“I want to travel more… but it is just too expensive”. If you are thinking that at this exact moment, you are in the right place. That is exactly how I felt back in 2013 after completing my first trip to Europe. Ten amazing days visiting Italy and Spain, the travel bug hit me and I needed more… but the sticker shock was no joke. Over $2,000 USD for airfare and hotels, let alone the additional spending money I would need for each day I was there and other additional costs that would come up. Sure I could have gone the backpacker route and stayed in hostels, but it was not for me and it certainly is not for everyone. Having just completed graduate school, it did not seem like another trip to Europe would be in the books for a while.
It was a little over a year later though, that I found a solution to that problem, and it was as simple as making the same normal everyday purchases I had been making my entire life. The money I spent on my cell phone bill, restaurants, sporting events and more, could all become points you could redeem towards making your trips cheap or even free by using travel rewards credit cards (a quick note, this is all focusing on the American credit card system).
I have used the points Gokce and I have collected since 2015 for dozens of free hotel nights, including seven nights for our honeymoon at a 5 star, all-inclusive resort in Montego Bay, Jamaica, and five nights in Aruba, both during the busy winter months, all which would otherwise. We have also turned those points into cheap and free flights, including flying international business class on five separate occasions, something that would be impossible otherwise. All of these travel opportunities were thanks to paying for my everyday basics like groceries on a travel credit card. The best part? If we could do this, then you can do this too, we are sure of it!
You may have heard this referred to as “travel hacking”, so consider this post and those that follow it in the series as a “Travel Hacking for Beginners” guide. In reality though, this term of art makes things appear a bit more complicated than they actually are. This guide will aim to make things as simple as possible, so that you will hopefully learn the basics much quicker than I did when I started.
This all sounds good, but now you are wondering where do you start? Well, first up, we are going to briefly take a look at credit card basics. Even if you are familiar with what affects your credit score, a refresher never hurts. Then, to start, we will go over the most basic way to make travel cheaper, with cash back credit cards.
Ready? Let’s begin.
CREDIT CARD 101
We have to first acknowledge, credit cards are of course not for everyone and we strongly recommend being financially responsible in a way which is best for you. Financial responsibility when using credit cards and your credit score go hand in hand. The most important thing to remember, whether you stick with cash back credit cards or work your way up to travel rewards cards is that you must pay your bill on time each month and pay in full! Too many Americans unfortunately do not or cannot follow that basic guideline, and paying an extremely high interest rate on your balance defeats any advantage these cards have to offer.
If you pay on time and in full each month, your credit score will be pretty much guaranteed to increase, as 65% of your credit score is calculated from those two factors alone. This will allow you to sign up for more lucrative credit cards and more importantly qualify for lower interest rates on loans. If you are having trouble paying the balance in full each month (or almost full if you have a 0% interest rate credit card, more on one of those in a bit), you need to limit which expenses you put on your credit card to your everyday essentials like groceries and cut out spending on luxury items that you want, such as that purchasing your daily coffee or daily lunches out with your friends.
If you want to take it a step further with a specific example and do the math, those two expenses over the course of a year in a city like New York add up to the same cost as my ten day summer European trip back in 2013. Would you rather have a summer vacation in Europe, or Starbucks and Just Salad? I know which one I am picking.
The other 35% of your credit score comes from the average age of your accounts (do not close your oldest credit card account), the types of accounts you have open (credit cards, loans etc.), and the amount of hard credit inquiries you have in a 24 month period (things like opening a mortgage would result in a hard inquiry). A helpful, free website to monitor this all is Creditkarma. We are not sponsored by them in any way, but appreciate how simple they make it to check two of your credit scores with Equifax and Transunion as often as you want and highly recommend it or a similar website to stay on top of your score.
CASH BACK CREDIT CARDS
Now that we have the basics under our belt, we can go over the most simple type of credit cards that will help you save money on travel and just put money back in your wallet, cash back credit cards. Each credit card company (issuer) has their own version of cash back cards, and we recommend checking out Citi, Discover, Bank of America and other companies to see which product may be best for you.
All of these cards generally offer 1-2% cash back on everyday spending, or more. A credit card like the Citi Double Cash will get you $2 back for every $100 that you spend. While seemingly a small amount, every little bit helps. The ones we will recommend, especially if you want to get into travel rewards credit cards down the road (more on that in the next part), are either the Chase Freedom or the Chase Freedom Unlimited credit cards.
Both Chase cards offer a very generous sign up bonus of $200 cash back if you spend $500 within the first 90 days. I am going to repeat that, Chase is offering you nearly half of your money back for spending $500 within the first 90 days! On top of that, both cards have no annual fee and offer a 0% introductory interest rate for the first 15 months that you have the credit card. This means if you are unable to pay your credit card in full during those first 15 months, Chase will not penalize you and charge you interest on your balance, a big win! Of course, we recommend paying as close to the full balance as possible and be prepared to pay the remaining balance owed after 15 months in full to keep your credit score up!
The Freedom Unlimited keeps things simple with a straight 1.5% back on all purchases (i.e. $1.50 cash back for spending $100). The Chase Freedom provides for 1% cash back on all purchases, but every quarter has a different category of purchases which will earn 5% cash back (i.e. $5 for spending $100 in these categories). A note, it is capped at $1,500 per quarter in combined bonus spend and you must activate it manually each quarter on Chase’s website or mobile application. Currently the bonus categories for this quarter are groceries, gym memberships and streaming services.
The best part is that you can have both cards (we do) and even earn the sign up bonus from both cards! My parents just signed up for both, purchasing a new computer on one of the cards and new cell phones on the other, earning the bonus cash back from both cards and getting them $400 off the bill for those major purchases on top of the standard every day cash back you can earn. Even my grandmother uses the Chase Freedom card and it helped her cut a large bill from the dentist in half! If they can use the Freedom cards and earn valuable cash back, so can you!
For the purposes of travel, you can sign up for one of these cards and put the airfare for your upcoming London trip on them. In the below flight example, signing up for and using your Chase Freedom Unlimited will wind up saving you over $200 off your airfare from the sign up bonus plus the normal 1.5% cash back you would earn on the purchase. You could not have done that if you had used a debit card, and apply that towards a hotel stay or just have some extra spending cash while you are visiting the city, a major win!
There are some downsides to using cash back cards for travel, the most basic of which is that they very often come with an additional fee for using them internationally (usually around 3% of the price) and it is not until you graduate to the traditional travel rewards credit cards do you start to see those international purchase fees waived. That said, they are a step in the right direction to making your travels more affordable compared to just using cash or a debit card.
NEXT UP
In the next part of the series we are going to go into the basics of travel credit cards, giving you an introduction to the major transferable points systems of American Express, Capital One, Chase and Citi. Do not worry, I will even explain what exactly a transferable points system is and why you want to start with a transferable points system as opposed to having all of your points with one hotel or one airline.
If you have any comments or questions about credit card basics or cash back credit cards, please let us know in the comment section below, we would be happy to discuss them with you!
(Disclosure: If you sign up for a card through our sign up link, we will receive a referral bonus, but there will be no extra obligation on you.)
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Hi, we are Gökçe and Steve, a married Turkish and American full time travel couple. We left behind our New York City office jobs and our home to experience the world and all its wonderful cultures. We also want to teach you how you too can turn the money you spend every single day into FREE or CHEAP TRAVEL, just like we do, through using credit card points here on this channel! We hope to inspire you to chase your own dreams and we thank you for subscribing to our channel to follow us along on our journey!
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