Pages

11.11.2024

Money Monday: Credit Card Hacking


Let's talk about getting to travel for free! 

But first, I realized in last week's post that I kind of jumped into the middle of the saving topic without covering the basics! However, for those of you who have not seen some of my prior posts, I do think that if you are just going to do one thing, it should be to pay into your 401k (403b/RRSP etc.) at least up to whatever your employer will match. If you don't have an employer who offers this, there are other ways to save, but I will cover them in a future post! You can find posts about a lot of these subjects on my Tips and Hacks page, but also here are a few of my favorites.

Every Quarter Counts: Three Tips for Growing Your Wealth Early 
Saving My Latte For a Rainy Day: Saving for Retirement
Make a Dollar Out of Fifteen Cents: What I Splurge and Save On 
My Last To Do List: Trusts and Other Documents 

The second thing that I think is important is to pay off all of your credit card debt. I did a review of a friend's finances once and the two things that really stood out to me were that (a) he had multiple charges for some subscriptions that he hadn't even realized because he was not looking at his statements and (b) he was not paying off his credit card in full every month! This can really add up! 

For example, if you have a balance of $5,000 with 25% interest rate and you pay it down $100 a month ($1,200 total), by the end of the year, your balance will be unchanged, at about $5,056, and you would have paid about $1,256 in interest that year. If you pay it down $200 a month ($2,400 total), your balance would be about $3,700 and you would have paid about $1,100 in interest. You would have to pay $475 per month to get it down to $0 by the end of a year, and you would still pay about $700 in interest. That is a lot of money to pay to the credit card companies! Obviously there are emergencies, but I think putting money aside for them in advance is much more prudent. 

So before I begin this post, I have to throw out the disclaimer that you should not do this if you can't pay off your card in full every month. Now let's talk about credit card hacking! If you are unfamiliar with this, it involves opening a credit card to get the welcome bonus, using the points for free stuff and possibly closing or downgrading the card later. Personally I like travel related cards, and Chase has one of the best values for that, so let's talk about that first. Side note: to my foreign friends, I am sorry, but these are US centric cards. However, please feel free to go to the bottom and let us know what card you use or any tricks you have to get the best value for your money!! 

Travel card ($600 - $1,500 bonus value) / $95 annual fee. The Chase Sapphire Preferred is currently offering $300 Chase Travel Credit + 60,000 bonus points (please verify by going to their site). What does this mean? Basically this can be worth anywhere from $600 - $1,500, depending on how you use it. Once you spend $4,000 in the first three months, you will get 60,000 points, and when you purchase any travel related items through their portal you will get up to a $300 credit. This includes the obvious things like flights, hotels and car rentals, but also has activities and cruises. 

For the points, at the very least, they can either be used to get cash back or buy gift cards at around 0.01 per point (value of $600) or you can use them to purchase travel through the portal, which is usually about $0.015 (value of $900) or you can transfer them to airline or hotel partners, which is where you can get the best bang for your buck. For example, if you transfer these points to Hyatt and use them to book a hotel room with points, the value will be about 0.02 per point ($1,200). This card does have a $95 annual fee, but it also gives you a $50 annual statement credit for hotels booked through their travel portal, so if you use this, it is only $45/year. This card also gives higher points per dollar in categories like travel and dining out and has no foreign transaction fees. 

In conclusion, if you travel at least once a year, this card may be a great fit for you! And if you don't love it after a year, you can cancel or downgrade to a no fee card. Basically with the current welcome bonus, you could stop using it after you get the bonus and still get value out of it for approximately six years (or more). If you travel a lot, you may want to go with the Chase Sapphire Reserve which gives you extra perks like lounge access and TSA Pre/Global Entry, but comes with a higher annual fee. 

Cash back card ($200 bonus value) / $0 annual fee. If you don't really travel a lot or you don't spend a lot on travel related items, you can get the Freedom Flex card, which currently has a welcome bonus of $200 after you spend $500 on purchases in the first 3 months. It gives you 5% cash back for a quarterly rotating bonus category, which includes groceries, gas, Amazon and pet services, which if you max this out, could equate to $300 per year. It has no annual fee and a 0% introductory APR. There are tons of different cash back cards with different % for different categories, so a combo of best bonus + best % for what you spend on is the way to go! 

Hotel card ($500 - $1,000 bonus value) / $99 annual fee. If you travel at least once a year and stay in at least one hotel/motel per year, I highly suggest getting a hotel credit card. I think the current best bang for your buck is either the IHG Premier or the Hyatt card. Let's talk about the IHG card. This is good for hotels like the Holiday Inn, Intercontinental and Staybridge Suites (list here). The good thing about IHG is that they are literally everywhere, versus places like Hyatt and Marriott which are sometimes pretty few and far between (or very expensive). 

It currently has a 140,000 point bonus (please verify by going to their site), which they state is up to 4 nights free, but I just booked a Holiday Inn Express in Strasbourg for ~24,000 points per night, plus with this card you get the fourth night free, so my four nights cost me 71,000 points, so this could possibly be more like eight hotel nights (or more in places like SE Asia or South America). If I would have paid for this room, it would have cost me about $500, which means that if I can book another at the same price, the welcome bonus would be worth about $1,000. In addition, you get an annual free night's certificate, which is good for up to 40,000 point hotel, which could equate to a value of about $200. This card does cost $99 per year, but if you use your certificate for a $200 hotel, it still "saves" you money! Last but not least, you get automatic Premier Elite status, which can give you perks like upgrades, early check in, late check out, and possibly a snack or a drink. Once again, if you decide this is not for you after a year or two, you can downgrade to a no fee card with no ding on your credit, or you can cancel if you choose. 

One last thing I want to talk about is a card that does not currently offer a bonus so is not really one for "hacking," but could be a great option for people who pay rent and that is the Bilt Rewards card. Please note that I have not used this myself, so you will have to do your own research. However, my understanding is that you can use it to pay your rent with no credit card transaction fees, even if you normally pay by check (they will issue the check for you) and you will get one point per dollar spent on rent plus extra points for other categories on rent day (the first of the month). You also get points for travel and other categories and it has no annual fee. You can then use the points for free travel, to pay part of your rent or for gym memberships etc. FYI currently a RT flight to Europe in Feb would cost about 40,000 points. 

Have you fallen asleep yet? No? Great, because one other thing I want to add is that if you do travel, many of these credit cards also come with added perks like rental car collision (LDW) insurance (normally $10 - $30 per day), travel trip delay or lost luggage protection, purchase protection, roadside assistance (~ $99/year value), TSA-Pre (~$100 value every four years), cell phone protection (~$75/year value) and more. These extras may cover the cost of your fee in some cases! 

Have you ever done any credit card hacking? Do you already have any of these cards? What is your favorite credit card and why? 

This post is part of NaBloPoMo. You can find the rest of my posts for this challenge here. You can find the list of participants and their information here

28 comments:

  1. So my big demerit here is NOT reading the fine print on our CC benefits! We pay off our CCs in full each month, but my husband tries to put everything on his card - we have a business and personal Aeroplan card which does have an annual fee but he gets a crap ton of points for frequent flyer miles which is why we always end up paying so little to fly places. I have a free dividend card. That's it. Only 1 personal credit card a piece and 1 for the business.
    We have a friend who does the card hacking as a hobby! I really need to talk to him more about specifics of what/how he does things.

    ReplyDelete
    Replies
    1. Haha! You have TWO friends who do it as a hobby! (actually I think Birchie may dabble also). You guys have a bit more limitations I think due to your location and availability of companies, but the Aeroplan is actually a good one! They often have pretty low point values for some of the flights.

      The fine print is important! I always read all of the benefits, and all of the fine print, and some things like...did you know that if you link your card to Paypal and then pay for something, they will treat it as "cash back" and I think there is a 5% service fee for this!? Things like that can really add up! On the flip side, if you don't have a car, you can get collision car insurance for rentals with your card, and pay for a yearly liability, which is only a couple hundred a year, and basically get car insurance for really cheap!

      Delete
  2. I have a Westjet card and have gotten a lot of travel perks from it!

    ReplyDelete
    Replies
    1. I just flew WestJet and wished that I had some perks because I flew with my bike and it cost me an extra $140 CAD! It would have been nice to get a free bag in this case. However, I pretty much never fly with carry on, so it usually is not an issue.

      Delete
  3. Credit card hacking is a recent-ish hobby for me. I wanted to see if I could do better than my Amazon and Costco cards. The answer is - kinda sorta! Between you and me, I would probably be better off using my Amazon card for Amazon and my Costco card for Costco/gas/restaurants/travel (no annual fee - 2% at Costco, 4% gas, 3% travel & restaurants) and getting a 2% cash back card for everything else. But what's the fun in that?

    I got the Chase Sapphire because at the time the intro bonus was 80k points, or $1,000 back through their travel portal. The only downside is that I find myself hoarding points instead of using them. The upside is that the annual fee is $95-$50 hotel credit = $45 which IMO more than paid for itself the one time that I needed to use their travel insurance for a cancelled trip. In theory my plan is to transfer points to an airline or to Hyatt someday, which in theory should be $2k worth of free travel at that point. Stay tuned.

    ReplyDelete
    Replies
    1. I will stay tuned! The best value is Hyatt, as generally they are about $0.022 per point, but I found that in Europe, for instance Dijon, there are no Hyatts, but there are tons of IHG options. So, this is why it is nice to have Chase points, as you can put them wherever you want them. So it may be worth keeping your card open.

      However, if you are going to really hack, and close or downgrade, sometimes you have to use the points first, which is why you shouldn't hoard them too much. But I did read that if you have two Chase points cards, you may be able to transfer them from one to another. So you could get the Chase Business Ink and then move your Sapphire points there. I think.

      Oh and Amazon for Amazon, yes. I have a chart and after I get the welcome bonus, I use the most beneficial card to pay for each thing! It is a little fiddly, but it works! (also there is a browser extension for that, which I am trying, but it seems to slow down my Chrome so I will probably ditch it!)

      Delete
  4. This is really great. Thank you for this detailed post. I think it's also important to mention (or, maybe I missed it in your post) that if you are using your card overseas OR booking on foreign websites (i.e.gites de France or europcar.fr) that the card has no foreign transaction fee. Or, if it has then the person is okay with that transaction.
    I found a card that I will soon hack for our France trip: Bank of Am Travel rewards, 15 month o% intro, plus no annual fee, plus no foreign transaction fee. 25,000 points but I don;t particularly care about points since I mainly travel with Airbnb. But I need to learn more.

    Also, using websites like Motley Fool or Nerdwallet or Bankrate can allow people compare cards side by side and decide which one is best for their particular situation.

    ReplyDelete
    Replies
    1. These are great tips! I agree about foreign transaction fees, and this is part of the small print that I always read. I don't ever get a card with foreign transaction fees! The points can be good for when you have a one day gap between places, as the Airbnb will be expensive for just one day due to cleaning fees and service fees. So that is the perfect opportunity for one night in a hotel. Also if you mostly stay in Airbnb, you may want a credit card that gets 3x points for travel, or a higher cash back amount for that category.

      I also use those sites, as well as The Points Guy (TPG) for comparing cards!

      Delete
  5. The idea that this is "fun" for people blows my mind. *sigh* I get decision paralysis when I look in my wallet and see multiple credit cards. Even reading Birchie explanation above made me question my reading comprehension. Oh, well. My SIL (who is a banker and loves this sort of stuff, too) told me to get a Chase Freedom card, so that's what I did. And I just put $$$$ on the card for the cat's treatment, so maybe I'll be able to pay for all my holiday costs this year with cash back from my credit card.

    ReplyDelete
    Replies
    1. That's good! I mean, not about the cat, but that you can at least benefit from it in some way! Silver lining and all that.

      Delete
  6. I love these money-related posts! I'm here for all of them! :-)

    Do you find that the Chase travel portal is more expensive? I tried to buy our airline tickets for our Europe trip in the summer and I found them to be higher. I just opened the Chase Preferred card for the sign up points (plus the insurance and foreign transaction fees) and I tried to book flights through their portal but noticed this so I have not looked there since because of that. But thanks for the reminder about cell phone insurance. I am paying for it (times 3) right now since ours are fairly new -- and I thought I remember reading it as a perk of one of the cards but I couldn't remember which.

    My favorite credit card depends on what's going on in my life. :-) The last few years, when the stock market was down and even bank interest rates were high, I did a couple of 0% interest for 18/21 months. I don't spend money I don't already have -- so the money I would've used to pay these for these 0% interest card charges went to either the market or even to the 5% interest-earning savings account. Otherwise, I use the Costco card and Discover card probably 90% of the time.

    ReplyDelete
    Replies
    1. The phone insurance is on the Chase Business Ink card for sure, which is also a Chase rewards card. I do think it is sometimes more expensive to use the portal, but if you instead transfer the points to whichever airline you are going to use I think that you can get a better deal AND I have heard horror stories about changing your ticket through the portal if your flight gets canceled or delayed. I do know that the Capital One portal does price match, but I am not sure if the Chase portal does that too. You can use pointsyeah for free to find out which airline has the cheapest point flight, then you transfer the points from Chase to your FF account (which you can sign up for right before that) and it takes less than 24 hours (and in some cases, is instant) to get the points credited into your airline account, then you book the flight there!

      The Costco card actually has some pretty good perks. I saw that they have 4% cash back on EV charging now, which I think is cool (plus of course 4% for gas and 3% for dining, which is pretty dang good!)

      Delete
    2. Ahhh...thank you for explaining that the goal would be to transfer the points to another account that you can use for travel! I love getting new info/knowledge! My husband likes to go on cruises so we are going on a fairly long one next year, and one of the passengers said she took a few classes on credit card hacking and is going to share with those interested! I am planning to attend her little session!

      Yes, the Costco card is pretty nice. My son told me about getting cash back on EV charging -- but even with 2 Teslas, we don't incur a lot of charges so I didn't worry about it. I think I will ask him to change it sometime, specially if we're going to be on the road more.

      Delete
    3. Yay, I am so glad I could help, and SO GLAD that you come back and check to see if there are responses! Feel free to email me (on my Who Am I page) if you have any other questions about any of this. I love talking about it but feel like most readers' eyes kind of glaze over!

      Delete
  7. I do not do any credit card hacking. But 99% of my travel is for work and goes on my corporate card. I have a Delta platinum card which has a hefty annual fee but I get a companion fare and now that the kids are older, I feel like I will be able to use the companion fare to travel with a child - or ideally with Phil but that is tougher to swing. Besides that we have a cash-back chase card and I have a prime chase card because Phil told me to get one. Of the 2 of us, he's the one who is more apt to do card hacking, but we travel so little that it's not worth it? And when we do travel, we always stay in airbnbs. I can't remember the last time I stayed in a hotel on a person trip. It's been a long long long time!

    ReplyDelete
    Replies
    1. If you don't use the travel, you can buy gift cards for .01 per point, or you could use the points for flights! Or maybe there is another one you can get that is not travel related, like a cash back card with a good welcome offer. Or you just need to start traveling more, and when you do, it maybe would be good to have some points ready, as flights for four people can add up! You can also use your points to book tours, cruises and activities. There is hope!

      Delete
  8. This is SO helpful. It's like you read my mind and knew I wondered what cc we should try next. I've had a Citicard forEVah. I get miles on American when I spend money and I spend a lot of money every month. I use my cc for everything - but groceries is my biggest expense, and then probably gas. I like getting my flights paid for, but I have wondered about getting a 2nd card. Especially because I want a back up for the unfortunate times when my credit card gets compromised. We pay our balance down every month. I'm gonna share the rent credit card with my son who lives in the city and pays a lot for rent. Love these hacks!

    ReplyDelete
    Replies
    1. If I paid rent I would highly consider the Bilt card! In San Francisco, it could easily be $2000-$3000 per month, or even at $1,000 a month, that is at least 12000 points a year, which is like half a flight!

      It does really depend on what you want to use the points for, and if it is travel, great. If it isn't, cash back can be a good option! Sometimes cash back is just easier, so you don't run into the issue of accidentally hoarding points and then not using them.

      Delete
  9. Credit Cards are not such a big thing in Germany. However I do have a visa that cost me 1.90€/ month and which I haven't used in probably 4 years. So My plan for November is to check if I should cancel. I also have a Mastercard for my business account which I need for hotel bookings that cost me 20€/year but doesn't give me any value.
    We have an Amex card which is collecting points en masse and we can do something with it. I sent even know how many points we have. We usually get things we need for the home with the points.

    All that said I really want to get into the credit card hacking game. I have even signed up twice for a course (free) but haven't read any of the sent emails.

    ReplyDelete
    Replies
    1. Is the AMEX you have the payback one? I hear that one is pretty good. However, I have noticed in Europe that they don't always take AMEX cards at establishments. Probably the one that you have not used in four years you should cancel but in the US you can also call them tell them you are thinking about canceling and sometimes they will waive the fee. And it sometimes is good to keep your oldest card because the length of time you have had your cards is part of the calculation of your credit score.

      Delete
  10. I haven't done any credit card hacking. I always feel like the companies are out to trick me! 🤣 However, I really appreciate your tips and the IHG card sound very interesting. You've given me something to think about!

    ReplyDelete
    Replies
    1. They are trying to trick you...into not paying your bill so they can charge you way too much interest! Don't fall for it. However, lets turn it around and trick them! :)

      Delete
  11. I have the chase reserve and love it. especially the free lounge at airports with two guests pass. Girls love it. I don't have any hotel card though as we prefer airbnbn if possible. And I definitely always pay full balance every month.

    ReplyDelete
    Replies
    1. I also have the Reserve but am still analyzing if it is worth it or not, as I have not been able to use the lounges this year. I am going to give it another year, since I will be traveling more internationally in 2025, and will then decide if I want to keep it at the end of next year.

      Delete
  12. This is my jam. I love the mental games of points. I have the following cards, and am unlikely to add any.

    Capital One Venture - This is a travel card. 2x points if you redeem for travel, 1x points otherwise. I think the annual fee has gone up, but I pay $59 a year. I like that I don't have to book through them, I can just purchase my travel using the card and reimburse myself with points. I save my points for big family trips, like when we went to Maui and Alaska. When I went to France on my own, I didn't use my points, I figured I was saving enough money by being without my family. ;-) It also has no international fees, and I've gotten some good benefits, like a trial subscription for The Cultivist, which got me into several museums for free, including The Louvre and Musee D'Orsay. It pays for PreCheck or Global Entry, and I signed up for Global Entry but could never get an appointment. I tried just showing up, people said they had done that, but it didn't work in the heady travel days of 2022 when I tried. When you re-enter the US you can get an on the spot interview before you come through customs, but they closed 1/2 hour before my flight landed. Boo. This is the card that I use for most items.

    The other three are all through Chase.
    Chase Freedom - This is the one with rotating 5% categories. I only use it for whatever the category is. The only time I spend enough to get the maximum amount is when it is grocery stores. I do OK when it is drugstores or maybe PayPal, but the others I don't use enough.

    Chase Amazon Prime - I use this one for Amazon and Whole Foods, where it gets me 5%. I also use it to rent cars, because as you said, it gives me collision insurance, and also there is no international fee.

    Chase Freedom Unlimited - This one gives 3% at restaurants and drug stores. That's only 1% more than my Capital One card, so might not be worth the hassle if it had an annual fee, but it doesn't.

    I second your thoughts on paying them off every month, though. That is SO IMPORTANT, there's no point getting 5% cashback on your groceries if you are paying 25% interest.

    I had no idea that there was a card you could use for rent. THAT IS HUGE. I don't pay rent, but gosh if I did I would be researching the hell out of that one.

    I am going to come back and read your other financial tips that you linked to, thank you for those.

    ReplyDelete
    Replies
    1. I love your response! I actually have the Venture too and I use it for most non-travel related expenses. (It does cost more now @ $99/year) Sapphire and another one I have (Business Ink) have 3x points for travel and better travel related benefits (delay protections, lost luggage etc. death and dismemberment insurance) than the Venture does. However, AMEX Gold is good for restaurants and grocery stores, as it gives 4x points on that. I did get the Global Entry through the Sapphire Reserve, and it was kind of hard to get an appointment (6 week wait, I think) but I did get one, and this is stupid, but the actual appointment only took about five minutes (after schlepping down to SFO).

      The annual fees on some of these cards can get a little ridiculous, but depending on what you use, sometimes the benefits are worth it. AMEX Gold for example gives a $10 credit on Uber/UberEats every month, $10/month credit on some restaurants, $7/month credit on Dunkin Donuts, and $100/year credit on Resy, but only if you spend in these places. However, if you do eat out a lot, this could add up to like ~$400 in credits. I do not really eat out that much!

      Delete
    2. That 4x points on grocery stores is tempting. The annual fee is pretty high, and I'm not sure I spend enough to justify it. I'm going to make myself a spreadsheet and calculate my grocery store spending and see if it makes sense. :) FUN!

      Delete
    3. That sounds fun to me! The cool thing about the AMEX is that their points transfer to a few different airlines than than the other cards like ANA, which has a really good points value (I think it is like 2.2 cents per point), and you can get like a RT to Japan on business class for like 88,000 points (just as a context, it was ~100,000 on United to go to Germany in economy. This article has a great breakdown of the points values.

      Delete

Thanks for commenting! I love to respond to comments, so please check back soon for my reply!