The business class seat from San Francisco to Tokyo cost me eighty-seven dollars and sixty thousand credit card points. The cash price was six thousand eight hundred dollars. I had earned the points by signing up for two credit cards, meeting the minimum spending requirements, and paying my rent and groceries with those cards for six months. This is travel hacking, the practice of using credit card rewards, airline miles, and hotel points to travel for a fraction of the normal cost. It is not illegal. It is not unethical, as long as you pay your bills in full. And it is not as complicated as the online forums make it seem. I have been doing it for five years, and I have flown business class to Asia, Europe, and South America for less than the cost of an economy ticket.
How Credit Card Points Work
Credit card points fall into two categories: transferable points and co-branded miles. Transferable points, like Chase Ultimate Rewards, American Express Membership Rewards, and Citi ThankYou Points, can be transferred to multiple airline and hotel partners. This flexibility makes them the most valuable. Co-branded miles, like United MileagePlus or Delta SkyMiles, are tied to a specific airline and are less flexible but sometimes offer better redemption rates for that airline's flights. The key to travel hacking is earning points faster than you spend them. The fastest way to earn is through sign-up bonuses, which typically offer fifty thousand to one hundred thousand points after you spend three to five thousand dollars in the first three months. I sign up for two to three cards per year, meet the minimum spend through normal expenses, and cancel or downgrade the cards before the second annual fee.
Redeeming Points for Maximum Value
Not all redemptions are equal. Using points to buy merchandise or gift cards typically gives you a value of half a cent per point. Using points for economy flights gives you one to one and a half cents per point. Using points for business class or first class international flights gives you two to five cents per point. I redeemed sixty thousand Chase points for a business class ticket to Tokyo that would have cost six thousand eight hundred dollars. That is a value of eleven cents per point, an exceptional return. The best redemptions are on partner airlines. For example, you can transfer American Express points to ANA and book a round-trip business class ticket to Japan for seventy-five thousand points, compared to one hundred twenty thousand points if you book through United. Learning these partnerships is the key to maximizing value.
The Risks and Rules
Travel hacking requires discipline. You must pay your credit card bills in full every month. Carrying a balance destroys the value of the points, because interest charges exceed the rewards. You must also keep track of annual fees, which range from ninety-five dollars to six hundred ninety-five dollars for premium cards. I use a spreadsheet to track my cards, their annual fees, their benefits, and my points balances. Another risk is credit score impact. Each credit card application generates a hard inquiry, which temporarily lowers your score by five to ten points. However, the increased credit limit and on-time payments improve your score over time. My credit score has increased by thirty points since I started travel hacking.
Getting Started
If you are new to travel hacking, start with one card. The Chase Sapphire Preferred is the standard beginner card. It offers sixty thousand points after four thousand dollars in spending, has a ninety-five dollar annual fee, and earns two points per dollar on travel and dining. Use it for all your expenses, pay it in full, and after three months, you will have sixty thousand points. That is enough for a round-trip economy ticket to Europe or a one-way business class ticket to Asia. Once you are comfortable, add a second card with a different rewards currency. The key is to spend responsibly, track your points, and remember that the goal is to travel more for less, not to accumulate debt for points.
