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How do you normally pay for your bills? Do you use credit cards to make any of your payments?
If you don’t use credit cards to pay for your bills, you could be leaving extra money on the table. There are numerous rewards credit cards available that can be used to help put money back in your pocket.
Our family has been leveraging credit cards for the past decade to earn points and cash back.
Note – If you are in debt or have problems paying off your credit cards each month … please ignore this post! Earning credit card rewards can be a great strategy to earn some extra money each year … but not if you are spending more in interest and late fee’s and racking up debt.
How We (Currently) Earn Credit Card Rewards
Earning credit card rewards points is nothing new to our household. For the past decade, my wife and I have used 2 different rewards credit cards to pay for 65% to 75% of our bills. From groceries and gas to household utilities like our water/sewer and gas bills have all been paid by credit card.
Most of our credit card spending over the years has earned 1% cashback and in some unique instances up to 2% cashback. We have used these rewards to buy gift cards and a few times to help pay down the balance on the card.
Overall, it has been an easy way to earn a little back every year.
I would caution anyone who has trouble paying off their balances each month to avoid using credit cards altogether. However, if you can stick to our 3 simple rules, then I don’t see any reason not to start earning something back from your spending.
- pay off balance every month
- spend within your means
- use cards with no annual fee
Up until now, we have taken advantage of $0 annual fee credit cards that earn us 1% to 2% back on our spending. That usually translates into an extra $250+ back each year for our family.
And while an extra $250 (or more) every year helps out … I think we can do a LOT better. So we have decided to start travel hacking.
Building Our Travel Hacking Portfolio
You might be wondering what the heck is travel hacking? To put it simply … it a strategy to build up frequent flyer miles, points, etc. by opening up one or more credit cards that offer signup bonuses.
Many “travel hackers” use this strategy to visit their favorite destinations all around the world for very little money … and in some cases for FREE.
The possibilities for travel can be endless with travel hacking. Getting discounted or free airfare to destinations all around the world. Free hotel rooms. You name it!
So while my wife and I have enjoyed our extra credit card rewards over the past decade, we have the potential to earn back way more in travel options using this strategy.
That is why we decided to start building our – Travel Hacking Portfolio.
Once we decided to take on this new strategy for our credit card spending … we felt like we needed to set some goals.
Travel Hacking Goals
First of all, our family does not currently travel too much. We usually take a week or two out of the year for family vacations … but they are all within driving distance and we stay for about a week.
And we don’t have huge plans to start traveling all over the world anytime soon … although someday when the kids are grown that could certainly be an option. For now, our goals are to raise enough free miles/points (whatever you want to call them) so that we can pay for our family vacations. And possibly a couple weekend trips for my wife and I to get away.
Plus, our kids participate in travel sports and there is the need for out of town weekend trips. We would like the flexibility to build a portfolio of points to use for these trips.
Our First Travel Hacking Credit Card
A few weeks ago, we took the first step to building our travel hacking portfolio by opening our first card.
The first credit card we opened up is one of the most suggested cards around … at least from most bloggers who I’ve read that cover travel hacking.
Note – I won’t mention the actual card for now … but instead discuss the travel value earned from opening up the card.
The card comes with a sign-up bonus of 50,000 points if we spend at least $4,000 in the first 3 months. There is no annual fee the first year, and the 50,000 bonus points are estimated to be worth $625 in future travel.
Right from the start, this new card will increase our rewards by $400!
As I mentioned earlier, we currently use one of our two credit cards for 65% to 75% of our monthly spending. Basically this covers everything except for our mortgage and 2 car payments. Plus a few miscellaneous bills that we cannot use a credit card on.
At a minimum, that is at least $2,000 per month in transactions we currently put on our credit cards. So we shouldn’t have a problem hitting our minimum spend of $4,000 in the first 3 months.
Plus the annual fee is waived the first year, so unless we forget to cancel our card before then … there is no cost out of pocket. And it is assumed we will continue to pay off our credit card balance with this new card every month … just like we are doing today.
After 90 Days
Once our 90 day window is up (we have about 60 days to go at the time of this writing) and we get our points in the account … we will hold off using this card for any more purchases.
That is when my wife will open up the same card in her name … and we switch to spending on that card. This strategy will earn us another $625 in future travel rewards.
At some point along the way, we will need to figure out the best option for transferring out the points on my account as well as my wife’s. This step is crucial since we will want to close our cards before year 2 starts and that $95 annual fee kicks in.
Concerns? What About Our Credit Scores?
Do we have any concerns with travel hacking? Yep. The biggest question I have had for years (and why we haven’t tried this sooner) is the impact it may have on our credit scores.
From the research I have read on others using this strategy is that there isn’t really any negative long term impacts to your credit score. In many cases, your credit score may actually go up.
This is something that I will certainly monitor closely as we take steps to open a second card down the road.
Tracking Our Cards
In order to stay on track with the cards we open and the points we are earning, we setup a spreadsheet that will be used to log the information.
We plan to track the card names, bank information, bonus point offers, date opened, annual fee (if applicable after year 1), date closed, etc.
This will help us stay focused and avoid any late fee’s, interest charges, or future annual fee’s. We have realized that staying organized is crucial to making travel hacking a success.
Travel Hacking – Resources
I plan to provide periodic updates on how we are building our travel hacking portfolio. As we start to earn points and open up new cards … we will send out updates on our progress.
Hopefully these updates will provide value to anyone looking to start building their travel hacking portfolio.
In the meantime, here are a few great resources that have helped us get started –
- Travel Hacking and Slow Travel – by Mad Fientist
- FREE Travel Rewards Course – by Travel Miles 101
- How to Start Travel Hacking – by Money Under 30
- Dynamic Flight Pricing – by Million Mile Secrets
Do you earn travel hacking rewards? What other resources can you recommend for those looking to get started?