MilesForTwo

Travel Hacking 101: Six Suggestions for Beginners

If you’re just starting out in travel hacking, here are some of my suggestions and tips.

Tip 1: Apply for Chase Cards First

Here’s why… not too long ago Chase implemented a rule called 5/24. It basically means that if you’ve opened 5 new credit card accounts in the past 24 months your application will be denied. Here are the cards that are currently under the 5/24 rule (updated as of 6/3/2016):

  • Personal Cards:
    • Sapphire Preferred
    • Sapphire Reserve
    • Slate
    • Freedom
    • Freedom Unlimited
    • United MileagePlus Explorer
    • Southwest Plus
    • Southwest Premier
    • Marriott
  • Business Cards:
    • Ink+
    • Marriott
    • United MileagePlus Explorer
    • Southwest Premier

If you get into this hobby more, you’ll start realize how restricting the 5/24 rule is. If you opened five or more credit cards in the past two years, no matter how good your credit score is your application will most likely get denied. Yes, even authorized user accounts count against this 5/24 rule. There a lot of questions as to what constitutes a credit card account. Pretty much anything except student loans, car loans, home loans, and some business credit cards will count against your five credit card limit. For this reason, you should apply for Chase cards before applying for cards with other banks. This would be the order I would suggest:

  1. Sapphire Preferred
  2. Ink+ (if you have a business)
  3. Sapphire Reserve
  4. Southwest Plus/Premier (for the companion pass)
  5. United or Marriott

If you don’t feel comfortable applying for a business card, then I suggest applying for the two Southwest cards and the United and Marriott. Again, these are just my suggestions based on where I see the most value.

With that being said, if you’re just starting out and have no credit history you might want to consider applying for the Discover IT card or Chase Freedom (two great no annual fee cards) to build your credit.

Tip 2: Know Your Options

Before you apply for a credit card, you should have a general plan for if you are going to pay the annual fee, downgrade the card, or cancel the card. These are your only three options.

Some credit cards do not have an annual fee so these are no-brainers to keep open once you apply. Many credit cards waive the annual fee for the first year so you’ll have to decide what to do when the second year rolls around. Some credit cards have options to downgrade to a no annual fee card. This is referred to as a product change. The beauty of product changing is that you retain your credit history. Again, this differs from card to card so before you apply you should know if you will be able to downgrade the card. If there is no downgrade option, do you plan on paying the annual fee or cancelling the card? Figure this out before you apply.

Tip 3: Apply for Highest Offer

If a credit card increases its sign up bonus and its the highest they’ve ever offered, jump on it! Don’t forget to make sure you have a use for the points you earn. You especially want to sign up for the highest offer for American Express cards since you can only receive the signup bonus once per lifetime.

Tip 4: Earn and Burn

There’s no point in earning miles/points that you never use. Miles and points are not an investment. The reason I say this is because companies (airlines and hotels) are constantly devaluing their award charts and loyalty programs. One day a round-trip flight might cost you 25,000 miles. Then the loyalty programs decides to make it cost 30,000 miles (because they can). Now your miles are worth ~20% less. For this reason it is important to earn miles and burn them (and by burn them I mean use them to book awards).

Tip 5: Calculate, but don’t Over-calculate

Yes you should worry about how much value you’re getting from your points, but at the same time don’t let cpp (cents per point) get in the way of you enjoying your points.

Tip 6: Start Early. Plan in Advance.

It takes time to accumulate points. You need to start early. Don’t expect to jump into the game and have a trip booked on points within a month. It takes time. Also, because there are limited award seats or rooms you need to plan and book in advance. Otherwise, you may not find an award availability. Also be sure to ask questions. Most people in this hobby are usually willing to help and answer questions as long as you’ve done the initial research.