I love talking about travel hacking, which I define as strategies of acquiring travel experiences creatively, for less than than the usual cost. It’s pretty awesome actually.
I’ve utilized some tricks that have allowed me to stay in nice hotel rooms for effectively free, getting a room when a hotel is “sold out” , and even earning the equivalent of a a trip to Europe by spending $250 on merchandise (via the much-missed US Airways Grand Slam). I went to Asia for $80, and use elite status to basically never have to wait in line at airports. All without spending very much.
And yet, I find myself very much on the periphery of travel hacking land. Out of all the deals that I find, I don’t take advantage of almost any of them. And this is because I feel that taking advantage would conflict with some financial precepts that I hold to.
Here are some reasons why I abstain from most travel hacking deals, and why you may want to as well.
Table of Contents
Saving money by spending money
Most deals that let you accrue frequent flier miles or travel points won’t do so just because. They require, through some means, spending money. And while I’m a big fan of spending money (especially on experiences) I rarely recommend spending money to get a deal unless it was money you were already planning on spending anyway.
Quick-ending deals can cause you make bad decisions
There are mistake fares all over the place. These are incorrect fares that airlines post on their website (or on third-party sites) that are clearly too low. I recall a little over a year ago there was a deal for $500 or so from Vancouver to Hong Kong. Another one was $400 from LA to Japan. (To say nothing of the $10 airfare deal that affected United.) Now, these deals are usually corrected within a day or hours, so if you find a great deal like this, the tendency is to jump on it.
And yet, the thrill of the discovery can come with penalties. Did you really have the money for this deal? A $2000 ticket selling for $500 isn’t a good deal if you didn’t have $500 to spend. What if you bought the ticket hastily for certain dates, and then found out that you were unable to go during that time? $500 for nothing is never a good deal.
Since I’m a big fan of waiting 24 hours at minimum before making a big purchase, and given that many of these deals are gone within that time, I can’t say that getting on board is always a savvy move. There will be another deal.
Some deals can be morally questionable
By now, many people have heard about the now-ended trick of buying coins from the US Mint. In effect, you could buy dollar coins using mileage-earning credit cards, and then deposit those coins in your bank, and then use those coins to pay off the credit card, in effect, buying any number of miles for free. Stories abound of people pulling $30,000 a month.
While this is fascinating and kind of hilarious, there’s part of me that wonders if this isn’t some kind of fraud. Yes, I know it was “legal” but, as it’s impossible to get something for nothing, who is really paying for this? The bank (having to receive wheelbarrows of coins), the shipper (who has to ship hundreds of pounds of coins), the airline, the people who fly on the airline, the credit card company, the taxpayers? I confess my argument is more of a gut feeling, but to me, it feels wrong.
The coin deal is dead, but a similar, if smaller scale trick can still be accomplished through Amazon Payments, which for free will let you send $1,000 a month. So, spend $1,000 on a credit card (earning miles) and send $1,000 to your friend or spouse (who will hopefully be nice enough to give it back to you), and you’ve earned miles for doing effectively nothing. Yes, it’s legal, but it reminds me of the complex financial products that Wall Street perpetrates (credit default swaps, etc), because it appears to create real value from nothing. Yikes.
Most deals require the use of credit cards
I’ve written about this before, but it bears repeating. One of the central tenets of ways to accrue miles is by putting all of your spending on a credit card.
Everyone is at pains to note that you need to pay off your entire balance at the end of the month, and that failing to do so will negate all of the benefits that the miles will give you.
Unfortunately, that’s not quite good enough for me. This is because we tend to spend more when using cards. While studies tend to vary on specifics, let’s throw a dart and say that plastic causes you to spend 10% more on average than you would with cash. Do you get more than 10% equivalent in travel hacking benefits when compared to the 10% extra that you would spend by using plastic?
Say you spend $10,000 in an average year on a credit card, netting you 25,000 frequent flier miles. Actually, let’s be really generous and say that you took advantage of enough deals to net yourself 50,000 miles. That’s about enough for a trip from the US to Europe in coach, which I would value at around $900.
But because of the 10% credit card spending penalty (spenalty?), you spent $910 more than you would have with cash. That’s some “free” trip.
But even if you don’t put your spending on credit cards, but instead perform credit card churning (apply for credit cards, put enough spending on the card to get the spending bonus, cancel the card, and then reapply later), you need to ask yourself whether the time, money, complexity, and risk is worth it.
So while I love hearing stories about people who earned 1,000,000 frequent flyer miles through credit cards (which does happen), I don’t feel like I can with prudence justify doing likewise. Luckily not all deals require compromising one’s principles. However, as always, your mileage may vary.
But enough about me: How crazy are you willing to get when it comes to travel hacking?
