Is Travel Hacking Worth It?
Today’s guest post is from personal finance and travel expert Barry Choi. Before he started his own blog at Moneywehave.com, Barry wrote a guest post for me back in 2013 which covered Three saving rules he lives by. It’s been a while, so it’s good to have him back sharing his travel tips and hacks.
Over the years, the term travel hacking has become quite popular. I’m sure you’ve read stories or heard from a friend about how they travelled for cheap. I personally flew home from Dubai to Toronto in Emirates First Class which normally costs close to $10,000+ for about $100 thanks to points I had accumulated.
The problem with travel is that loyalty programs have changed over the years and credit card providers have become more strict, so many people wonder if travel hacking is still worth it? As a travel expert, I personally think there’s still a lot of value in the game, you just need to do some research and figure out what your goals are. Here are my tips for travel hacking and why it’s not as difficult as you may think.
Go for the low hanging fruit
While it certainly helps, travel hacking doesn’t require you to sign up for a ton of credit cards or to know loyalty programs inside out. Sometimes it’s about the simple things that you can take advantage of right away.
For example, due to the current global pandemic, many airlines have sales on seats right now. I recently saw a flight to Japan from Toronto in 2021 for about $650 which is easily 40% off. There were also a couple of hotel chains that offered discounts on gift cards which worked out to up to 20% off. Fairmont Hotels had a really aggressive promotion where if you booked one night, you got one free. All of the refund/cancellation policies were very generous so you had lots of options.
These deals are usually advertised to subscribers, so it’s always worth signing up for multiple newsletters so you can casually monitor deals. If you see something that works for you, book it right away.
Understand your loyalty programs
Every travel loyalty program has different rules which can complicate things. For example, American Express Membership Rewards is arguably the best bank travel loyalty program, but that doesn’t mean Scotia Rewards doesn’t have good value too. As long as you know how to maximize the value of your points, you can come out ahead.
Let’s take a look at Aeroplan for a second. The current program has a lot of problems, but the changes coming to Aeroplan will make redeeming rewards more accessible for the majority of travellers. Yes, some (many) routes will cost more points, but it’s up to the members to maximize the use of their points. With the new program, one sweet spot is from Canada to Hawaii or the Caribbean, so that’s where I’ll be focusing on for future redemptions. The family sharing plan is also a great new feature that should be used by families since it’ll allow you to pool your points.
With Marriott Bonvoy, the number of points required to get a free night depends on the season and property. I personally value Marriott Bonvoy points at 1 cent each so I do the math to see if it’s worth it to use my points. For example, if a room will cost me 35,000 points, it needs to have a cash value of at least $350 for me to book it. If it costs less than $350, I’m better off paying cash. They also have a standard offer where if you book 4 nights on points, you get the 5th night free.
Mark: I’ve also taken advantage of the 4 nights and 5th night free Marriott deal. Well worth it!
Some people complain that it’s difficult to make redemptions, so collecting points isn’t worth it. They also claim that using one of the best cash back credit cards is better since you’re instantly getting something back. While cash back is definitely easier to understand, earning points and redeeming them for travel can be much more valuable. Regardless of where you stand, NEVER use your points for merchandise as it’s always a low value.
Use credit cards to reach your goal
Many people are afraid to use credit cards when travel hacking, but when used responsibly as Mark suggests, I think there’s nothing wrong with implementing this strategy. You just need a goal in mind before you begin.
Let’s say you want to fly from Toronto to Hawaii in business class. Under the new Aeroplan, it’ll cost you as low as 35,000 points one-way, or as low as 70,000 points return. Many of the best Aeroplan credit cards from TD and CIBC often have welcome bonuses between 25,000-40,000 points, so if you applied for 2-3 cards, you’d have enough points for that flight to Hawaii that would normally cost $5,000+.
Now let’s say you’re travelling as a couple, you would need at least 140,000 points. The American Express Platinum Card normally has a welcome bonus of 60,000 points when using a referral link (although it’s lower right now). If you applied for that card and then transferred your points, you’d be pretty close to your goal. Remember, you can pool your points now under Aeroplan so reaching your goal might be easier than you think.
A simpler redemption might be with WestJet. If you apply for the WestJet RBC World Elite Mastercard, you get $250 WestJet dollars as a sign up bonus, an annual companion voucher, and free checked bags. Let’s say both parents in a family of 4 applied for the card. They’d now have $500 in WestJet Dollars and two companion vouchers. If they flew from \Ottawa to Vancouver, they could easily save over $700 when using their welcome bonus, companion vouchers, and free checked bags.
Most of the best travel credit cards in Canada offer a welcome bonus worth at least $250. However, if you take advantage of some of their transfer partners or maximize the use of points, you could easily get more value.
Why you may want to think twice before travel hacking
If you’re going to travel hack with credit cards, you’ll need to meet the minimum spend requirement to get your bonus. That usually means you need to spend $1,000 – $3,000 in the first three months of card membership. If you have major purchases coming up, applying for a new credit card with a good sign up bonus can be worth your while. However, if you’re just constantly making purchases to get the bonus, it may not be worth the trouble. Don’t forget, you need to pay your full balance every month to avoid interest charges. Going into debt for rewards is never worth it.
One more concerning aspect of applying for multiple credit cards is the fact that your credit score drops 10 points every time you apply for a new card. Although your credit score will go back up over time, that temporary drop may hurt you. For example, if you’re applying for a mortgage soon, lenders may wonder why you recently applied for a bunch of new credit cards.
You also need to decide what to do with those credit cards after you’ve received the sign up bonus. In the past, most people would cancel them before their annual fee posts and feel no guilt. However, some credit card providers have become more strict about this and have even banned people from reapplying or getting a welcome bonus in the future.
If all you’re doing is taking advantage of travel deals and maximizing your points within your loyalty program, then there aren’t any real repercussions that you need to worry about.
Final thoughts – is travel hacking worth it?
So is travel hacking worth it? It really depends on what you’re comfortable with. I love to travel so I’m always looking for deals and will use any tricks that are beneficial to me. Casual travellers may not think it’s worth the hassle, but I’m sure they still don’t want to pay more than they have to.
Thanks to Barry Choi for this great guest post. Personally, I’ll continue to leverage my existing rewards programs (such as Aeroplan, Marriott) but I will avoid any credit card churning and flip-flopping between programs. Seems like too much work to me! You? Thoughts on travel hacking? Share in a comment.