Introduction: Travel Hacking Myths
I’ve always believed ‘if it seems too good to be true, it probably is’, which is something I hear a lot from our readers, and also from family and friends. When PointsWise was launched, I thought the biggest hurdle would be convincing people that paying credit card annual fees can almost always result in huge savings on travel, when in reality this has been relatively easy, yet selling people on the idea they can fly first/business class and stay at luxury hotels as a realistic travel goal has been tough to overcome. There are a bunch of travel hacking myths out there, so I thought I would write a post on the top 5 I hear on a regular basis, in no particular order.
1) Signing Up For Credit Cards Will Hurt My Credit Score
While some basic math will show people that paying annual can be worth it, many people are under the assumption that any new credit applications will hurt their credit score. This is a bit harder to guarantee, as the credit score algorithms are proprietary and the truth is that new applications will impact scores differently dependent on a number of factors.
Credit scores in Canada range from 300 to 900, and the higher the better. Generally speaking, anything over 700 is considered good, with 750+ considered excellent (you shouldn’t have any trouble being approved for credit above 750). While the exact formula is proprietary and unknown to consumers, the breakdown of factors that impact score is as follows:
- Payment History – 35%
- Amount of Debt – 30%
- Credit Length – 15%
- Diversity of Credit – 10%
- New Inquiries – 10%
As you can see, payment history and overall debt load make up the bulk of your credit score, with only 10% coming from new inquiries.
To get a free copy of your Transunion credit profile, check out Credit Karma in Canada.
To get a free copy of your Equifax credit profile, check out Mogo in Canada.
The credit score algorithm is sophisticated enough to know when someone may be shopping for different products, and when they may be in financial crisis and seeking new credit. For example, If I have a credit profile with perfect payment history and no balances on my current cards, the formula will not penalize me for applying for a different card. If however, I apply for a card in September, carry a balance on it, miss a payment, and try to apply for another card in December, the algorithm will likely pick up that I’m desperate for new credit, decline my application, and the inquiry on my file will likely drop my score accordingly.
Applying for different credit products is no different than buying new shoes or painting the walls in your house. Ultimately there is a lot of competition between the card companies, and new products are being released all the time with different perks and benefits (and welcome bonuses). Don’t worry about a couple of credit card applications a year. If you have good credit and are responsible with new cards, you won’t notice a difference. In fact, you may even see your score increase in the long term!
2) Travel Hacking Is Too Much Work/Confusing
I get this feedback a lot. I often get asked how I can possibly afford to travel as much as I do, and stay in luxury hotels while flying first class. The explanation is simple really – I leverage reward point programs and welcome bonuses.
I’m not going to lie – nothing in life worth having comes easy, and travel hacking isn’t much different. It will take an ounce of effort and dedication in the beginning to learn the basics, but you’ll be surprised at how easy it actually is. To be an amateur travel hacker doesn’t mean memorizing airport codes and airline routes, you simply need to focus on choosing the best reward programs relevant to your needs, and learn the techniques to redeem those points without getting burnt by taxes/fees or no availability.
The good news – I’ve travelled hundreds of thousands of miles and redeemed millions of points over the past several years and have carefully curated that knowledge into an easy to follow format for beginners – The PointsWise Guide To Travel Hacking.
3) Travel Hacking Must Be Illegal
Hacking is a term that stirs up a lot of negative reaction with people who often relate it to computer hacking (definitely illegal). In reality though, travel hacking refers to the process of learning the best techniques to earn and redeem reward points for high value redemptions – that’s it.
There’s nothing illegal about what we do, and every technique we practice is 100% within the terms and conditions of each reward program.
4) It’s Impossible To Get Decent Value By Redeeming Points
I hear this a lot by many frustrated consumers who have saved their points for years only to be stung by high taxes and fees or no availability. Rather than going on their dream trip they end up spending their 200,000 points on toasters and gift cards.
Travel hacking teaches ways to ensure you’re always getting good value redemptions. Our Travel Hacking Guide shows you how to search for availability that doesn’t come up automatically, how to choose programs and airlines that will minimize taxes and fees based on your travel goals, and most importantly, how to never spend your hard earned points on merchandise. Reward programs are huge profit centres for airlines and hotels and much of that depends on you using your points for low value redemptions. Stop redeeming your points for low-value redemptions, and instead use them for first class flights or luxury hotel stays.
5) Travel Hacking Seems Too Good To Be True
Travel hacking myths don’t get more untrue than this, but, I get it. If someone told me 5 years ago that I could fly first class and stay in luxury hotels for (almost) free I probably would have shrugged them off. The reality is that with a bit of patience, hardwork, and commitment, it’s entirely possible for just about anyone to leverage reward programs for more travel, or better travel.
Nothing in life is free, and that’s true of travel hacking too. Even the best travel hackers still have costs, such as airport taxes and fees (can be minimized, not eliminated), credit card annual fees, incidental costs while travelling, etc. We aren’t here to provide you with advice to travel the world for free. We want to show you that by leveraging reward programs you’ll be able to stretch your travel budget further, and travel more comfortably.
Travel Hacking Myths Bottom Line
There will always be skeptics, but hopefully this list of common travel hacking myths has helped dissipate some of the concerns in getting started. Even if you don’t want to commit all of your free time to learning the complexities of travel reward programs, there’s much to be gained just by using the right programs specific to your goals and staying organized. Our Travel Hacking Guide is designed for beginners who don’t have time to scroll through endless blogs and frequent flyer forums, and we guarantee you’ll be able to use the knowledge to better your travel!