As I’m getting this blog up and running, I’ve written a number of posts about walking the local greenbelt trail, as well as about our first out of town adventures of the year. Behind the scenes I am also doing quite a bit of travel planning. Part of my strategy to make travel possible this year involves concerted travel hacking. At its most basic, travel hacking means earning free travel through credit card bonuses. I started off slow, but not too slow. Here’s what I did.
Back in September I began dipping my feet in travel hacking. If I want to travel as much as possible in 2017, I knew I had to start earning free flights and hotels right away. After doing some research on what would be the best cards for me to open, I decided to start with 2 cards, the Chase Sapphire Preferred Card and the Hyatt Card, also through Chase.
The Chase Sapphire Preferred Card
I chose the Chase Sapphire Preferred because it is widely regarded as the best travel credit card out there. No foreign transactions fees. 2x points on travel-related and dining expenses. Rental car, trip cancellation and even baggage delay insurance. Most importantly, this card has a sign-on bonus of 50,000 Chase Ultimate Rewards points, among the most versatile travel rewards available. Ultimate Rewards Points can be transferred at a 1:1 ratio to partner airlines and hotels, including United, Southwest Airlines and Hyatt hotels, among others. You can also book travel directly through the Ultimate Rewards program at 1.25 cents per point for a total of $625 if you’ve earned them through the Chase Sapphire Preferred card. Further, when you open a Preferred card, the first year’s annual fee of $95 is waived. If you can spend enough with your usual expenses to earn the bonus, and you pay off your balance each month so that you don’t have to pay any fees, you can literally earn free travel.
Applying was easy. I did it on-line. The form asked about 10 basic questions about myself and my income. Name, address. They wanted to know my annual income and employer. Also, be prepared to give your social security number and your mother’s maiden name. They are a reputable company and I looked them up, rather than them soliciting me, so I felt safe enough entering that information. If you’re not comfortable giving your personal information online, you can choose to apply at a Chase Branch office. It took me about 3 minutes on the computer and I was immediately approved. I put my income at $60,000/yr and I have good credit. I guess that was all I needed to qualify.
Once I was approved for the card the clock started immediately ticking. I had just 3 months to spend $4,000 in order to earn my 50,000 points. It’s important to know that your 3 months starts right then and there. Do not count from the day you get your card in the mail. It starts when they say, sure, you’re approved and we’d love to take your money! (Mwahahaha – I love turning the tables on them.)
I forgot that it might be so quick! In my planning I was hoping to use my Christmas shopping to meet the spending requirement. Um, I applied a little too early and had to get a lot of my Christmas shopping done by mid-December. I guess that works. Here was the rest of the 3-month spending breakdown I had planned:
$500 computer (need new one for blogging)
$1500 groceries for 3 months
$500 autopay accounts for 3 months (Netflix, YMCA, donation to charity)
$400 cell phone bill for 3 months
That only left $600 of additional spending over 3 months to reach my target. Gas. Car insurance. Entertainment. Expenses for kids. And other incidentals totaling at least $200 per month seemed doable.
It turns out that wasn’t quite how my expenditures broke out, but I did make the spending requirement. 50,000 points, plus points for all my spending on the card, were credited to my account within days of my reaching the threshold. By the way, that’s enough for 2 round trip airfares across the country, several shorter flights, or 4 nights at a nice Hyatt hotel in great destinations such as Washington, DC or Anaheim, CA. Cool. I’ll put those points to good use.
The Chase Hyatt Card
The next day I applied for the Chase Hyatt card. This card had a similar on-line application…both are Chase. But all cards ask similar questions. The bonus for this card is 2 free nights at any Hyatt in the world. Now, Hyatt has some rather upscale hotels to choose from. The Park Hyatt New York has rooms starting at $788 per night during part of the year. I have 2 trips planned to New York and have confirmed that I can book this hotel with my free nights. This is a benefit of more than $1,500. Hyatt hotels in Hawaii, London and Paris could also give a value of more than $1,000. To earn this bonus, I had to spend $2,000 within 3 months of opening the account. Note that this card has an annual fee of $75, which is not waived the first year. So while not exactly free, $75 to stay 2 nights at a super swanky hotel is amazing.
I was approved. Since I was concerned about being able to spend $2,000 more dollars in the same time frame as my Chase Sapphire Preferred Card, I decided to test out the process called manufactured spending. This is basically travel hacker money laundering. It’s not illegal, but it does feel a bit sneaky.
To help meet my spending, I bought two $500 prepaid Visa debit gift cards at Walmart on my new Hyatt Card, creating $1,000 out of $2,000 in spending. It also cost $4.95 for each card. Visa gift cards can’t be used to get cash back, and work rather like credit cards in the retail world. Except, they use a PIN number, which is where you can kind of work the system. Make sure you get a gift card with a PIN number! It will say it on the package. With the prepaid cards in hand, I took a second trip to Walmart– I was too nervous on my first trip to try it. I went to the customer service counter and asked to buy a $1,000 money order. You cannot use a credit card to buy a money order, but you can use a card with a PIN number. The salesperson allowed me to split my money order purchase between the two $500 cards, and I also had to pay a 49 cent fee for the money order. Once I had the money order, I could take it to my bank and deposit it right into my checking account to pay the credit card bill when it came. See how that works?
It didn’t quite go completely smoothly. I bought two different prepaid gift cards to try them out. The Walmart Visa Gift Card used the last 4 digits on the card as the PIN number. Do that. It worked perfectly. Just swipe on the payment keypad and enter the PIN. For the other card I tried, a Vanilla Visa, I had to set up a PIN, which was a pain, and it did not work at the customer service register. Super awkward. Eventually everything came together, but I would have been more comfortable if everything had just worked the first time. I didn’t really want to have to explain myself to the salesclerk!
I tried a tiny bit of manufactured spending and I think it’s perfectly fair to beat credit card companies at their own game. They’re not exactly looking out for your best interests with all of their fees and penalties and out of control interest rates. However, I still feel a bit uncomfortable executing this type of spending. If it interests you or works for you, you can get lots more details from more seasoned travel hackers such as:
I was able to hit the spending requirement and earn my 2 free Hyatt nights with the manufactured spending and paying at least $333 on expenses each month for 3 months. This is probably my favorite travel reward I’ve earned to date. Luxury hotel, here I come.
I’m pretty happy to have all those Ultimate Rewards points and the 2 free nights to use this year. Some people might worry that opening a bunch of new credit cards will hurt your credit. It hasn’t hurt me yet. Since my success with these 2 cards, I have opened 4 additional cards, including the high-end Chase Sapphire Reserve. A couple of months later, my credit score is still an excellent 799.
The Travel Take Aways
1. In my opinion, opening credit cards to earn the awesome travel bonuses is a great way to help make travel possible for me and my family. I’ve already earned and used free flights and free hotel rooms through credit card rewards.
2. HERE’S THE CAVEAT. You should only use this strategy if you pay your credit card bill in full each and every month, if you are responsible with your use of credit cards and only spend what you can afford to pay off each month, if you have good to excellent credit, and if you can meet spending requirements with your normal day-to-day spending and expenses. It’s not for everyone. Here’s some more good information. http://millionmilesecrets.com/2013/03/28/warning-the-5-dangers-of-applying-for-credit-cards/
3. How to start. I would recommend starting with the Chase Sapphire Preferred Card. As of this writing, if you spend $4,000 in 3 months on the card, you will earn 50,000 Ultimate Rewards points, which can be turned into 2 or more roundtrip flights or 2-4 free hotel nights. The annual fee is waived the first year, so you literally have nothing to lose. See conditions above. If you want to start smaller, there are many cards out there with a less strenuous spending requirement, some as low as $750 in 3 months (such as the no-fee Hilton American Express card I am using to earn free hotel nights right now). Figure out what works with your financial situation and travel goals.
4. Manufactured spending. You can try manufactured spending to meet some credit card travel bonus requirements if it interests you. Manufactured spending entails buying gift cards or other cash equivalents that can then be liquidated to pay off the credit card spending. It’s not illegal, but some credit card companies may not allow it. Read the fine print and read up on other people’s experiences with it.
Woot-woot. I plan to keep working this strategy as long as I can for as much travel as I can. As long as they keep giving me free travel. What do you think about using credit card bonuses to make your travel affordable? Are you going to give it a try?
Hope to see you out there!