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Travel hacking 101: Part 2

If you read part one of travel hacking, then you may have read about a few of the credit cards I recommend. Here is the thing, every credit card has a different value for each person applying, but if you know the basics, it becomes easy. If you want to sign up just click on highlighted links in this article.

Over time you will figure out what works best for you. I really feel strongly on earning points, but you must know the key to this ‘travel hacking‘ game. You must pay off all your bills when the statement is due. If you are not in a financial place, with a positive credit score and able to pay off your bills, or you are in credit card debt, this is not something you should enter in at this time.

Any of these recommendations here are not financial advice and please know the risks, yet there are massive rewards for the art of travel hacking. For starters, we all have to start somewhere, right?

In America companies push credit card offers on you and don’t teach you the repercussions of paying off your bills on a monthly basis and this is where people start to get into trouble. I know I have never had a bad credit score, but during my time in college, I did run up credit card bills. I personally paid for my entire college education by myself  between loans and grants, with the exception of some monies my parents contributed for books, and a few other odds and ends, but made a major decision when I got my first credit card in 1998.

I remember getting to college and seeing credit card recruiting tables set up. I signed up for my very first credit card, which I still have to this day. Do I use it often, no, but more on that later. I received a credit line of $10,000, with having very little income or proof of a credit history. Say what, how can that be? It is possible to get access to credit at a young age here in America, but the problem is there is lack of financial literacy and transparency of what that truly means. 

Financial literacy is understanding the checks and balances of an income to debt ratio. Not really knowing much about balancing credit cards I immediately lowered my approved credit limit of $10,000 to about $5,000, half of what I was approved for. Now was this a smart move, probably not, because you want to build your credit at a young age, however I knew if I was ever in financial trouble I didn’t want to bite off more than I could chew and run up a credit card bill that I could not pay off. This right here is the key component to travel hacking.

If you are opening a credit card, after reading this, please do your due diligence to know the risks along with the rewards, as previously mentioned. I know for me I pay off my monthly statement, each and every month. How do I do this and why? 

Well, for starters, credit card companies want to see you will pay them back, yet they also don’t mind collecting interest on the credit cards you open and don’t pay off immediately. Don’t be that person, and only charge what you know you can pay off every month.

My first card as I mentioned above, was approved for $10,000. In 1998 I  immediately lowered the credit line, as I was a bit unsure of all that money being thrown at me, (in borrowed form) and I did this because I didn’t have the knowledge that I have now. I wouldn’t change this decision now because it saved me from running up a credit line that I couldn’t pay off. 

You see during my college days I gave myself a budget and I told myself even if I max out a credit card I would be able to pay it off. With a credit limit as high as $10,000 I wasn’t so sure that was a good idea, as a result I knew I should only have a card with half of that limit.

 I have always been smart with my finances and this decision was the right one for me at that time. I had to pay for some college expenses and had to use the credit card as back up. Credit cards can be extremely beneficial if you know how to use them to your benefit.  For example, that time I wanted to travel to Spain while studying abroad in London, you bet that credit card from 1998 came in handy. 

So, now that you have a basic history of my use of credit cards, let me explain the art of travel hacking to you. I recently saw a quote saying, ” if you use your debit card to pay for things we cannot be friends.” Well, we can still be friends, regardless, but if you like me are in a great financial situation and can charge things on your credit card to collect points and miles, then pay them off monthly, then you can join the travel hacking club, of course at your risk, but remember the rewards.

 Trust me when I say this is truly an art, when you start seeing the rewards of using credit cards versus your debit card or cash. I get the antiquated notion of paying for everything with cash, but credit cards do truly have a benefit for those that know how to use them properly. For starters I think this email is going to be a three part series, as there is so much to say on this subject and it is not a one size fits all situation. You probably are wondering what next right? Well, there are many credit cards to choose from, but my favorite ones are the following. 

Now, I am going to teach you a few things about short cuts when it comes to the slang used for travel hacking. Chase offers many credit cards, but one very important rule is the 5/24 rule. To be approved for any Chase care you are subject to the 5/24 rule, which means you cannot have opened five or more personal credit cards across all banks in the last 24 months. This means you must be under 5/24 to be approved for a card. The rule typically only applies to cards issued and approve by Chase, but the 5/24 can count for credit cards from other banking institutions. 

Now you are probably asking, which card should I start off with? Now this is really based on many things, including the current reward offerings. Chase currently has a great offer for the Chase Sapphire Preferred card (CSP) that I highly recommend with earning 100,000 UR (ultimate reward) points or that of $1,250.00 cash which can be applied to your statement after earning them in the three months of opening the card. I received mine less than a year ago and started earning my free hotels, trips and flights. 

The key piece to this credit card (CSP) is you must spend $4,000 in the first three months of opening the credit card account. Now, this isn’t difficult to do especially if you shop, grocery shop, have bills and such. I think most of us have the usual bills to run a household. I do not recommend you pay your rent or mortgage on your credit cards (although there is a travel hack for this too), however paying things like your cell phone bill, cable, utilities and such can add up. Each card has different requirements to meet the monthly spend (MS).

With these UR points you will have access to the Chase system and you can book flights, hotels, rental cards and even use these points or dollars for straight up cash. Yes, that is right, cash after paying with your credit card. No, it is not too good to be true.

Just be sure to budget each month to not avoid running up credit cards you cannot pay off monthly. This particular chase card (CSP) does not have any foreign transaction fees and only has a yearly fee of $95.00, which in the long run is completely work it for the amount of free travel you will earn. Another great card from the Chase portfolio is the Chase Sapphire Reserve (CSR) , but the current offer is only 60,000 points or $900.00 cash. To not overwhelm you I will stop there, as I could go on about other cards, but that is where I think it is relevant to do a Part three to this travel hacking 101 email. Stay tuned for Part three of travel hacking 101.

If you have any questions or want to reach out, please do not hesitate to contact me.