Let me preface this post by stating that if you’re an experienced travel hacker then this example may be a touch old-hat. There are literally countless articles online from countless bloggers on the subject of travel hacking, so lord knows the world doesn’t need my two-cents on the subject. This post is more of a reference for those who know me so that they may glean a little more knowledge on the process. However, all readers are welcome to Marginrich.com even if it’s just to obtain yet another story about travel hacking a trip.

Unfortunately, this post does not contain any market or economic thoughts. And I know how much those are missed.

I deem traveling totally on one’s own dime to be a complete waste of money. The opportunity cost of compounded investment capital wasted on flights and hotels is a concept that really just sticks in my craw. Why blow thousands of dollars for travel when with a little planning and some credit card sign-ups, one could travel for free or at least at a significant discount and in luxury no less?

Travel hacking aka using travel reward points offers via credit cards and other promotions is a simple methodology to fund a larger-than-life travel experience primarily on some bank or corporation’s dime. If one is credit worthy and has a sufficient monthly spend, then literally, credit card companies are giving away free money to fund the trip of a person’s lifetime or several person’s lifetimes. Who doesn’t like free money, even if you are wealthy enough to freely spend on first class travel? Full disclosure, I ain’ts well-ta-do…or educated in proper grammar apparently.

Through general observation, I have ascertained three primary reasons as to why more people who are able to travel hack, don’t travel hack. One, people are lazy i.e. they don’t want to be bothered with keeping track of multiple credit cards. They don’t want to have to switch credit card usage between multiple carriers to use at various businesses depending on the current offer(s) or monitor their monthly spend. Also, signing up for multiple loyalty reward programs across various hotels and airlines is just too much work.

I got one word for that…spreadsheet.

Two, people get intimidated by the process and the initial time needed. Yes it takes some time to sign-up for the many different loyalty programs and submit credit card applications but that time is small compared to the value of a magnificent trip that could be earned. Plus, you can only take advantage of so many offers at a time. Widen the process. Credit card reward offerings generally need to be spread out a little to allow for adequate time to earn into a points bonus.

The fact of the matter is that you have what the credit card companies want and that’s usage for fee-driving. The user is in the catbird seat in this process so no need to be intimidated by any aspects.

Number three, the myth of the negative effect on credit scores for credit inquiries. I have noticed through conversations that people have a tendency to think that if they sign up for too many credit cards, which creates the credit inquiries, then that may have a negative impact on their credit score. It’s as if people think their 750+ score is going to go to 550. I swear people treat inquiries as if they were a bankruptcy or foreclosure and that is simply not the case.

I haven’t been travel hacking for long but I’ve never had a negative hit to my credit score when applying for 3 or 4 credit cards at once. Neither has my wife. Where there is the potential for a negative impact is if you need to take out some sort of loan in the very near-term.

Auto, home, business, whatever. Then the lender is going to prudently ascertain how responsible you are with credit usage and assess your credit profile for risk, but other than that, the negative effect on credit scores for application purposes is essentially null and void.

So let’s get to the example. In the fall of 2014, the Mrs. and I decided to take a close to three-week trip to northern Europe for some fast driving, great eats and coffee, beautiful old cities, and just straight-up relaxation. Our first stop would be Koln, Germany which means flying into Dusseldorf. Which by the way I always recommend over Frankfurt unless you’re specifically flying first class, because Dusseldorf is much less busy and so much easier to navigate through customs. It’s just a smooth process from baggage to car rental to hitting the autobahn.

Ok, so we decided to fly in and out of Dusseldorf, Germany. We intended to see a fair chunk of northern Germany’s biggest cities by doing a loop from Koln up and around to the east to Berlin and then back to Dusseldorf to fly out, with side trips to Holland and Denmark. The trip to Denmark ended up getting nixed due to logistics but it’s irrelevant for the sake of the example.

I had informed the wife that if we wait till the next year we could accumulate a ton of free miles utilizing credit cards and fly business class for 90% off the price and stay at most of our hotels for free. She was skeptical to say the least but she was supportive as I dived into and facilitated everything. She just wanted to fly coach for free and have all the hotels fully paid for with points and maybe the car rental, too. I wanted to fly business class but was willing to pay for a few rooms and maybe the car. I mean come on, if it’s no big deal to you to sit up straight for 8 to 10 hours and have little leg room to boot, then more power to you. I much prefer to lay flat whenever I feel like and drink unlimited booze, all while getting unceasing quality service from the crew.

Flying into Germany meant flying Lufthansa. That meant signing up for the Miles and More rewards program from Lufthansa. We then signed up for the Miles and More MasterCard when they were offering the 50,000 miles bonus. The minimum spend to qualify for the offer was $3,000 within 90 days, which is pretty standard. However, minimum spends vary by credit card and reward partners. Sometimes it’s as low $1,000 or $2,000 but the time-frame to obtain the bonus offer is almost always 90 days.

By the way when you click on links on travel hacking blogger sites, the blogger almost always gets a commission for you visiting and signing up for whatever offer the link leads to, but that is not the case here. I hyperlinked just for reference.

We then signed up for every travel hacker’s trusty go-to card, the Starwood Rewards Guest (SPG) American Express Card. Obviously, you’ll need to sign up for the SPG loyalty program as well. The SPG Amex came with a bonus offer of 25,000 points if you spent $3,000 within the first 3 months. Sometimes Amex will kick the bonus up to 35,000 so if you’re patient and can wait then take advantage of that. Another couple of reasons travelers love SPG is they have so many partners with which to transfer SPG points to and almost always at a one to one ratio plus if you transfer points in increments of 20,000 or higher then SPG kicks in another 5,000 points for free.

In other words, that 25,000 bonus points became 30,000 bonus points when I transferred it to Miles and More. And just like that we had 80,000 Miles and More points.

Now Lufthansa is not the best airline for redeeming rewards as their fees for “fuel and surcharges” are downright outrageous compared to their competitors. For economy seating, you end up paying approximately $650 out of pocket to use your points for one round-trip free flight and for business class it’s $950. However, they make up for it by offering crazy cheap travel specials every month.

Business class out of O’Hare to Dusseldorf is only 55,000 rewards points with their discount special. So it only takes 110,000 points for 2 seats and $1,900 out of pocket. You may think that’s expensive but consider that normal coach seats tend to retail for $799 plus fees and taxes on the cheap end. Business class tends to go for about $10,500 for a single round trip ticket to Dusseldorf out of Chicago, so $950 plus the requisite Miles and More points is essentially getting the ticket for a 90% discount. Plus as a B-class ticket holder you get access to the business class lounge where there is Wi-Fi, food & beverages, and well beer, wine, and alcohol for free.

I communicated with several businesses that assist travel hackers with obtaining the cheapest travel possible and not a single one could beat what I came up with using Miles and More to travel business class to Germany, based on the points balances we possessed. We rounded out our Miles and More rewards balance with our monthly spend and easily surpassed the 110,000 points needed for business class flights. We used the leftover points to book a room for a couple of nights in Amsterdam.

As for hotel accommodations, Marriott is our preferred provider and fortunately they partner up with Visa to offer a very nice rewards credit card. Normally, the Marriott Rewards Visa offers 50,000 Marriott Rewards points if you spend $2,000 within the first 3 months but we were fortunate. They were offering 80,000 points at the time we signed up. Factoring in our travel for personal and business reasons, we were able to accumulate enough points to cover 14 hotel nights. We did have to come out of pocket for 5 nights, but that was only because there was not enough Marriott’s with availability in every single city we visited but I’d say two-weeks’ worth of nights for free is still pretty dang stellar. Another reason for why we had to come of pocket for even 5 nights is because we picked an especially luxurious stay at the Hotel Am Steinplatz while in Berlin. And it was worth every excess point we spent for it.

The rental car came out of pocket too, but we paid less than $500 to Avis for a Ford Mondeo wagon for almost 3 whole weeks at a rate of less than $30 a day. The Mondeo is basically the European equivalent of the Fusion here in the states. And “if you haven’t driven a Ford lately”, it was a really nice ride. We were moderately surprised at the quality. Our last time in Germany for the Oktoberfest, we rented a 5-series Beemer wagon because we got a killer deal but after taxes and euro-area fees it definitely was not that good of a deal in USD terms. This time we rented ahead of time and did not upgrade. I found that the Mondeo, although obviously not as fast as the BMW, performed quite handily and had great pick-up speed when needed.

Let’s summarize:
1. $1,900 for 2 round-trip business-class tickets on Lufthansa to Germany with an actual retail price of $21,000
2. 14 free hotel nights (let’s apply a modest $125 average value)
3. 5 nights out of pocket hotel at same average rate of $125
4. Car rental for close to 3 weeks at a total of $425.

So getting to Europe, staying in Europe, and getting around Europe only cost us approximately $2,950 out of pocket. The value is actually less based on some of the Accor properties we stayed at but for the sake of the example I’ll just stick with the $125 average rate on the hotels. Compare that to the actual cost of around $24,000 and I’d say we travel hacked a pretty good trip at a damn good price. Of course, there is food and beverage to consider as well as kitschy crap as additional expenditures but we still came in way under any normal budget for that kind of a trip.

Don’t want to do Europe? Prefer fruity drinks and sandy beaches? No problem, British Airways is offering 100,000 Avios points for signing up for their branded Visa and the terms are very liberal. British Airways and American Airlines are tight partners so you can use those Avios points to fund AA flights to Hawaii and still have plenty leftover. Guess who’s going to Hawaii, soon?

One last thing to remember regarding credit card bonus offers. You have to wait 2 years from the time of card cancellation according to the banks in order to re-sign up for a specific credit card to get a travel rewards bonus again. That is how people keep taking these trips over and over as long as they continue to qualify. This is standard across the industry except for American Express where you only get to take advantage of the offer once and only once. Those bastards.

So the next time your travel bug is itching real hard, fight that impulse to go on Orbitz or Expedia or Priceline. Instead, take a breath and hop on the web to see what credit offerings are available and what would make sense to sign up for based on where you want to travel. Anybody with a decent credit score, decent income, and some organizational skills can travel hack the ultimate trip at the ultimate price. What you sacrifice in spontaneity, you can definitely make up for in quality.