Admittedly, I’m a little bit green behind the ears, but I’ve always been smart with credit cards. Or at least responsible. My first credit card was an American Express Green Card, and it was a good choice. You have to pay off the total balance at the end of the month. There’s no option to build up significant debt, so in some ways it’s a little bit like training wheels. This makes it a good card for building responsible habits while bolstering your non-existent credit score.
But I soon learned there is so much more benefit to a credit card than convenience and a good credit score. The opportunity to earn rewards or cash from credit cards is huge. And the Amex Green card – it’s not great for racking up reward points. So after a year or two of 100% on time monthly payments and good credit, I was approved for a Chase Freedom card. $150 cash back – just for putting my regular spending on a card? No annual fee? Yes please.
About a year later, the plot thickened when my brother introduced me to the Chase Sapphire Reserve – the holy grail of travel rewards cards. And you guessed it – I signed up for that card too. And in the year and a half I’ve had the card, I’ve gotten well over $1500 of free travel (including the 50,000 point offer with sign up). I love that card. As someone who spends nearly all of their discretionary budget on food and travel, it racks me up some serious points, and in a hurry.
This year however, I discovered travel hacking.
Travel hacking is a concept that involves routinely signing up for new credit cards to get a bajillion points (this is the technical term) through sign up bonuses. For those of us who are “good” with credit cards (i.e. always pay off the monthly balance IN FULL and treat the plastic the same way they would cash) it is an incredibly lucrative way to travel for free, or next to free.
So how to hack the hack?
In order to get the bonus at sign up, there is a minimum spend attached to every card. I recently signed up for the Chase Ink Business Preferred card, which comes with a $5,000 (over three months) minimum spend requirement. That means we would have to spend roughly $1667 per month. In order to avoid going over our monthly spend budget, I kept brainstorming ways to spend $1667 a month, without really spending $1667 a month. And for those of you who are good at math, that math doesn’t really add up…
In comes the hack. Today, there are so many ways to pay people back. In addition to good old fashioned cash, there seems to be a new online payment app each week. I’m very fortunate to work with people who are instantaneous about repaying their debts. (Same with friends and family) So when I offer to pick up lunch, I’m often reimbursed before I make it to the restaurant. But by charging the cost of lunch to my card (often $50-$100 for 3-6 people), I’m getting way more bang for my minimum spend buck.
This past week, I brought my friend to Costco. As many of you know, you have to use a card (or cash) attached to the membership owner’s account. So the $300+ worth of food and party supplies she needed? You guessed it – that went towards my minimum spend of $5,000. And she sent me an immediate payment online. In this scenario – we both win. She needed access to cheap, bulk items for a birthday party. I need to spend upwards of $5,000 over the course of three months while trying to maintain a stringent budget. The win-win here is important to me. I don’t believe in taking advantage of anyone – especially my friends and family.
In looking at my spend budget last month, Mint tells me that there was $627 in reimbursable expenses. That’s more than $600 that I didn’t have to spend, and it doesn’t include the $300 from Monday’s Costco run.
- Read about travel hacking. It’s an incredibly lucrative way to travel the world for free or nearly free. The folks at ChooseFI have laid it out really well here: https://www.choosefi.com/all-articles/travel-rewards/
- If you have friends, coworkers and family members WHO PAY YOU BACK IN FULL, EVERY TIME, offer to pick up the tab. In this way you can expedite “spending” the minimum to receive a sign up bonus while sticking to a stringent budget.
- Travel hacking – using a credit card sign on bonus to get free travel/cash/rewards – only works if you are someone who is RESPONSIBLE with credit cards. If you are someone struggling to rid yourself of consumer debt, and have a history with credit card debt – it may not be a strategy for you. Know thyself.
- If you have friends, family, or coworkers who are constantly trying to get out of paying for things – don’t offer to pay for them. This only works if you get paid back 100%, 100% of the time.
- Be honest with your friends about what you’re doing. My friends know that I am trying to rack up points. When I took my friend to Costco, I explained everything I knew about travel hacking to her, and how her purchase at Costco was gong to benefit me.
- Try to make it beneficial to both parties. If you’re going to go pick up lunch for a busy coworker, you’re helping them. If a friend needs access to a bulk supply store, you’re helping them. Make it work for both of you!
- Always think of new ways you can optimize! If you don’t have friends and family who are good at re-paying their debts, look for times when you know you have a big purchase coming up to open a new credit card. We knew we needed to put about $1600 of repairs and maintenance into our car. So you can be damn sure we waited to make those repairs to coincide with the opening of a new credit card.