Disclaimer: This strategy should be used with caution. You need to zero balance your credit card monthly or the interest will negate any savings. We do not advocate going into debt if you already have credit card balances.
Do you long to travel, but think you can’t afford it?
Well, stick with me because I have a special guest, and we’re going to talk about how to be a travel hacker.
Here we are in Germany, and I thought it was appropriate that I introduce you to my husband, John Kaib. John is our travel hacker.
Sherold: John, what’s your definition of travel hacking?
John: Travel hacking is a strategy whereby you utilize frequent flyer and hotel loyalty programs, to gather enough points, to get free travel, hotel rooms.
Sherold: How would somebody get started if they don’t know anything about how to use these credit cards and the mileage programs? Let’s say someone wants to start saving for the trip of their dreams. And, let’s say that somebody wants to go to Europe, like we did, for example.
John: First thing to do is join loyalty programs, both for your preferred airline, which would probably be from the airline most utilized by your local airport, and a hotel family that you prefer. There are four major hotel families – Starwood, Marriott, Hilton and IHG (Intercontinental Hotel Groups). Get one or two of those, one or two airlines, but no more.
Then, the second component is to get co-branded credit cards. Co-branding, for example, means you get a United Airlines credit card through Chase. You want to get one for each airline loyalty program that you have, and also, for each hotel.
*Remember only work with one or two for an airline and hotel.
Further enhancement of this is if you have a business, you can get a business card too.
Each one of these credit cards have a certain period of time in which you have to charge, let’s say, $1,000 in 2 months or $3,000 in a half of a year. You definitely want to pay attention to that and follow the requirements in order to get the miles.
Once you’ve succeeded in that, that credit card can be set aside to be cancelled, perhaps before the annual membership is due.
Sherold: There’s a fee for each year that you’re a member, so if there is, you want to use it during that time frame they require in spending value, and then put it away. So, you don’t want to incur any more debt, like you said.
John: Right. One of the things that some cards do is for certain categories of purchases, they will have a multiplier effect on a bonus, such as using a card for your groceries, you’ll get two or three times the miles, so you want to pay particular attention to that.
But, the real key on getting the miles to go to Europe is to initiate multiple credit cards over time. If you want to go to Europe, you’re not going to do that in 6 months. It will probably take a year and a half to two years to gather up enough miles, but it’ll be a free trip.
Sherold: So, how many miles was it for us to use on this trip?
John: I went through American Airlines, which is another point that each of these airlines, these domestic airlines, have a varied number of partners that they can utilize, and you’ll be assigned tickets on those partner airlines for the best connections.
We spent 135,000 miles, each of us, to get from Portland, Oregon to Marseilles, France, and then it was an open jaw ticket, which means you don’t have to fly back from the same place. We are returning, again, first class, from Berlin to Portland, Oregon.
Sherold: That’s a lot of miles, 130,000, so that was for Europe. That’s to fly here. As John said, it’s a much better value. Now, we’re flying first class, so how did you manage to get first class? What would it have been for a coach ticket?
John: Quite honestly, I don’t know. I think it would be like 60,000 or 90,000.
Sherold: So, less.
John: Yes, it would be much less. One of the things is the days of getting an upgrade on frequent flyer miles are pretty much over with. The airlines have taken it upon themselves to give those bonuses to their loyal flyers that have, like, a million miles, etc., which are considered to be hard miles. This program, the strategies we’re talking about today are called soft miles.
Again, you get 135,000—well, if you were given a bonus of 30,000 for each sign-up on cards, did the math, you would take 4 credit cards for each of us, over a 1-2 year period, and then spending in between. Basically, on spending, I might have said this, but anything that’s over $10, we put on the credit card. And, there will be multiple credit cards, so we probably move through the credit cards every 4-6 months. We have another credit card. Again, I set it aside and then cancel it, possibly before the annual fee comes up, definitely before the second one would be there.
Sherold: Okay, so I want to clarify. One is that if you were flying coach, which we’ve done, many times, frequent flyer miles, flying coach, it’s not going to take you as long.
Sherold: Now, there’s another tip. You have booked for us one year out. These go fast. If you are like us—he’s an extreme travel hacker, so he’s always on it. We’re always tracking our miles. Or, John is. So, we know. We’re planners out in the future. So, we knew we wanted to come here, and I know that we’ve done this in the past when we’ve flown to Baton and other places. You’re looking a year out to grab us some seats, whether it’s economy or whatever, because there are serious travel hackers out there, like us, and we are going to get those seats a year out, and then they’re gone. There might be a limited number of those seats.
John: Yes. The airlines are fluid in their numbers, but usually you figure about 10% of the seats are reserved for their frequent flyers, but that could be less than that or more than that, depending on the popularity of the line.
The airlines put out their seats about 330 days ahead of departure. I just read an article that said the best time is 257 days out, but clearly, the early bird gets the worm. Say you do like we do, around 330 days, we are looking every day, every other day, to see when it pops up, and then you know your itinerary. You put it in and you usually get it. If you wait until 6 months out, then you’re probably not going to get it.
Sherold: One of the things you do for us is that you will—we put our personal expenses, groceries, medications, things like that, on a certain card, because we’re really working that card. You will hand me a card, because this is kind of your job in our partnership/family here. You’ll say, okay, now we’re going to use this card for groceries and this one is for medications or whatever, and then you’ll take the card I had and you’ll put that away, because we probably hit our requirements.
John: Yes a minimal payment.
Sherold: So, you’ve gotten another card with that particular airline that’s given you and me 30,000 or 25,000 miles, and now we’re going to use that card for the miles. So, that’s how we do it. We do not incur any more debt at all. We’re just simply using—instead of cash, instead of checks, any debit cards—we’re using these cards for anything we need to buy, and that’s getting us miles.
John: I probably go online about every 4 months to look at the promotions. So, 25,000, 30,000 is pretty standard. But, on occasion, you’ll find 50,000…70,000 miles. Not that many points for hotels, but you can find those on occasion, and when they pop up, you want to grab them, even though you’re not necessarily needing that. You want to grab it. Use it. Use the minimal buy. Set it aside. Cancel it later.
Some people worry about their FICO scores, but really, it’ll cost you 4-6 points to apply and cancel a card, but that’s only for, like, 6-9 months, so it really is minimal. It’s talked about a lot, but if you have a good credit score, over 700, it doesn’t matter.
Sherold: Okay. On this trip, for example, we’re staying in hotels about 7 nights. We’ve stayed with friends. We’re here, in Germany, staying with friends. We’ve stayed in various hotels. All free using points. I mean, this trip, I can’t wait to see. It’s probably food and incidentals and things like that, but this trip is really not costing us that much money.
How would someone start with the credit cards and the hotels?
John: Okay, the hotel loyalty programs are similar to the airline programs in that getting there is the same thing. You join the loyalty program of your preferred. To be honest with you, there are three big ones, Starwood and Marriott. There are others, but they’re not as inclusive around the counties.
As I said, really, hotel programs, unless you get a bare bones minimum staying in the United States, you want to use these to get the most value. Expensive cities, New York, San Francisco, Chicago, or more preferably, overseas.
Depending on your loyalty level, and sometimes, just by signing up for the card, you’ll get bumped up to a loyalty level. Loyalty levels are designed for the frequent traveler who is paying, and this is the hotel family’s way to ingratiate themselves to them. However, as a card holder, you’re able to get up one or two levels. It gives you some perks, but that’s not a big driver here. The big driver is that cities are expensive, hotels in these cities are very expensive, and just used points.
I recently read that if you were to compare airline frequent flyer programs versus hotel family loyalty programs, the hotels went out for the value in their points.
Sherold: Hmm, that’s interesting.
John: And, I should say that unlike the airlines, which are dealing with only a couple classes of seats, hotels—and I think we all know that there are varying classes of hotels. You’ll pay more in points to stay at nicer, nicer, bigger, better ones, and those are your choices. Again, the big value, if you’re just looking for a place to sleep is the lower quality, which are still good hotels, and it will get you a lot further in using your points than staying at the best hotel in that city.
Sherold: Right. I have my business so I can travel and keep my business going. I put on a workshop over here for 10 English-speaking German women. It’s very fun for me to visit other cultures and meet other women and people.
So, if you’re interested in this and you want to be a travel hacker, let us know and give us your questions.
John: Yes, and if I may, add one more thing.
John: Go online. Google search travel hacking. There are multiple websites concerning this.
Sherold: Like, what websites?
John: Chris Guillebeau has one. There’s one that’s called Points Guy. Likewise, for getting a card, there are multiple websites for the best airline travel card. That’ll be under travel cards. Not necessarily hotel cards or airline cards, but use travel cards and you can just roll through them. When you scroll down, you can find that hotel program that you’re looking for. Click on them. You can compare up to 4 or 6, what have you. When you apply online, they get a little cut on that, but it doesn’t matter. It’s convenient, and everything can be done via internet. Everything from signing up for the loyalty programs, signing up for the credit card, canceling the credit card, paying your monthly bill. It’s all internet-based and so easy.
Sherold: So, if you like this video and you want to know more, we could do another one. We could do an advanced travel hacking. We’d like to know your questions. I’ll bring John on as a guest because this is really an important part of our lifestyle.
Thanks again for watching. If you liked this video, and want to learn more advanced travel hacking tips, let me know.
Please share this blog with others that might want to learn these tips.
Happy Traveling, xo Sherold