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Travel Hacking Small Wins

I’ve been thinking a lot about how when Travel Hacking, small wins can add up to great savings over time. When I got started in this hobby, all I wanted was a free round trip flight to San Diego. To that end, I applied for one credit card; the Citi/AAdvantage Platinum Select World Elite MasterCard. That credit card name sure is a mouthful!! With that one card, I got a $100 credit on the flight I happened to be booking at the time. Then I met the minimum spending requirement of $3,000 in 90 days.

That earned me 40,000 AAdvantage Miles. Offers vary all the time and as of this writing, you can earn 50,000 miles with this card. The minimum spend is only $2,500 in 90 days. Also, this card continues to carry no annual fee in the first year. If you’re interested, you can find out more information here: Citi/AAdvantage Platinum Select World Elite MasterCard.

My First Small Wins

With that one credit card, I earned myself a free flight to San Diego the following year. I didn’t have to use the full 40,000 points I’d earned from meeting my minimum spending requirement. I continued to use that one card to make most of my purchases. That first free flight felt life changing. That redemption of miles meant a savings of over $400. This savings was in addition to that first $100 credit I received when I first applied for the card. That may not seem like a lot of money to you. However, to this self proclaimed frugal gal, it was a huge win. Let’s call them Small Wins Number One and Two.

The Wins Get Bigger

Business Class Seat in the 20 Seat British Airways Upstairs Cabin. This was a big win by using Credit Card miles as a Travel Hacker.
Business Class Seat in the 20 Seat British Airways Upstairs Cabin

A little over 18 months into this hobby, I had earned enough American Airlines miles to fly one way to Oslo Norway in business class. My seat was located upstairs in a special business class secion on British Airways. There were only 20 seat in the whole section. half of them were unoccupied. It cost me 55,000 AAdvantage miles and the cost of the taxes and fees. This really was a huge win for me. Flying business class was not something I had ever imagined doing.

Learning about travel hacking showed me that what was possible without breaking the bank. That trip to Norway had me flying business class on both the outbound and inbound flights. I used two different types of points/miles and flew on two different airlines.

The other type of points I used were Chase Ultimate Rewards Points. I earned those points with both the Chase Sapphire Preferred and the Chase Business Ink Preferred. There is nothing like sleeping in a lie flat bed/seat complete with pillow and fluffy duvet blanket. I arrived refreshed when I got to Oslo after my overnight flight on Lufthansa.

Another Win

Business Class Lounge Shower Heathrow Airport London. I loved this one of my Travel Hacking Small Wins.
Business Class Lounge Shower Heathrow Airport London.

A great perk of flying business class is the opportunity to access business class lounges in the airport. Those lounges offer comfortable seating, nap rooms with beds and lots of delicious free food and drink (including alcohol). However, for me, the best part of my experience in the British Airways business class lounge was taking a shower; at the airport!!! That is a true luxury. Imagine how fabulous I felt before boarding my 7 hour flight back to the States. It’s hard to put a price on a shower but I can tell you how much money I saved on that trip.

My Oslo Trip Costs

My lovely Airbnb in Oslo in a great location.  Another of many Travel Hacking Small Wins.
My lovely Airbnb in Oslo

I’ve written about this trip before because it’s really the one that got me completely hooked on Travel Hacking with points and miles. The full cost of my one week long trip would have been over $12,000. That trip included business class flights, a week in an Airbnb, one night in a luxury hotel and a 14 hour round trip scenic train ride to Bergen, second largest city in Norway. I paid a total of $217. Technically, this is a rather large win. I couldn’t have been happier with that savings. In fact, Money Magazine interviewed me about my amazing experience. You can read the article here: This 54-Year-Old Mom Used Credit Card Points to Take a $12,000 Dream Vacation to Norway for Only $217.

Other Wins

I think one of the best aspects of using credit card points and miles is the flexibility they afford me. When I learn of a family occasion that requires travel, it’s so great to be able to book flights and hotels with miles and points rather than dollars. It allows me to say “yes” a lot more often to traveling. It’s taken me to places that I hadn’t expected to go. It’s great to be able to visit friends and family while doing it with a frugal eye. Life is great when you have a stash of miles and points.

Travel hacking small wins add up to big wins over time. As I’ve written before, in a little over two years, I’ve saved over $18,000 on my travel. Can you imagine how you can achieve those first small travel hacking wins? Scroll down and leave a comment. I’d love to help you.

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Keep Your Eyes on the Prize

So, you’ve made the decision to travel for pennies on the dollar. My post a few weeks ago about all the money I’ve saved in the last two years (over $18,000 and counting) convinced you that Travel Hacking has merit. You decided to take the plunge. I’m here to warn you about something that is a challenge for many of us. Pay attention here because this is critical if you want to benefit from the points and miles hobby. Beware of Shiny Object Syndrome and keep your eyes on the prize. Sounds simple enough but let’s discuss.

A Cautionary Tale

A Cautionary Travel Hacking Tale of applying for a credit card in order to receive a "free gift".  Keep Your Eyes on the Prize at all times when Travel Hacking
A Cautionary Travel Hacking Tale

One of my readers recently got in touch to tell me about her latest credit card application and approval. I’ll call her Nina to protect her privacy and her innocence. Nina has been in the travel hacking game for a while now. She took a lot of free flights using points and miles. She’s traveled to Europe for pennies on the dollar. Nina took some time off from Travel Hacking and now, she’s back in the game.

Not long ago, she applied for and received the Chase Ink Business Preferred card. Nina was thrilled with the 80,000 Chase Ultimate Rewards point sign up bonus. She is looking forward to a future trip to Australia using those points.

I suggested her next credit card based on the travel goals she had for this winter. Nina applied and received the Capital One Spark Business credit card. Fast forward to our most recent communication. She was excited to have applied for and received another new credit card. Great, I thought; she’s learning from the information on my blog and our email exchanges. Now she’s taking initiative and moving forward on her own to apply for credit cards. It all sounded great. We’ll get back to Nina’s story in a moment.

Beware of “Free Gifts”

Some of you are old enough to remember when it was the norm for banks to offer credit cards on college campuses. The students were enticed with all manner of free gifts to apply for credit cards. Offers of free T-Shirts and other goodies can be quite tempting.

A Free T-Shirt can detour your travel hacking goals. Keep Your Eyes on the Prize at all times.
Free T-Shirt

There were t-shirts, water bottles, Frisbees, golf umbrellas, beach balls; you name it. If you can print a company name and logo on it, it’s probably been offered as an enticement to sign on the dotted line.

Many if not most, college students have no idea how to manage credit responsibly. Yet credit card companies were happy to extend credit. You might ask why. Banks and credit card companies love to collect high interest on outstanding balances. Most students used those shiny new credit cards to rack up debt. They didn’t understand that they were responsible for paying off the balance each month. Most never paid attention to how much interest the banks were collecting on those outstanding balances. Some interest rates are as high as 27% these days. It’s a very lucrative business.

Free Doesn’t always Mean Free

Now let’s talk about the value of those free gifts. Typically, due to the volume pricing, those free t-shirts, coffee mugs and beach balls cost less than $10 to $30. Think of the value of even a 15% interest rate compounded monthly on $2,500 of credit card debt over time. I think you’ll agree that the banks knew exactly how to exploit their young customers.

Enter Travel Hacking

Our purpose in collecting points and miles is to use them to offset the cost of travel. A typical sign up bonus is worth $500 worth of travel savings at a minimum. If you were to sign up for a more entry level credit card like the Chase Freedom Unlimited, you would earn a sign up bonus worth $200. Readers of this blog know that those savings are just the beginning. I’ve gotten way more value than the stated minimum of 1-1.5 cents per point.

Back to Nina’s Story

My jaw dropped when I learned that she had signed up for a credit card because her credit union offered her a Yeti Travel Mug. Folks, I have to tell you that I immediately Googled Yeti Mug because I had no idea what it was! I must admit, it looks to be a snazzy drinking vessel.

Yeti Travel Mug, a "free" gift for signing up for a new credit card.  I say, Keep Your Eyes on the Prize and skip these "free" gifts.
Yeti Travel Mug

But how much does one of these great beverage holders cost I wondered. Turns out one can purchase a nifty Yeti Travel Mug in your choice of colors for $29.99

Now I ask you, which is more valuable to you the traveler, a $29.99 Yeti travel mug or $500+ savings on your next trip? I adore Nina and I don’t mean to poke fun at her. Ok, maybe a little fun is good for the soul. I tell you her story as a cautionary tale.

We are all human and prone to missteps from time to time. Credit card offers come in many different flavors. Consider each offer carefully before pulling the trigger on an application. As I explained to Nina, keep your eyes on the prize. The goal is the ability to travel for pennies on the dollar. Go out and buy yourself a fancy travel mug; you’re certainly worth it!

Missed Travel Opportunities

Nina missed out on the opportunity of earning a sign up bonus worth $500 or much more. This is a detour that won’t derail her from her goals. However, I can’t stress enough that a strategy is important when applying for credit cards.

The Chase 5/24 Rule

Chase credit cards are some of the best in the business for Travel Hackers. The Chase 5/24 rule is important here. The rule states that Chase will not approve you for a new Chase credit card if you have applied for and received 5 or more credit cards in the prior 24 month period.

Nina is applying for credit cards at a fairly aggressive rate. She needs to be very mindful of the number of “Chase slots” she’s got left in her wallet. It would be a shame if she missed out on applying for a great Chase card because she had used a 5/24 slot to get that Yeti mug. I hope you are beginning to see the value in taking a very mindful approach to credit card applications.

As I’ve mentioned many times, I welcome the opportunity to help you reach your travel goals using points and miles. Reach out to me by commenting below or through the contact page on this website. We can discuss your travel goals and choose the right credit cards for you. Learn from Nina’s story and Keep Your Eyes on the Prize.

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Don’t Cancel Your Oldest Credit Card

Some of my Travel Hacking Credit Cards.This hobby gives you a stack of credit cards to manage. Don't cancel your oldest credit card. I explain why in this blog post.
Some of my Travel Hacking Credit Cards

You’ve embraced the Travel Hacking lifestyle and now have a stack of credit cards to manage and grow. Read on to learn why I suggest you don’t cancel your oldest credit card.

Your Credit Score

Earlier, I wrote about what goes into your credit report. I suggested you get a free account with Credit Karma. It’s important to know what’s in your credit report. Also, knowing what impacts how the score is calculated will help you move on in accumulating travel hacking credit cards.

Five Key Credit Score Components

Here are the five key items the credit bureaus use to calculate your credit score.

  1. Payment History
  2. Credit Utilization
  3. Length of Credit History
  4. New Credit Inquiries
  5. Credit Mix

Let’s focus on numbers one and three: Your Payment History is important because the banks want to see that you pay your bills on time. This shows them that you are responsible and likely a good credit risk.

Combine this with Length of Credit History. The longer your credit history, the more data the credit bureaus and banks have to evaluate you as a credit risk.

Credit Utilization

I’ve written about this in this post: The Elephant in the Room. Credit Utilization is the percentage of your outstanding credit that you use on a monthly basis. Outstanding credit is any loan, mortgage, credit line, credit card and other instruments of credit. The lower your credit utilization percentage the better in the eyes of creditors.

Your Oldest Credit Card

Now let’s go back to that oldest credit card. Here’s why I say “Don’t Cancel Your Oldest Credit Card”! We’ve just established that banks want to see a long credit history and a great payment history. They also want to see a low credit utilization percentage. Your oldest credit card helps in all three areas.

If You Cancel Your Oldest Card…

If you were to close your oldest credit card, here’s what would happen:

You will shorten your credit history. You’ll also remove payment history data from your credit report. Finally, you’ll lower your total outstanding credit. This in turn, will raise your credit utilization percentage. Banks want to see a low credit utilization percentage. Now do you understand why I tell you “Don’t Cancel Your Oldest Credit Card”?

Why Close Your Oldest Credit Card ?

You may be concerned with having too many credit cards to manage. There could be an annual fee that you don’t want to keep paying on that oldest card. It’s likely you have moved on to using other credit cards regularly. No worries, there are options for you.

Oldest Credit Cards with No Annual Fee

If there’s no annual fee on your oldest credit card, keep the account open. Use the card a couple of times a year and pay the balance in full and on time. The rest of the year, keep your oldest credit card in a drawer.

Oldest Credit Cards with Annual Fees

If there is an annual fee you can call and ask if there is any way to waive the annual fee. Also call to see if there is any sort of retention offer. The bank may extend you bonus points for a specific minimum spend amount. Those bonus points may be worth enough to cover all or part of the annual fee.

You can also ask to downgrade your oldest credit card to a no-fee version of the card with the same bank. This preserves your credit line. This keeps your credit utilization percentage low. Again, use the card a couple of times a year to put some activity on the card. The rest of the year, keep the card in a drawer and certainly out of your wallet.

Cancel the Card as a Last Resort

If you feel you must cancel the card, call the credit card company. Ask if they will move your credit line to another credit card you intend to keep open with that bank. This really is a last resort. I don’t recommend this. You still lose your long credit history and payment history. This will hurt you in the long run. Getting more travel hacking credit cards will become much more difficult. Again, only do this as a last resort.

The Bottom Line

Don’t Cancel Your Oldest Credit Card! Do everything you can to keep your oldest credit card account open.

Have you thought about closing your oldest credit card account? What did you do to keep it open. Scroll down and leave a comment.

Note that I am in no way affiliated with Credit Karma.

Chase Sapphire Reserve Upgrade

I am a big proponent of starting your Travel Hacking journey with a Chase Sapphire Preferred credit card.  One reason is the value of the sign up bonus which is currently 60,000 Chase Ultimate Rewards Points worth a minimum of $750 at 1.25 cents per point.  The annual fee is $95 and there are many perks with this credit card.  It is a relatively low cost way to test the waters with a Chase credit card that offers a lot of valuable perks. This post will explain why I am contemplating a Chase Sapphire Reserve upgrade.

Chase Sapphire Reserve Credit Card

Did you know that there is also a premium version of the Sapphire Preferred credit card known as the Chase Sapphire Reserve? This credit card currently offers a 50,000 point sign up bonus worth $750 at 1.5 cents per point and an annual fee of $550.  As you can see, that’s a very high annual fee as compared with the Sapphire Preferred. 

Reasons to Upgrade

Even so, there may be reasons to consider a Chase Sapphire Reserve upgrade from the Sapphire Preferred if you travel quite a bit.  The fact that your points are worth 25% more with the Reserve is one reason.  Again, the points with Preferred are worth 1.25 cents per point whereas with the Reserve, they are worth 1.50 cents per point.

Reductions in the Annual Fee

Here is another reason to consider a Chase Sapphire Reserve upgrade. Card holders of the Sapphire Reserve receive a credit for up to $300 on any purchases that code as travel.  This effectively takes the annual fee down to $250.

One of the great perks with this card is enrollment in the Priority Pass Select Airport Lounge Access Program.  Card holders and up to two guests get free access to over 1300 Airport Lounges in over 600 cities in 148 countries around the world. 

Priority Pass lounges offer a comfortable place to relax while you are at the airport. Offerings vary but generally include free food and drinks both alcoholic and non-alcoholic.  You’ll find comfortable seating and ample space to spread out to get your work done.

Priority Pass Partners

In some cases, where there is no Priority Pass lounge in an airport, card holders and up to two guests can dine at a Priority Pass partner restaurant. Food and drink allowances vary but can be as high as $28 per person.

In some airports, Priority Pass offers access to Minute Suites where you can sleep for one hour in a comfortable bed. You can purchase additional sleep time at a discounted rate.

In the Minneapolis airport, you have access to a putting green, golf lessons and use of a golf simulator all for free!

Value of Priority Pass Select Membership

It’s hard to put an exact value on this perk as Priority Pass offers several membership tiers none of which correspond exactly to the perk offered by Chase. 

Right now, $199 membership offers 10 free visits per year and a cost of $32 per visit thereafter.  Members pay $32 each per guest.  Currently the most expensive membership is $429 for unlimited free visits but still charges $32 per guest. Remember that with the Priority Pass Select Membership, the card holder and up to two guests get in free.

I’ll value this perk at a conservative and somewhat arbitrary $300. It all depends on how much you use this benefit.

Now let’s factor the $300 value of Priority Pass Select into the annual fee of $550 for the Sapphire Reserve. If you are keeping track, our current Sapphire Reserve annual fee is $250. After the travel credit of $300, you can see that we’ve wiped out the annual fee entirely!

More Sapphire Reserve Benefits

But wait, there’s more. The Sapphire Reserve also offers a credit of up to $100 every 4 years to reimburse for either TSA PreCheck or Global Entry.  If you already have one of these two great travel designations, consider using this perk for a family member or friend. Just use your Sapphire Reserve card to pay for TSA OreCheck or Global Entry.

Also, you’ll earn 3 x points on travel and dining worldwide. However, with the Sapphire Preferred, you earn just 2 x points on travel and dining. The additional points add up quickly for frequent diners and travelers.

Additional Partner Perks

Right now, Chase has relationships with Lyft and DoorDash.  With Lyft, you’ll earn 10 x points for each dollar spent through 3/2022.  Also, you’ll receive 15% off every car ride and a free subscription to LyftPink which offers additional benefits for one year.

With DoorDash, get unlimited free deliveries for one year as long as you order a minimum of $12 of qualifying food purchases.

Even More Sapphire Reserve Benefits

Other perks of the Sapphire Reserve include no foreign transaction fees when you use your credit card overseas.  As well, receive trip interruption and cancellation insurance, lost luggage reimbursement and auto rental collision damage waiver coverage.  There are additional purchase protections and warranties and a few other travel perks too numerous to mention here.

All things considered, it might make sense for you to upgrade from the Sapphire Preferred to the Sapphire Reserve.  I recommend waiting until you’ve had the Sapphire Preferred for one year before making the request to upgrade. 

Final Thoughts

To do this, call Chase customer service or send a secure private message through the Chase online portal.  Tell them you want to upgrade your Chase Sapphire Preferred to the Chase Sapphire Reserve card. It’s that easy! I’ll be requesting the Chase Sapphire Reserve upgrade this coming month.

Are you considering making this upgrade to the Sapphire Reserve?  If so, scroll down and leave a comment and tell me why you are making the switch.

Podcast Interview on Wanderlust Families

Recently, Susan Whitehead of the Wanderlust Families Podcast interviewed me. Susan and her family which includes six children, have done long term traveling to various places including Mexico, France and Costa Rica. If you have designs on traveling long term with your family, Wanderlust Families has got you covered. Check out what Susan has to offer to help you make travel long term with your family a reality. Back to my podcast interview on Wanderlust Families… We got to discuss all things Travel Hacking with credit card points and miles.

Click the image for Part One of this Two Part interview

Topics Covered

This is a thorough discussion about the world of travel rewards credit card using points and miles. We talked about the ways to earn and redeem credit card points and miles with an eye towards family travel. I discussed what to do if your credit score is less than optimal. As well, I debunk the myth that adding credit cards to your wallet will hurt your credit score. We also covered ed ways to cover an Airbnb stay for families with points and miles.

A discussion about travel rewards credit cards would not be complete without a mention of my favorite credit card. The Chase Sapphire Preferred card has a special place in my heart and wallet. It is a great starter travel rewards credit card. Susan and I talked about some lower tier cards from both Chase and Capital One.

Click the Image for Part Two of the Interview

Listen to my podcast interview on Wanderlust Families. This interview is chock full of tips and tricks to get the most out of the Travel Hacking hobby. You’re sure to pick up some new ideas to get more out of your credit card points and miles. And, stay tuned for part two of my conversation with Susan Whitehead.

FICO Credit Score Changes

FICO Fair Isaac Corporation.  This company offers credit scores that banks and other lending institutions use to determine creditworthiness of applicants.  This is important to travel hackers who use credit card points and miles.
Fair Isaac Corporation

As a Travel Hacker, I always know my credit score. Recently, I learned of some adjustments to how FICO, Fair Isaac Corporation, will be determining credit scores. Banks and lending institutions use credit scores to evaluate a borrower’s creditworthiness. If you currently don’t know your current credit score, you can sign up for a free account at CreditKarma.com. Note: I am not an affiliate of CreditKarma. There, you will see your credit scores and credit reports from two of the three major credit scoring bureaus. Read on to learn about FICO credit score changes and how your credit score might be affected in the future.

Credit Score Basics

Here are the five key elements in credit scores:

  • Payment History
  • Length of Credit History
  • Credit Utilization
  • New Credit Inquiries
  • Credit Mix

You can learn more about the details of each of these in this post. For now, we are interested in the specific changes that FICO will make to how it determines credit scores. One thing to note is that many but not all banks and lending institutions rely on FICO to make decisions about extending credit.

FICO 10 and FICO 10T

The changes coming to FICO scoring are the first since 2014. The new models are known as FICO 10 and FICO 10T. These new scoring metrics will take a harder stance on late payments and debt. They will also look more closely at historical information such as credit balances and payment amounts.

Trended Data

The five categories listed earlier will still weigh heavily in the scoring metrics. However, for the first time, FICO will look at Trended Data also known as Time-Series Data. The time frame examined will be 24 months. FICO will look at whether or not you pay your debt in full each month. People who pay in full are Transactors. If you carry a balance from month to month, you’re a Revolver.

(Note that in order to benefit from using credit card points and miles as a travel hacker, you must have zero credit card debt and pay your credit card bill in full each month.)

As a transactor vs a revolver, travel hackers will be looked at as better credit risks. So this change to the scoring models will likely help our credit scores.

Balances

The other area of trended data addressed in the new scoring models is about credit card balances. Are you maintaining, increasing or decreasing your overall balances over time? Lenders feel better when they see you are not increasing your credit usage. I always recommend that you do not spend more than what was typical for you before getting into travel hacking.

Late Payments- Ouch!!

Responsible credit card usage means paying every credit card balance in full and on time every month. For those people with late payments, the new scoring models will lower your credit score. Again, this is not a factor for those of us in the travel rewards hobby.

Credit Utilization

FICO 10 and FICO 10T will place more emphasis on credit utilization. The definition of credit utilization is the percentage of outstanding credit that the borrower is currently using. As we travel hackers acquire more credit cards, lenders generally extend more credit to us. This lowers the credit utilization ratio which the lenders like to see. With the new scoring, this will help our credit scores.

The Bottom Line

Not all banks and lending institutions will adopt the new scoring right away. If you have a good credit score under the current FICO scoring system, your score is likely to go up under the new system. Conversely, those who currently have lower credit scores may see a lowering of their scores when the new models go into place this summer. Keep paying your credit card balance in full every month. Open new credit card accounts strategically to meet your travel needs and goals. There you have it. The new FICO score changes will not have much impact on your credit score as a responsible travel hacker.