When we have the safety and luxury of travelling again, oh what a day that will be!!
What is travel hacking and is it possible for Canadians to do?
First of all, what is travel hacking?
"Travel hacking involves working within the existing rules set up by airlines, credit cards, and hotels, and using them to your advantage to earn free travel including flights, lodging, and other upgrades."
If you have any consumer debt, vehicle debt or student loans, I would not recommend doing any Travel Hacking until you are completely debt free. Also, if you struggle with overspending with credit cards and cannot stay within a budget, I would NOT recommend travel hacking.
I first heard about Travel Hacking when I watched Our Rich Journey’s Youtube video: Travel Hacking, How to Travel the World for Free. It was a new idea that I'd never heard of, but it fit perfectly into my travel plans because I was looking for deals on flights for my future travel plans.
(If you are new to my page and curious about what our travel plans are, please watch our Youtube video here.)
While researching about Travel Hacking or as some call it Credit Card Churning, I soon discovered that Americans have far more opportunity with more access to different credit cards, so I sought out Canadian alternatives and discovered Ricky at Prince of Travel and his Youtube Channel and Facebook page.
I had never worked with any travel rewards programs before and for most of my life had only used one credit card, in which I got my 2% cashback every year, to the tune of approximately $400/year.
Most of us Canadians have heard of Aeroplan Miles/Points or Airmiles Points and credit card points that you can accumulate to pay for flights. However, it had never personally interested me because,
#1. I hadn't travelled very often
#2. I don’t spend a lot of extra money on too many extravagant items.
But in 2020, I began my Travel Hacking journey with credit card rewards points and soon realized that the
travel redemption could be worth more value than the cash back option.
Which Travel Reward Program is the Best?
There are quite a few travel rewards programs to research and consider such as WestJet Rewards, Avion, American Express Rewards, Marriott Bonvoy, etc. Each person's situation is so different. Make sure that you research what works best with your dreams and goals.
After researching which travel rewards program was the best for our future plans, we decided upon the Aeroplan Rewards program, which was purchased and run by Air Canada.
In my research, i also learned that many members of the FI Community (Financial Independence) make use of Travel Hacking as well. In the book Quit like a Millionaire, Kristy and Bryce discuss how travel hacking has saved them $6000/year in flight costs and they have been fortunate enough to have travelled to every continent.
What is the procedure for Travel Hacking?
Thanks to Prince of Travel and Our Rich Journey, I learned that Travel Hacking involves:
1. Signing up for multiple credit cards
Unfortunately, in Canada we are slightly limited by the number of credit cards available to us compared to the US. However, we just have to be more creative as Canadians to make travel hacking work for us.
2. Obtain the larger sign-up bonuses
The sign-up bonus points are usually much larger than the everyday spending to obtain points. Not all points are equal or transferable, depending upon which rewards program you decide to work with, so make sure to do your research ahead of time. For example, American Express rewards are transferable to Aeroplan Points on a 1:1 ratio.
3. Meet the Minimum Spend Requirement:
The key to earning the sign-up bonus is to meet the minimum spend requirement through careful financial budgeting and planning. Some of these minimum spend requirements range from $1,000-5,000 in the first 3 months. Now, $5,000 might seem like a lot to spend in 3 months but for our family, we used our yearly Home and Auto insurance payments to meet the minimum spend requirement on one new credit card.
4. Get Organized and Keep track with a Spreadsheet or Tracking Tool.
Travel Hacking requires a lot of spreadsheets or organizational tools. I have already made mistakes along the way and paid late fees, trying to juggle multiple credit cards. My biggest mistake was realizing that I accidentally scheduled one of my credit card bills for the 30th of every month, forgetting that February doesn’t have a 30th day, so yes I the financial coach make mistakes too and missed a bill payment. If you struggle with organization, check out my blogpost about 3 Apps that can Simplify and Organize Your Life.
What about the Annual Fees?
Some of the more advanced Travel hackers will even sign up for credit cards that have an annual credit card fee, if they deem the rewards valuable enough. Some of these annual fees range from $89-699. To be honest, I barely knew that credit cards had annual fees and didn't see any point to signing up for one that did, prior to researching about Travel Hacking. In the beginning of travel hacking journey, my husband and I have decided to start with the credit cards in which the annual fee is waived for at least the first year.
Ricky at Prince of Travel recommends phoning the credit card companies and requesting that the annual fee be waived for the 2nd year and if the rewards do not seem worth it for you as a customer, then cancel the credit card.
What about my credit score? Won't it suffer?
I have been tracking my credit score via Borrowell since starting this Travel Hacking journey in September 2020. So, far my good credit score has only dipped down 20 points and then recovered and this is within the time frame of signing up for 5 credit cards from September-April. I didn’t spread out my sign up dates either. I was also able to sign up for a Business Credit card because I also have a business registration number for my Financial Coaching business. However, prior to discovering travel hacking, I would never have even considered signing up for a Business Credit Card. Some of them like my TD Visa Business card have quite a few perks. We'll get into the perks a little bit later.
How many Points have you accumulated so far?
I have so far accumulated between my husband and I signing up for separate credit cards and linking out Aeroplan points, we have accumulated 338,000 Aeroplan points since September 2020, which would be great if it was only the two of us flying but there are four of us!
(I recently updated this blogpost in August of 2022. The 338,000 Aeroplan points could potentially equate to a return flight for four from North America to Europe)
How much are you really saving?
Potentially by just spending what you normally spend on your credit card and by getting the sign up bonus of 25,000 Aeroplan points from one credit card, that could equal the price of one flight for one passenger within North America. So potentially by signing up for several credit cards each with 25,000 in points, you could pay for a flight for a family of four, somewhere within North America.
Some have broken down the exact cash value to approximately
$0.01 per Aeroplan Point
Will my vacation be truly free?
Is there ever such a thing as free?
Even when redeeming points, there are certain components of your airfare that you’ll need to pay out-of-pocket. For example, airport taxes and government-imposed aviation fees are almost never covered by points.
"The goal isn’t to travel for free, but rather to spend a fraction of the usual cost on flights and accommodations, while also enjoying an elevated level of luxury if you so choose."
Why do this?
Instead of spending money on flights, you now have extra money in your pocket to spend on excursions, meals or whatever else you want. However remember, that you will likely still spend more money on travelling than you probably would sitting at home, unless you start renovating your home!
How much work is involved?
It is a lot of planning ahead and keeping track of your budget, so you do have to be quite organized. However, would you rather be organized and utilize travel hacking or spend time working extra at your regular job and saving up extra money for travel? Consider, how many hours do you need to work to acquire an extra $2000? And that $2,000 might be for one flight, not for a whole family.
What additional perks come with some of these credit cards?
Some of these credit cards have:
-Travel medical insurance
-Trip cancellation/trip interruption insurance
-Auto rental collision/Loss damage insurance
-Flight/trip delay insurance
-Delayed and Lost baggage insurance
-Free First Checked Bag
-Maple Leaf Lounge access
-Priority Pass Lounge access
I recently listened to a great Podcast by Maple Money (hooray for Canadian Content) called Travel Hacks to Save you money on your next trip with Barry Choi, which was really informative.
Now, I haven't redeemed my 338,000 Aeroplan points for air travel yet, but I will let you know how the process goes to redeem those points.
However, I have used my old standard MBNA credit card to redeem points for a flight for four to Texas. Instead of receiving the standard $400 in cashback this year, I used the redemption points to pay $699 for our $1,318 flight to Texas.
I have also used my points to pay for one night in a hotel in Banff during the Calgary Stampede, which was pretty awesome. The hotel stay was free!
Now Go and Be Intentional!