myFICO: Deinfluence Me– Reasons Not to Travel Hack

Travel hacking isn’t for everyone. Here are some reasons not to travel hack, from Jackie Lam, a writer for the myFICO blog:

Confession: I'm no travel hacker. While some of my fellow money nerd friends are travel hacking whizzes, I attempted it myself and found it to be tedious and time-consuming.

There’s great appeal to using your high credit score to snag top travel credit cards, rack up points and swap them to essentially see the world for free or low-cost. It can seem like magic. But after dipping my toes into the world of converting points for free travel, here's why I've discovered that travel hacking simply isn't for me.

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It's Harder Than It Seems

"Many people think travel hacking is as simple as opening a credit card and reaping the benefits," says Dean Binder, a credit expert.

I too operated under a similar assumption. But when I read up on how to travel hack on popular websites and chatted with my friends who are gung-ho about it, I learned that traveling for free using credit card points takes a lot of work and can be time-intensive.

First, you'll need to understand the perks, benefits, and rules of a card. For each of your credit cards, you need to get your head around:

• Sign-up or welcome bonuses (and how to get those bonuses)
• Annual travel-related bonuses and points, and when they expire
• How to scoop up the most points (i.e., which spending categories give you the highest earn rate, how to book travel through travel portals to earn more points)
• Earn limits (i.e., the max amount of points you can earn in a given year)
• The art of transferring points to different travel partners
• Making the most of travel portals, and which travel portals feature the best deals on airfare and hotel, and when to book points to snag these deals
• Expiration dates of points
• Travel-related perks and benefits that come with the card (i.e., car rental insurance, trip delay or cancellation insurance, lounge access)

That's information you'll need to know—for each card. Multiply that by, say, 10 cards, and you're entering Spreadsheet Land to stay on top of key information.

Keeping Track of Your Cards Can Feel Like Another Job

If you're juggling a handful of travel credit cards, it can be time-consuming to keep an eye on all the payment due dates and payment amounts. In turn, you might end up inadvertently falling behind on your credit card payments.

Another thing you'll need to stay on top of? Whether any annual fees are worth what you're getting from the card. For instance, if you're a hardcore travel hacker and the annual fees on all your cards tally up to $2,000 a year, do you travel enough and get enough benefit from the cards to justify the costs?

Could Hurt Your Credit

I'm afraid that, if not careful, I'll hurt my credit by opening too many cards at once, or closing a card I've had for years. "Acquiring new credit, especially multiple accounts, can lower your FICO® Score," says Binder.

I keep my first credit card, which I opened in my early 20s, open. While I rarely use it, keeping it helps with my length of credit, which makes up 15% of one's FICO® Score. Plus, there's no annual fee, so there's no financial cost to keep that card.

Need Strong Credit

To play the travel hacking game, you need stellar credit. That way, you can land the travel credit cards with the best sign-up bonuses, perks, and earn rates for points. "Travel hacking is likely not going to work for consumers with disadvantaged credit as it will be more difficult to obtain new credit," says Binder. "Additionally, consumers who struggle with credit could easily get into deeper debt by acquiring more credit cards."

So, if your credit score hovers in the poor or fair range, it could be harder to get approved for those shimmery credit cards that allude to realms of free and easy travel.

Could Rack Up Debt Quickly

With so many cards, it's easy to run up a high credit card balance. Using one card for a few purchases here, and another card for a few purchases there, can result in forgetting how much of a balance you're carrying on all your cards.

"Consumers must be vigilant about paying off the balance each month to avoid running up debt which will also lead to higher credit costs," says Binder. It's hard enough to resist the temptation of online deals while I'm glued to my computer screen during the workweek.

I Lean Toward Cash-Back Cards

I currently have one premium travel credit card and a cash-back card. Between the two, I've found myself favoring the cash-back cards. That's because I do a lot of online shopping, and the rules to redeem are simple. I don't need to wade through the complexities of travel hacking, and the best way to "earn and burn" points.

If you have great credit, and prefer to globetrot purely on credit card points, don't let me sway you otherwise. It may not be for me, but if you're willing to put in the work and enjoy the strategic game of travel hacking, it could be fun and worth your while. But you'll want to know exactly what it entails before jumping in with both feet.

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