So how did this happen? How did we go from barely using a credit card at all to opening several new  cards and putting all possible expenses on them?

Lets go back to the beginning, maybe 15 years ago, when Tom was back in school and we were living on one very modest income. Guess what happened? Credit card debt. After really looking at our finances and working really hard to get out of that hole, we vowed to never use credit cards again. Well, that sounds more like something Melissa would vow. In all seriousness, we were nervous about making mistakes with credit cards or getting too comfortable with them because of how quickly the debt can snowball. As we both furthered our careers and had more income available to us, Tom kept trying to get Melissa to use credit cards that gave cash-back, but she kept resisting. 

Finally, one day in 2021, Melissa got really hyper-focused on hacking a trip to Disney World. She has loved bringing her family to the happiest place on earth but has hated the price tag that comes along with that. She listened to podcasts and consulted blogs and websites and kept coming across the idea of loyalty programs and frequent flyer miles. She thought to herself, gee, we don’t travel nearly enough to get enough points to be able to do anything as a family of five. But then she read more and realized that these people just open credit cards for the sign up bonuses that they then use for any number of things – flights, hotels, cash back etc. The banks just give these rewards out. While there are other little hacks that can cut the cost of travel, she was amazed to find that this credit card bonus way got the closest to zero money than any other tricks or tips. How could she turn away from the idea of taking a trip for close to zero money? Well, she couldn’t and that’s why we’re here.

Here are our FAQs that aren’t actually FAQs but rather questions we are guessing someone might ask:

1. How does this work?
It’s very simple, really. If there is a credit card with a good sign-up bonus that one of us is eligible for, we apply for it. Banks typically will lure new customers in by offering something like in the case of the Chase Sapphire Preferred card, 60,000 Ultimate Rewards after you spend $4,000 in three months. We open the card, shift all of our ordinary expenses onto it (hello, grocery bill! For a family of five we could almost hit that spend in 3 months), and then get the reward points. In the case of that particular card, there are multiple airlines and hotel chains that are transfer partners, so we then use those points to book travel and start the process over with a new card. For instance, 60,000 Ultimate Rewards is enough to take our family to this resort in Puerto Rico for 4 nights. We might just have to do that! 

2. Do I have to open a million new credit cards?
Not exactly. What we’ve found is that the most “bang for your buck,” though, is not in focusing on putting all of you spending on one particular card, but on really focusing on sign up bonuses for new cards. Of course you can maximize particular spending categories, like gas or groceries, on cards that will give you certain multipliers – and we do that too – but it doesn’t come close to the points generated from new card openings. For example, in 2022 we were able to generate a little over 900,000 award points by opening 7 new cards between us. This included the sign up bonuses plus using certain cards in categories that had good multipliers for things (5x on groceries, 4x on dining etc). Lets say instead of focusing on new card openings we had focused only on the Amex gold card. That is a great card that gives 4x back on dining and groceries. As a very generous budget, lets pretend we could spend $2000 a month in those categories and maybe $2000 a month on the non-elevated categories at 1x back. We would have made 90,000 points on the sign up bonus and about 120,000 points for the year on normal spending, topping out 210,000 points. If I haven’t lost you yet, the point is that 900,000+ points is more than 210,000 for the same amount of spending in a household.

3. Wow! Are you in a lot of debt?
Actually, no, we are not. The only way this method of travel hacking works is if you pay off your full balances on all cards every month. With interest rates being sometimes as high as 25%, a one month mistake could potentially cost hundreds of dollars. Without paying off cards in full each month, this hobby quickly becomes profitable only to the bank and not to you. It’s important to note here that this form of travel hacking really might not be for everyone. You may need to work on building up your credit first. Or, you may be in a place in life, like we were for many years, where you are operating on a super tight budget, and the temptation of using credit cards for things you can’t actually afford is too high. The keys to making credit card points and miles work for you is to pay off your cards each month and to not buy things you typically wouldn’t just to meet a minimum spend.

4. Won’t you run out of cards and bonuses to get?
This was something Melissa got worried about early on, and so she had a tendency to want to hoard her points and not redeem them. However, each major card-issuing bank has sometimes as many as 10-15, or even more, co-branded and specialty credit cards with unique features and bonuses. Working at a pace of 6-8 credit card openings per year, we haven’t even scratched the surface of what’s out there, and new cards are always getting introduced. What’s more, each bank has its own set of rules, but there are many cards that we could eventually get again. Veterans in this hobby have been doing this for 15-20 years and are still generating way more points than Melissa and Tom may ever see. 

5. Aren’t the points hard to redeem – can you actually go anywhere?
So far we’ve found transferring Chase Ultimate rewards to Hyatt and Southwest extremely easy and instantaneous. In fact, you could focus all of your travel hacking on these programs and travel pretty extensively within the US. We’ve also had great success with Marriot Bonvoy and have used a travel expense erase feature on our Capital One card. We were able to use these things to do the travel we wanted to do and didn’t feel restricted in what we have been able to do. Melissa has a big family trip to France coming up, so we will keep you posted on how that works. 

6. What about your credit score?
This really hasn’t been an issue. We tend to see a small dip after a card company has made a credit inquiry when making a new application, but then it goes back up to where it was. Overall, we’ve both seen our scores get higher since starting this. 

7. Do you pay for cards with annual fees?
Absolutely, if we calculate to perks of the particular card and find that they are worth it to us and come out in the net positive, we do. Typically, the sign up bonus itself will make most cards worth opening for at least a year. When the card anniversary comes around, we again evaluate if it makes sense to pay the fee to keep the card, downgrade to a different no-annual fee card, or cancel altogether once the fee has posted (they will refund it). It is important though, to keep the card open for at least a year and to have a plan for how you will redeem your points if you plan to close it. Without the right kind of card account with a particular bank, you might end up forfeiting your points and rewards.

8. Is this time consuming?
There is definitely a good bit of organization and time that can go into making this work for you, but you may find that its worth it. As we said above, you can get into this a little or a lot, depending on your goals. And, you don’t have to write a blog! There are apps out there such as Travel Freely and Award Wallet that will help you keep your information organized and cut down on the amount of time it takes to keep everything straight. Tom is definitely the organizer in our duo, and his system involves keeping our YNAB current and using various excel spreadsheets he made to track everything from card opening dates to bonus deadlines to 5/24 status. If this all sounds too overwhelming, focusing on trying one card that will help you with a hotel stay and one card that might help you with flights is a good way to start. Then, you can assess how hooked you are and how much more you might want to do!