While listening to the Mad Fientist podcast, one of the guests introduced me to travel hacking. The basic concept is that you sign up for a new credit card that has a travel bonus. Usually the terms are something like spend $4,000 in 3 months and you will get 40,000 travel miles or some other reward as a new customer. That would be equivalent to about $400 in free travel. After you have obtained the bonus you close the card and pick a new one with a new bonus.
The problem I had with this system is that I didn't think I could hit the spending thresholds each month since I do not spend that much money consistently. I would need to spend around $1,300 a month or so to hit those limits. Then an unexpected opportunity arose.
I was living in a house with two roommates. We were each paying out landlord $500 a month for rent in cash. We also split the utilities which was another $50 a month. Our landlord unexpectedly needed us to move out so he could rent the house to a friend of his. We were bummed out but liked living together so the 3 of us rented a 3 bedroom apartment down the street for about the same price. I told my roommates that I would like to put the entire rent on my credit card and have them pay me in cash so I could obtain some credit card bonuses. They agreed to do that. Each month I am now putting not only my rent onto a credit card but their rent as well. It comes out to about $1,600 or so each month. With that kind of spending it was been simple to hit those spending targets. One draw back is that the apartment company charges a 1.75% fee to make a credit card transaction each month which comes out to about $28 each month. In the end it still comes out in my favor.
The first card I tried this on was the Chase Sapphire preferred card. The deal was if you spend $4,000 in the first 3 months they will give you 50,000 chase ultimate rewards points which can be redeemed for cash, travel, hotels or other perks. I easily hit this spend in 2 months and converted my points for a cash back reward of about $550. Nice.
The next card I picked was the Chase United Explorer Mileage Plus card. The deal on this card is that if you spend $4,000 in the first 3 months you receive 40,000 United Mileage plus miles. Additionally, if you spend $8000 in the first 6 months you will receive another 30,000 miles. I hit my first target and received the 40,000 miles. I then used these miles to book a flight that would have cost around $400 on United for $11.20. I'll be shopping around for another credit card as soon as I hit the final target for the current one.
A nice side benefit of this is that my credit score has gone up as well. I have a 100% on time repayment rate and my credit score is hovering around 740. It might dip a bit when I cancel one of my cards to obtain a new one but it will be worth it as long I can keep getting bonuses and not paying interest. I'm not sure how much longer the credit card companies will be offering all these bonuses but getting a couple of free flights a year is big for me so I hope they keep it up. What is also nice is that I am self employed so I can plan my vacations around the times of the year when the flights will be cheaper so the miles can go quite a bit further.
This has been a great system so far. I am looking forward to planning some more trips now that I have a way to drastically reduce the cost of airfare. Combined this with staying at an Airbnb or couch surfing and you have the makings of a very reasonably priced vacation.
