I was 18 years-old the first time I stepped onto a commercial flight. The Boeing 747, a plane impressively regarded as the “Queen of the Skies”, soared for 13.5 hours over Canada, Alaska, and the Bearing Sea before descending into Narita International Airport. My maiden voyage from Detroit to Tokyo forever sealed my wonderment for human aviation. However, there was one small problem: the final price for my first international adventure set me back $1500.
I am on a mission to ensure that’s the most expensive flight I ever purchase. Since then I’ve discovered a proven tactic to simplify my financial travel burden, effectively opening myself to increase travel at a lower cost. Two of the greatest travel excuses are time and money; this conquers half the battle. Like many other topics I discuss on Designing Essential, travel hacking involves shifting paradigms, educating yourself, and turning something on its head. This is the challenge and great joy of crafting your lifestyle away from the mainstream.
A few years after my trip to Asia, I was informed of the scarcely known, but conversation-provoking art of churning or travel hacking. At first glance, this appears to be a dangerous game of financial roulette–and truthfully, the misuse of any tool can certainly be risky. However, grasping core financial principles and developing a deeper understanding of the American credit system, I’ve created a pipeline of exceptionally low-cost travel and an equally important sense of freedom.
In essence, travel hacking or churning exploits airline-branded credit card sign-up bonus miles, repeatedly. This boils down to a skillful and timely opening and closing of credit cards, meeting minimum spending requirements, paying off balances in full, and responsibly managing your expenses.
Following the aforementioned approach for over two years, I accumulated 270k airline miles on Delta, Hawaiian, American, Southwest Airlines, and more. Since the inception of my credit card gaming, I have flown to the following places for nearly no money at all, excluding minor taxes:
Seattle to Detroit → 25,000 miles + $11.20 round-trip
Seattle to New Zealand → 75,000 miles + $72.40 round-trip
Seattle to Salt Lake City → 25,000 miles + $11.20 round-trip
As you can imagine, this increased the frequency and distance of my travel experiences. While I do occasionally purchase flights (there are always exceptions!), the cost of air travel no longer weighs heavily on my decision to see the world, return home for emergencies, or impulsively book a ticket to LA at 1:30 in the morning. Whether you plan on returning home for the holidays or are searching for your next South American adventure, you can get there for free! Before we dive into the details of churning, let’s establish some rules about credit and whether or not someone is fit to experiment with “free” travel.
Things to Consider
While I encourage everyone to experience the joys of discounted travel, there are a few considerations to reflect on before joining the ranks of travel hackers. In the United States there is a very simple measure of one’s creditworthiness–or how likely one is to repay their debt. Despite the majority of Americans purchasing a car or home on credit, few of us actually know how our credit scores are calculated or how it impacts our financial experience in the long run. I previously explained the five credit score factors: payment history, credit utilization, age of credit, credit types, and credit inquiries. If you’re already a credit expert, continue reading. If not, I encourage you to internalize the credit score information first.
In addition to understanding one’s credit score factors, there are a couple more important financial aspects to consider. I would only recommend travel hacking to someone that can comfortably pay off their credit card in full and on-time every month. This is independent of how much money you make–I know plenty of people making six figures, but still racking up interest on their credit cards. Shortly after receiving my cards, I place them on auto-payment to cover the full statement balance (not minimum payment), opt for e-statements, and link my bank account for future payments. This ensures I am always on-time and in-full. Note: these are not the default settings–but they are important ones. Banks would much rather have you making minimum payments each month (usually $25) and accruing interest on the remainder for their profit. I advise everyone to avoid this if possible even if you have no desire to churn cards. This level of financial aptitude is very important for maximizing the benefits of churning.
Furthermore, take an honest look at your spending habits. If you tend to inflate your lifestyle with available credit, this is one slippery slope. While I could purchase a new SUV on credit right now, I know that would be foolish and doesn’t really represent my normal spending habits or thoughts towards frugality and consumption. Hence, I possess a large amount of control when it comes to this (admittedly absurd) dispensing of high credit limits.
The last piece of the puzzle to consider is whether or not you will be applying for a large loan in the near future. This may come in the form of a mortgage, boat loan, or auto loan. Most readings I come across recommend laying off credit card applications for one or two years before this point. Assuming you have done your credit score research, pay off your cards every month, and have no loans coming down the pipeline, let’s get to traveling!
The Step-by-Step Churning Process
Despite understanding the aforementioned concepts, I too hesitated in applying for my first rewards card. To this day, I still have a tinge of hesitation every time I submit an application. Admittedly, this feeling is easily ignored every time I walk down the jet bridge to a free flight. Similar to investing, I only wish I started hacking sooner.
Rather than outlining all the specifics of churning, I’ll point you to some resources which already do a fantastic job. I highly recommend Million Mile Secrets for the New to Miles & Points guides which will detail the methodology in which one begins their journey to free travel. MMS has been a go-to website for my travel hacking journey and I still reference his Hot Deals page for a thorough listing of valuable credit card offers. If you are interested in a community of people looking to achieve the same goal of free travel, I recommend perusing Reddit’s r/Churning page. Given all this information, I will simply summarize the general process below:
- Locate | If you’re a first timer, identifying major airlines departing from your local airport is a good place to start. Perhaps one of them hosts a hub in your backyard. Also consider any places you frequently visit or wish to travel in the next year or two. My first card was with Delta as they had a monopoly on non-stop Seattle to Detroit flights for many years. When holiday flights approached $700, this was a worthwhile investment.
- Open | Apply for a card which will help you achieve this goal. If approved, you will be given a specific credit limit and mailed a new card within a couple weeks. Activate the card and follow the aforementioned advice: set-up “pay in full” auto-payments, opt for e-statements, and link your checking or savings account.
- Minimum Spend | Each card will have a certain spending requirement tied to the sign-up bonuses. A very common “minimum spend” requirement is $3k in the first three months of card ownership. If you already spend $1k/month, then this should be fairly easy to achieve. Be realistic when selecting your card.
- Receive Miles | Once you achieve this spending requirement, bonus miles will be deposited directly into your airline membership account. I have seen these miles appear in various amounts of time–from two weeks after I spent the 3000th dollar to 4 weeks after my monthly statement closes. Congrats, you now have a boatload of airline miles!
- Continue Spending | After meeting this requirement, you can continue using the card or simply stuff it in a drawer and use a different method of payment. Either way, keeping the card open continues to build your credit–even though no money is being charged to the card. I generally continue using one card until I open an additional card a few months later.
- Close | Just about every rewards card will have some annual fee attached to it–I never said this was completely free. A typical annual fee is somewhere around $100. This fee may or may not be waived the first year (i.e. upon opening). I have signed-up for both styles of cards, but it’s obviously more ideal to avoid it upon the opening of the account. After 11 months of card membership you will have to decide for yourself if paying their annual fee is worth it. So far, I have cancelled every rewards card I’ve opened around the 10-11 month time frame–simply to avoid the fee. I know many people who continue paying the annual fee because they get enough value out of its specific terms. If you do decide to cancel, it is a very painless run-of-the-mill process outlined in many of the travel hacking resources mentioned above.
- Churn | So where does the churning come in? If you open an identical card for a second time, you are revolving your rewards game! There are a variety of rules surrounding each card and the ability to do this. Some offer once-in-a-lifetime bonus miles while others require you wait 24 months before receiving the bonus miles again. In all honesty, I have yet to actually churn a card, as there are so many different ones out there!
Given this general understanding of the travel hacking process, I’ll now address many initial concerns I hear.
After receiving my first collegiate internship, I went to the local credit union (in which I had been banking for just over a year) and requested my first no-fee, credit card. All I provided was a proof of future income–in this case an offer letter from my summer employer. Although I never run purchases on this card now, I keep the account open (i.e. place the card in a safe place) to help increase the overall average age of my credit lines. If you reviewed my explanation of credit scores, you know the age of your credit is important. While I’m not exactly sure where my score stood five years ago, I guarantee it’s stronger now (more on that later). I recommend a score of 720+ before you start hacking, but don’t take this as an absolute. You can keep tabs on your credit score via Credit Karma or Credit Sesame‘s websites and mobile apps.
Given the lack of transparency and seeming ambiguity surrounding credit scores, it’s a common misconception that your credit score will simply go down by travel hacking. This is partially true. Any time you engage in opening, closing, or using any form of credit, you interact with the five credit score metrics. For example: opening a card will provide you with an immediate inquiry against your credit score (bad). Yet being the responsible citizen you are, you will always pay it off on time and use a small portion of your available credit (good). If you never had a credit card before, this will add diversity to your credit lines (good). However, it will also decrease your average credit age because it has an effective duration of 0 months (bad). Given the interdependent nature of these factors, one quickly recognizes the complexity of credit score algorithms. The good news about all this remains in the weighting of these factors; an overwhelming portion is calculated based on your payment history and credit utilization. Safeguard these components of your score, and you’ll do just fine.
So, does your score go down? Temporarily. The “dip” in your score will come immediately after an inquiry (or “pull”) against your credit. Early on in your credit-building career, these dips may be larger (~25 points), whereas now my credit decreases a small amount (~8 points) after each pull on my score. Assuming you follow my other pieces of advice and use credit responsibly, your score recovers in a handful of months. These small hits are a necessary evil preventing the general public from applying for credit lines at unprecedented rates, albeit we may already be at that point. Despite these small dips, the overall trend of my score since I began travel hacking is positive–many other bloggers document the same phenomena.
Another common question is how many credit cards I carry at once. Being a minimalist, I only carry one credit card on my person at anytime of course! But the more accurate response to their question would be 4-6 open credit cards. Two of these cards are my “have ’em for life”, no-fee credit union cards. Recall these stay open to continue ageing your credit history with no penalty to you. The other 2-4 cards are caught up in the churning process. For example, a Delta card is opened in January, a United card in April, a Southwest card in August, etc. Seeing that I wait 10 or 11 months before closing my cards, there will be some cascading effect.
Sometimes the minimum spending requirements are higher that your typical spending: $5k in three months. While I would never recommend signing up for a minimum spend that would require excessive spending, there are ways around it. Before applying for a card, consider any large purchases coming down your financial pipeline: car repair, laptop, bicycle, furniture, holidays. This will provide insight into when it is best to open a new card. More often than not friends and family are willing to let you pay for a large purchase of theirs for a cash transaction. This favor could be exchanged, say, for an explanation of travel hacking. Remember to thank your mother when boarding your first free adventure.
For the budget-minded consumer or credit card novice, all this may be quite a bit to absorb. In fact, it may seem easier to obtain one card and collect miles though your favorite airline simply from annual spending alone. And while this plan will eventually pay off, the real gains in hacking come from the sign-up bonuses. If I was to open three cards in one year at 50k bonus points each, I would net a handsome 150k miles. On the other hand, consistently reaching $2k/month on your monthly statement would take many years of one’s normal spending rate to achieve the same stash. In light of this, opening and closing of cards becomes an attractive solution to achieving lots of free travel.
So how far can you go with your miles exactly? It all depends on season and distance, but I typically budget 25k miles for a round-trip US domestic flight. International travel can be found for 40-80k miles round trip. All of these values are for economy flights departing the continental US. I am more than happy to sit with other “second class plebeians” knowing that my flight was comped.
Also consider that not all airline miles are created or spent equally. Airlines value their points at varying cents/mile. And when spending miles, points can be exchanged at different rates. Let’s say I spent 75k miles on three round trip tickets from Seattle to LA. To be conservative, we’ll assume each flight is $200 round-trip. This concludes I exchanged 75k miles for $600 of free flights. On the other hand, as listed above I was able to exchange the same amount of miles for a round trip ticket to New Zealand valued at $2300 during time of purchase. I made out much better in the latter situation. I encourage you to weigh these options as you exchange your miles for flights. I often buy flights outright to large hubs such as Chicago or Los Angeles, but spend my miles on international flights or jaunts to Detroit, Denver, and other less convenient airports.
Here’s a link to my Travel Hacking Google document which I invite you to copy and mold to your liking. This spreadsheet will keep you organized and on track for maximum rewards! The rows contain your current or closed credit cards. I recommend recording your airline reward IDs, minimum spend information, fees, and other pertinent notes in the document. Cards highlighted in red are closed permanently while the green ones are ripe for mile earning!
Joining the Game
Sometimes I hesitate in calling it a “game” as this is typically the last way we wish to think of our finances. However, churning credit cards or not, finance is a mix of behavioral psychology and strategic planning. It doesn’t always have to be seen though that lens, but I’ve certainly prospered in doing so. Travel hacking has wildly simplified my ability to see friend and family by effectively retiring the excuse of high-priced airfare. In a previous life, the thought of visiting New Zealand (to the tune of $2300 round-trip) seemed beyond reason. Traveling every other month seemed equally challenging while trying to maintain a budget. Now I’ve strung together amazing experiences near and far for a fraction of the cost. Educate yourself on credit score basics and leverage these opportunities. Welcome to the world of free travel.