel the card and will pay no fees.
Lesson Learned: The big lesson is that travel hacking is a real thing that can actually work. The results were definitely worth the effort. We saved over $1,200 just by taking a few minutes to organize our system for tracking our rewards, signing up for one credit card and using it for our normal spending until we hit the required minimal spending limit of $3,000. This is over double the value that we typically accumulate in an entire year using one card with cash back rewards.
Next we turned our attention to paying for our hotel. Since my wife travels a bit for work and usually stays in Hilton properties, she already had a Hilton HHonors account and had approximately 23,000 points accumulated.
We targeted a Hampton Inn, which would require 30,000 points per night. We chose to use the Citi Hilton HHonors™ Visa Signature Card. This card had a spending requirement of only $1,000 to receive the sign-up bonus of 40,000 points. The card has no annual fee. We spent about half of the minimum at a different Hilton property for a previously planned mid-December getaway. Any spending on this card accumulated at Hilton properties gives you 6 points for every dollar spent.
My wife was able to earn some additional points through work travel, allowing us to accumulate 71,000 points by the time of the trip. This would allow us to get Sunday and Monday free (a $300 value) and pay cash for only the cheaper Saturday night stay ($89 + taxes). However, on the morning of our check-out, we received our receipt and realized that we booked the trip prior to accumulating the rewards. We never re-booked with the accumulated points, so we were stuck paying the full bill: $395.
Lesson Learned: Travel hacking is a skill. Like any other skill, it has a learning curve. You must pay attention to details to make it work. However, even when you lose with travel hacking, you win.
We still have the $300+ value in Hilton HHonors points accumulated, which we will use for another trip this year. We were able to accumulate this value with little over $1,000 in normal spending plus my wife’s collecting points when staying in Hilton hotels traveling for work. Similar spending on a cash back card paying 2% would have been worth only about $20 cash value.
We didn’t find a great credit card option to get a free rental car and were getting short on time. We therefore simply rented a car, charged it to our original card and then applied the cash back reward we had accumulated throughout the year to pay it off.
Verdict: Draw. We technically got our car for free using credit card rewards but otherwise would have used this money for something else.
Lesson Learned: The rental car experience was an eye opener in that it took us a full year to earn enough rewards to pay for a rental car for 4 days (about $400). In contrast, there are many credit cards that offer sign-up bonuses valued at $300‒$1,000 when hitting minimum spending of $1,000‒$3,000 within three months.
It’s not very hard to get essentially a 30‒50% return on all your spending by signing up for a new card to receive a bonus, using the card up to the required minimum spending, then repeating the process continuously. Compare this to getting only 1‒2% return on your spending for using one card.
Travel hacking is not too good to be true. It’s also not quite as simple as it can sound when reading an article on the internet. As with most things in life, the truth lies somewhere in between.
I’ve seen enough with our experiment to realize that it is well worth my time to learn more and continue to develop this skill. Since taking this trip, I’ve been reading and learning more about travel hacking.
I’ve found out that Delta Airlines and Hilton hotels are not the most travel-hacking friendly chains to use. I’ve also learned we did not use optimal strategies. Nonetheless, on our first attempt, we were able to obtain about $1,500 in tax-free value simply by taking about two hours to research and apply for a couple of credit cards.
Travel hacking has proven my skepticism wrong. We obtained real savings. The benefits were far greater than what we were getting using a single cash back credit card. Our effort was minimal. Unless you have another way to make $750/hour, after taxes, travel hacking may be worth your time as well.Topics: Credit Cards