How to Utilize Travel Rewards for Free TravelJun 22, 2022
Disclosure: This post contains referral links, and I would receive a small commission in the form of points if you choose to apply and get approved for any of the credit cards that are mentioned using one of my referral links.
Is one of your favorite hobbies traveling abroad to new, exciting countries to explore, soak in the culture, and try delicious local flavors? Or do you prefer to travel domestically to visit a new city, or even adventure in a national park? Or do you simply have family or friends that live in another state that you simply visit frequently by hopping on a plane? Or are you a PA who travels to CME conferences, but your CME budget isn’t that generous, so you have to cover part of the trip yourself? If any of those scenarios resonate with you, then this blog post is for you! I’m going to share with you how you can travel hack to earn free travel!
Many PAs travel for a variety of reasons. Some of you may have been reading along or listening to the PA the FI Way podcast and thinking that you probably should dial back the travel so you can reach financial independence more quickly. However, travel is simply something that I refuse to put on hold until I’ve reached FI, and if you love traveling as much as I do, I hope you agree!
Travel Hacking and Travel Rewards Defined
So let’s start by reviewing what travel hacking with travel rewards actually means. Travel hacking is the term used by travelers who earn free or low cost travel by obtaining credit card points, hotel points, and frequent flier miles, which are collectively called travel rewards. Although the term “travel hacking” may sound a bit sketchy, it is a completely legal way to earn points to put towards free travel. Arguably the quickest way to earn travel rewards is with credit card sign up bonuses, and this is the topic that will be the focus of this post.
Things to Consider Before Diving Into Travel Hacking
Besides needing to travel for enjoyment or out of necessity, there are a few other criteria that are needed before you consider utilizing credit card sign up bonuses to earn travel rewards.
- You need to have a pretty good credit score. If you haven’t yet, take a listen to Ep. 18 of the podcast to learn about what your credit score is, why it is important, and how you can boost it.
- You need to be able to pay off your credit cards on time and in full every single month. If you can’t do this, don’t even consider travel hacking otherwise you’ll be paying an enormous amount of interest.
- You need to be able to meet the minimum required spend amount in order to earn the sign up bonus.
- You should not be trying to qualify for a large loan (such as a mortgage or trying to refinance your mortgage) when you open up a new credit card.
Travel Hacking Will Likely Only Temporarily Affect Your Credit Score
Each time you apply for a new credit card, a hard pull on your credit is completed, which can drop your score by a few points. Typically, your score is back to where it was within a few months. Some who take advantage of travel rewards via credit card sign up bonuses may even find their credit score increase with time. As you recall from Ep. 18, new credit and the length of credit history are only a portion of your total credit score. Once you have a new credit card, you may have a lower utilization rate of your total credit, and you will plan to pay the card off on time and in full every single month, which will both help your score.
Determine How Flexible You Are With Your Upcoming Travels
If you’re ready to start earning points to put towards free travel, first consider where you want to go. If you have a set targeted destination, or even a specific hotel or resort that you would like to visit, keep that information in the back of your mind when you are trying to decide which credit cards to open.
On the other hand, if you’re willing to be very flexible with your future destinations, or if you’re like me, and your travel wish list just keeps getting longer, then you’ll likely benefit more from travel hacking than if your plans are very rigid. Flexibility can be key, especially when it comes to travel dates. For example, if you know you want to travel only to a particular city or country right over the holidays between Christmas and New Year, you likely won’t find that great of a deal, especially because travel is generally more expensive that time of year. However, if you have a few potential destinations in mind, and several weeks to choose from, you likely will be able to find good deals on flights and hotel or resort stays.
Consider Starting With Chase Ultimate Rewards to Earn Points
The Chase Ultimate Rewards program is one of the most valuable programs out there. Chase Ultimate Rewards points can be used for a variety of airlines and hotels. Depending on which Chase card(s) you open, you can often transfer the points to the airline or hotel partners directly, which can be more valuable than booking directly through the Chase Ultimate Rewards portal.
However, it’s important to note that once points have been transferred to a partner, the points cannot be transferred back to your Chase Ultimate Rewards account. It’s advised to finalize your travel plan for flights and hotel or resort, then transfer the points at that moment, to book right away. It’s recommended not to redeem your points for cash, as that typically provides the least amount of value.
Before you consider opening a Chase credit card, ensure that you’re under the 5/24 rule. This rule is such that Chase will not approve you for any of their cards if you’ve opened 5 or more personal credit cards from any card issuer in the past 24 months. However, if you open a Chase business card, then that card is not counted towards one of the 5 personal cards for this rule.
Now that we’ve reviewed some reasons why Chase Ultimate Rewards points are pretty awesome, let’s discuss what your first credit card should be. Many travel hackers in the travel rewards community suggest starting with the Chase Sapphire Preferred credit card, as it provides a ton of value with its sign up bonus, and the annual fee is only $95 compared to Chase Sapphire Reserve credit card of $550. As a side note, the Reserve provides some luxury such as being able to use Priority Pass Select lounges at airports, as well as a $300 annual travel credit to help offset the cost of the large annual fee, and the points earned with the Reserve are 0.25 cents more valuable when booked through the portal as well compared to the Preferred, to list a few benefits. However, as someone new trying to earn points, the Chase Sapphire Preferred really is an excellent starter card due to the lower annual fee.
How to Meet the Minimum Spend
You may be thinking, “Wow, Kat, $4000 really sounds like a lot of money to spend!” Granted, this can be true for a lot of people. However, if you spread out the $4000 over the course of 3 months, then is is only about $1333 per month. What you would do is put all of your family’s spending on that card until you hit the minimum spend. Consider if you have a known larger purchase coming up, such as a home improvement project. If so, you could likely reach $4000 very quickly. Additionally, if you think you may be a few hundred dollars short, consider purchasing Christmas or birthday presents early for others, or even consider buying gift cards to grocery stores or restaurants that you frequently visit to help you meet the minimum spend.
I am in no way suggesting that you spend money just to earn points. Rather, I’m encouraging you to consider what your family normally puts on credit (or debit) cards monthly, and if you’re in the ballpark, consider trying to earn travel rewards by directing your spending to the current card you’re trying to earn the bonus on.
Consider Trying to Earn the Southwest Companion Pass
Now that you’ve started earning your points with the Chase Sapphire Preferred, consider if you want to try to shoot for the Southwest Companion Pass, or if you’d rather try to first get a hotel card. I’ll talk first about the Companion Pass because depending on the time of year, you may want to hold off a bit on starting on the Companion Pass.
Southwest flies to many domestic cities, as well as cities in Mexico, several Caribbean islands, a few central American countries, and in the past few years, has even started to fly to several islands of Hawaii. If you are thinking you’d rather first explore Europe, Asia, Australia, South America, or Africa, then don’t bother opening a Southwest card!
So what is the Southwest Companion Pass? It is a reward that once it is earned, allows you to fly anyone (your companion) that you designate for free with you for the rest of the calendar year that it is earned in, PLUS the whole following next year. Your companion can be changed up to 3 times per year (so up to 4 companions total in the first year, followed by 3 the second year). Due to this, many who are trying to earn the Companion Pass will open their credit card towards the end of the year, but (THIS IS VERY IMPORTANT) they wait to meet the minimum spend until early January of the following year. Otherwise, if they make the huge mistake of meeting the minimum spend in December, then the rest of that year is sort of “shot”, and they would just have the next year to use the pass, plus they would be likely short in the required points to earn the pass for that year.
How can you earn the Southwest Companion Pass? From Southwest’s website: A Member who earns 135,000 Companion Pass (in 2023) qualifying points or who flies 100 qualifying one-way flights booked through Southwest per calendar year will qualify for Companion Pass. Most don’t fly 100 one-way flights in a calendar year, so we will focus on the points. It’s important to note that if you already have those Chase Ultimate Rewards points from your Chase Sapphire Preferred, that you cannot transfer the points to Southwest to help you get to the 135,000 (in 2023) for the pass.
As with the Chase Sapphire Preferred, the point values for Southwest credit cards change over time as well. You can compare the credit cards on Southwest’s website.
Unfortunately, you cannot have 2 personal Southwest credit cards, and due to this, often people will open a Southwest business credit card as well to earn the Companion Pass quickly.
You Don’t Need a Traditional “Business” to Open a Business Credit Card
Now I can already hear many PAs and PA students out there saying, “But I don’t have a business!” However, I’m going to review how many of you likely actually do already have a business or could easily start one.
For example, if you sell items on Etsy, Ebay, Craigslist, or Amazon, or if you sell crafts or goods at flea markets, or if you tutor, teach music lessons, coach sports, or if you occasionally work as a photographer or videographer, or if you drive for Uber or Lyft, or if you rent out a room (house hacking!) or have a place on AirBnB, then you have a business!
For all of these small businesses, you likely have not created an LLC nor obtained an EIN. Instead, you would be considered a sole proprietor. You would want to use only your name on the card when applying, NOT a business name (otherwise the credit card company will request further information of the business), and you would use your social security number in place of an EIN to open the business card.
If you're not trying to earn the Southwest Companion Pass, a Chase Business Ink credit card could be a good option for you if you have a business!
Consider Hotel or Airline Specific Credit Cards
After you’ve earned your points through the Chase Sapphire Preferred credit card, and have possibly decided to open both personal and business Southwest credit cards to earn the Companion Pass depending on the time of year, consider if there are any particular hotel credit cards you would like to open, or possibly another airline if you’re planning not to fly Southwest with the Companion Pass.
For example, I chose to next open a Hyatt credit card, which is also a Chase card (just like the Sapphire Preferred and Southwest credit cards). Since Hyatt is a transfer partner of Chase Ultimate Rewards points, I was able to transfer some Chase Ultimate Rewards points from the portal to my Hyatt account, and combine those with the points earned through the sign up bonus with the Hyatt card to book a stay in Costa Rica for this upcoming December. My husband will be my companion as we fly Southwest utilizing the companion pass. He will “fly for free”, while I use Southwest points to fly myself down there. We do have to pay taxes and fees for the flights, though, which the case with travel rewards. Nonetheless, our flights will cost approximately $162 total for the two of us to fly round trip from the upper Midwest to Costa Rica as opposed to approximately $907 as the full cost without using points or the Companion Pass.
Additionally, Hyatt does have some all-inclusive resorts in Mexico and some Caribbean islands that look nice. Marriott and IHG are other Chase partners who have many locations all over the world including all-inclusive resorts.
Consider Other Credit Cards Outside of the Chase Family
Although all of these previously mentioned cards have been under the Chase umbrella so to speak, there are several others to consider such as Capital One Venture, some American Express cards, Hilton, etc.
Decide if Your Next Vacation Will Be Mostly Free With Travel Rewards!
As we have discussed, travel hacking with travel rewards points will allow you to earn up to several thousands in free travel, while you cover the nominal amount for taxes and fees. Better yet, if you have a spouse, get them on board, and they can be your “player two” in this game of travel hacking! You can open your cards in both of your names to earn double the points. Or, if you’re married with two kids, you and your spouse could both earn the Southwest Companion Pass, then your two kids could fly free with you guys! Otherwise, you and your spouse could alternate for who has the companion pass so the other could fly for free.
I first learned about the concept of FI through being introduced to travel hacking with travel rewards by the husband of one of my previous PA coworkers and friend. If it weren’t for my learning about travel hacking, I wouldn’t have discovered the concept of financial independence at the time. Not only would my blog, podcast, and business not exist, but my husband and I may still have not been very intentional with our money over the past couple of years.
Travel is one area of spending that I do not plan on ever eliminating since I enjoy it too much. So instead of eliminating it, I recently started using travel hacking to help keep costs low! If you would like to sign up for any of these credit cards that were mentioned, I sincerely hope that you consider doing so by applying through one of the links in this post for the correlating credit card.
Please reach out to me if you have questions. You could either send a message through Instagram @pathefiway, or join the private PA the FI Way Facebook group, and send me a DM. Otherwise, you can contact me through the website if you prefer.
If you’d like to listen to PA the FI Way podcast episodes where travel hacking is discussed, check out episodes 22 and 47!
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