Personal Finance | Travel Hacking
By Bernard Freeman
Thrifty travelers have uncovered the secret world of travel hacking.
Advanced tips and strategies have emerged for using credit card rewards, miles and loyalty programs. These tools can unlock affordable globetrotting.
Many of these techniques require a higher level of dedication and organization, but the pay-off can be rewards such as international first-class flights and luxury hotel stays. Remember, though, responsible credit card use and adhering to program rules are paramount to successful travel hacking.
Credit Cards
Beyond initial sign-up bonuses, experienced travel hackers strategically select credit cards that align with their travel goals. Some cards offer higher rewards for specific categories like dining, travel or groceries. By diversifying their card portfolio, travelers maximize their earning potential.
Credit card churning involves opening and closing credit card accounts to take advantage of welcome bonuses multiple times. While this strategy can be lucrative, it requires meticulous planning and responsibility to manage multiple cards effectively and ensure you close them out before an annual fee is charged. Also, Forbes warns that a pattern of opening and closing credit cards is a red flag for many credit card issuers. It’s also important to know that this technique can affect your credit rating because it lowers the average age of your accounts, increases the inquiries into your credit history and changes your credit utilization amount. Also, many banks have rules and policies that discourage credit card churning.
Advanced travel hackers employ manufactured spending techniques to meet minimum spending requirements for sign-up bonuses without increasing their actual expenses. Techniques like buying gift cards or using prepaid cards require a deep understanding of rules and regulations.
Nomadic Matt says the ideal travel credit cards should have a large welcome bonus, a low spending minimum, an added category spending bonus, special travel perks and no foreign transaction fees. He stresses that it is important to pay off balances every month.
Reward Programs
Frequent flyers often choose loyalty programs affiliated with different airline alliances strategically. This flexibility allows them access to a broader range of routes and destinations while capitalizing on partner benefits. Some travel hackers recommend signing up for at least three airline loyalty programs.
Elite status perks, such as priority boarding and lounge access, can significantly enhance the travel experience. Savvy travelers leverage status matches and challenges offered by airlines and hotels to quickly attain elite tier benefits without the typical qualifying requirements.
Monitoring airline and hotel promotions is an art form. Earning bonus miles or points during limited-time promotions can significantly boost your travel rewards balance.
Travel hackers adeptly use point transfer options and conversion techniques. Converting points between loyalty programs or transferring miles between airlines can unlock valuable redemption opportunities.
Getting Started
Familiarize yourself with credit card terms, conditions and loyalty program rules. Misusing rewards programs can lead to account closure and loss of points.
Organize your portfolio and maintain meticulous records of your credit cards, rewards, and accounts to manage your travel hacking strategy effectively. Continuously monitor travel forums, blogs and newsletters to stay up-to-date on the latest promotions and hacks. Plan your trips strategically, keeping an eye on award availability and peak travel seasons.
Use cards with high rewards for everyday spending categories to accumulate points faster. Consider using travel hacking tools and apps that can help you track rewards and find optimal redemption options.
Ethical investing
Investing with a conscience has never been more accessible.
With the rise of investing tools and socially responsible mutual funds, there are more options than ever to invest in alignment with one’s values.
Sustainable and ethical investing offers the opportunity to have a positive influence on the world while pursuing individual financial goals. Nerd Wallet defines ethical investing as “an investment strategy in which an investor chooses investments based on an ethical code, such as religious or social values, and financial returns.”
It points out that what is ethical varies among individuals, which is why a person must carefully select investments to align with their values.
Defining Terms
Socially responsible investing (SRI) focuses on investing in companies that uphold ethical standards and social responsibility. Investors often screen out companies involved in activities such as tobacco, weapons or environmental harm.
Environmental, social and governance (ESG) investing involves evaluating companies based on such criteria as environmental impact, social practices and governance structures. Investors seek companies with strong ESG profiles, often supporting those committed to sustainability and ethical business practices.
Impact investors actively seek opportunities to generate positive social or environmental effect alongside financial returns. They invest in ventures addressing critical global issues such as clean energy, education or healthcare.
Sustainable funds, also known as green funds or ethical funds, pool investors’ capital to invest in companies adhering to sustainable and responsible principles. These funds offer diversification while supporting environmental and social causes.
Investment Factors
Many ethical funds apply rigorous screening processes to exclude companies involved in controversial activities. These screens align with investors’ values, ensuring their investments do not compromise their principles.
Historically, sustainable and ethical investments have demonstrated competitive returns while maintaining lower risk due to their focus on responsible business practices. Morningstar data reported that sustainable funds outperformed their traditional peers in 2019, with 66% having returns that landed them in the top half of their investment categories.
Some ethical investors actively engage with companies to encourage better ESG practices. Shareholder activism can lead to positive changes within corporations.
Sustainable bonds, including green bonds and social bonds, fund environmentally friendly or socially beneficial projects. They provide a way for investors to support specific causes.
Creating a Plan
Define your values and priorities. Consider the causes and issues that matter most to you. Explore sustainable and ethical investment options, including mutual funds, exchange-traded funds (ETFs) and individual stocks.
Seek guidance from a financial advisor with expertise in sustainable investing. Examine the prospectus of any sustainable fund you’re considering to understand its objectives and screening criteria. Stay updated on developments in sustainable and ethical investing as the landscape is continually evolving.
Diversify your portfolio to spread risk while supporting various sustainability initiatives. Consider how your investments measure the impact you are making.
