Does travel hacking work, or are the reports of it being a scam actually true?
I hate making such cliche titles as they sound like clickbait, but it is something that many are asking.
Does travel hacking work? Of course, it does. Is it a scam? It might be, depending on several factors that I’ll mention below.
But let’s start with, what do you consider travel hacking to be!
For many (if not most) it’s to find the best program that gives the most points when you travel by plane (frequent flyer miles) or stay in hotels. With those points, you can get huge discounts, free flights, free hotel stays, and so on.
For many, that is the essence of travel hacking.
What I personally consider travel hacking is including travel tips that give you an edge compared to usual travelers, be it in a form of tips and tricks. Since I’ve traveled a lot in my life, I have used tons of tricks that I call “travel hacking”, which have helped me tons. It doesn’t always have to be related to credit card, and flyer miles hacks (although it occasionally is).
But since it’s a big topic, I will start with those points hacks:
Does travel hacking work in terms of credit cards and flyer points?
To explain it the best way, Flyer points (or Air Miles) can be compared to experience points in a game. Airlines make their own game and the reward depends on how far you travel with them. As you gain more miles, you get a “level up”. Each Airline level gives you different benefits like a priority, better seats, luggage benefits, and so on. The amount of miles you travel has to be maintained throughout the year, otherwise, you may be downgraded from ‘Platinum’ to ‘Gold’, for example.
That’s why the Frequent Flyer Miles points system works best for people who fly a lot.
You also have to remember that those points that you accumulated, typically have an expiration date of around 18 months.
These points can also be cashed in towards travel tickets, or even items. It all depends on the Airline.
Some airlines, like American Airlines, for example, can even give you their own credit cards for you to use. Each dollar that you spend with it, earns you points. It doesn’t matter if you buy food, fill a gas tank, go to the cinema – every spending is turned into points.
There is some certain value with those points accumulate, but in most cases, I found the ‘additional perks’ to be the biggest value right now. If you don’t have the AA credit card, you get the most value from the sign-up, as you basically get points valued at around $500 of travel. Make sure to read the requirements though! Depending on the Airline, as well as time, the requirements and rewards differ.
So do flyer points actually work nowadays?
Yes, they do! If you travel more than 2 times a year (with AA for example), you are already saving money by not paying any baggage fees.
I am not even talking about the additional perks or flyer points that you accumulate.
If you plan to travel, I wholeheartedly recommend signing up for Airline programs, whether you know what you are doing or not.
With credit cards, travel hackers like to play around with a thing called ‘churning’. It’s a process where you repeatedly apply to different credit card accounts, just to get that sweet, sweet sign-up bonus. Once the advantage is taken, ‘churners’ close the account and open the next account where they find the most value.
So, to sum up the good parts of churning, it allows you to get free hotel nights, airline awards, in some cases even cashback. The discounts are tremendous, the classes are oftentimes upgraded in hotel suites or on tickets. If you truly know what you are doing, it can even increase the credit score you have.
You’ll be basically treated like a king on travels while paying a discounted price.
BUT, it’s not for beginners. In fact, if you are hearing about churning for the first time, I’d advise you not to do it. Only do it when you are fully aware of the risks and know what each sign-up actually does.
There are many pitfalls around that activity. It is NOT a scam, and can be incredibly useful, BUT only when you know what you are doing. If you don’t know what you are doing, your credit score may plummet HARD. You will be hit with interests far higher than a regular person should pay, and in some cases, your account just gets terminated.
It wasn’t like that in the beginning. However, once credit card companies started to get a whiff of churning people, the sign-up conditions became much more strict.
So what are the examples of things to be aware of?
Credit cards will have a requirement for you to spend, for example, 5000 dollars in 3 months. If you apply to 7 different credits cards at the same time, they will have different requirements. Each of them has to be paid on time, otherwise, the interest you are hit with is an ouchie. That’s actually what many credit card companies hope for and bet on.
That’s one of the ways they make money – they hope people mess up. Juggling between 7 different credit cards is not easy, and you should be completely prepared for that and make plans.
Speaking of “7 different credit cards”, there is a 5/24 rule.
It says that you can’t be approved for most Chase cards if you have opened 5 or more credit cards within 24 months.
But not all credit cards count towards that “5 max” list. There are certain cards that can be opened without worry. But you’ll have to follow forums to keep track of that.
Once you have finished the ‘churning’ process and got all the required bonuses, you will have to close down the account (or downgrade), otherwise, the annual fees will reach hundreds, if not thousands.
The last thing to keep in mind is, your credit score will be reduced for a few months, once you start the ‘churning process’. So if you apply for any place that requires a credit score check, be it a mortgage, car, loan, apartment, job, then it’s best if you stop the churning activity. Most recommend the time to be at around 2 years, as most credit score graph checkers stop at 2 years.
Is churning even for me then?
There is an easy way to check that. Ask yourself a few questions:
1) Do you have a history of running into monthly debts?
2) Do you have a long-standing relationship with a certain bank, which you don’t want to lose?
3) Are you careful with your personal finance?
4) Do you have a plan for those months and have you made a spreadsheet?
5) Do you have a certain goal you want to achieve with churning?
Who is a typical churner?
There was an interesting poll made in 2022, with quite a lot of responses:
Here is the summary for that poll:
1. People who churn are mostly 20-30-year-olds.
2. 85% of churners are male.
3. Over half of the churners are married.
4. 70% don’t have children.
5. Almost a third of them travel a couple times a year for work.
6. Majority of churners have not served in the military.
7. Majority are Caucasians, with Asians being in second place.
8. A bit over half are with an undergraduate degree.
9. 90% are employed.
10. Household income is mostly between 60-260k (better seen on graph).
11. Biggest percentage live in California.
12. 70% of churners have ACTUALLY churned a card.
13. Most (24%) stop the churning at 4 cards.
14. FICO score is mostly between 740-800.
15. This one’s actually funny: 60% of people are “business owners” in quotes while 14% of churners are actually business owners. Kudos for honesty.
16. Most churners do it for travel, with occasional cash benefit reasons.
17. Most have applied for well over 10 cards since they started churning.
18. 35% (the majority) of people have not been denied by credit card companies.
19. 91% of churners have not been banned by any bank for their churning activities.
20. Majority has not paid any interest on a credit card before discovering churning.
21. 90% hasn’t paid interest AFTER starting churning.
22. Most people organically spend between $1,000 and $3,999 per month.
23. Primary source for churning information is r/churning.
I skipped some of the polls, so you can check it for yourself later. It’s a very informative poll, as I have discovered quite a few interesting facts as well.
So, to conclude, churning is a serious business that CAN affect your life in a drastic way. Always be informed and my advice would be to check Reddit for updates.
You can also follow me if you want, as I follow that anyway and will write and update my guides accordingly 😉
To conclude, travel hacking does work. Many people have different understandings of what it is. Some call it churning, some use it to find great flyer points deals, and some seem hacks as just travel tips and tricks.
I like to write about the ‘tips and tricks‘ part, as I’ve found it the most useful for my travel situation. But I do occasionally dip into the point system. After, it’s a big part of travel hacking, and it works 😉
If you have any questions on this topic, feel free to comment below. I’ll answer as soon as I can!
Please consider sharing. It helps me out A LOT!