Charts A Course

Travel hacking is a buzzword many so-called ‘Experts tout. The most famous is leveraging credit cards to accumulate travel rewards. There are many benefits, however, people seldom discuss the disadvantages and hidden costs advertised.

Do not go into debt: unless you can pay it off (guaranteed). This is the fastest way to strain your personal situation. The number of United States consumers in credit card debt is increasing due to COVID and inflationary pressures, while the cost to carry that debt is at all time high. 49% of credit card holders carry debt from month to month, up from 46% prior year. There are over 50 million consumers (United States) that in total owe over $1 Trillion with the average debt near $6,500. Worse still, the interest rate to carry the debt is increasing near 22% in 2023 Q2.

Many Credit Card Options: There are an overwhelming number of credit cards that offer some type of travel reward. This ranges from specific Brands (i.e. Marriot) to general Points that have partner brands. The different credit card offerings have different partners, affiliates, and coverage regions. To best choose which to use, start with the end in mind by determining the travel destination, travel routes, preferences for quality and comfort, and lodging partners.

Platform Constraints: each company has its own Platform to exchange rewards points with partner products and services. Due to relationships, not all brands are available. This is critical to leveraging or compounding rewards points with brand-specific rewards. For instance, you may get a discount on rental cars but if you already have a separate rewards relationship with Hertz you may be able to exchange credit cards rewards points for the rental car while also getting Hertz recognition for an upgrade.

Booking Date Availability: Rewards may not apply to all components of traveling. More specifically, when using Rewards to book flights, only a few qualify for availability. So even if you have thousands of points there may be restrictions on route, dates, and time limiting booking availability. To overcome this restriction, book far in advance and embrace flexibility and the willingness to naturally research.   

Added Taxes and Fees: I was naive and thought points exchanged fully for products or services. That is not the case. After booking an international flight I had to pay hundreds in taxes and fees. These are not paid by rewards points. Fortunately, I was able to pay with my credit card.

There are many benefits to using credit cards to accumulate rewards. Now that you are aware of the 5 hidden costs, you can be confident in choosing an offering that maximizes value for your specific preferences.

Only use trusted sources for researching. I recommend ThePointsGuy and TravelHackingMoms.

Safe Travels,

Nathan