First thing, this is both what credit cards are for and advanced technique at the same time. The basic goal of travel hacking (and credit card use in general) is NEVER PAY INTEREST. Say it out loud with me: NEVER PAY INTEREST!!! Got it? Because none of this travel stuff makes any sense if you’re paying the man.
But, sometimes, you have to think ahead. Let’s say you have a big international trip coming up. You know – you just know – you’re going to go nuts and spend everything on everything. It’s not a great idea, but when are going to be back, right? Okay, so here’s what you can do (and if you’re independently wealthy – or have already saved up a travel budget, which is recommended – feel free to skip this whole post):
- You’re going to need a TRAVEL (NO FOREIGN TRANSACTION FEES) card. I put this stuff in ALL CAPS because this is really need to pay attention. Paying 1-3% or more in foreign transaction fees will ruin any fun in any vacation. Typically, these are your mid- to premium-level credit cards with annual fees. There’s lots to choose from, but choose one. If you’re only traveling domestically, you can skip this step.
- You’re going to also need a card with a NO INTEREST INTRODUCTORY PERIOD. Typically, these cards are your low- to mid-level credit cards and can frequently be found with no annual fees. These cards also tend to have less or no spending bonuses attached. Look for no interest periods of at least 12-15 months (although no interest for 18-21 months are also available on some cards). Get this card maybe 4-6 months before your trip – leave enough interest free months for after you come back from your trip. That’s your timeline to payback your trip interest free.
- Think over your cash flow throughout the year. Are there any upcoming boosts to your income over the year? Think tax returns, bonuses, commissions, extra monthly payments, gifts, etc. Or can you just save an additional $XXX per month? Add up all the (realistic, predictable and measurable) parts, and that’s your potential trip budget.
- Now, this is the tricky part. BEFORE you go on your trip, put as much of your spending as possible on the NO INTEREST INTRODUCTORY PERIOD credit card and DON’T PAY IT OFF. You keep that money in your bank account until it’s time for your trip. Some of it can go to cash or travelers’ checks and rest is what you’re going to pay off your TRAVEL (NO FOREIGN TRANSACTION FEES) card.
- Go on your trip. Have fun. Go nuts. Spend up to your trip budget.
- Come home. Upload all your pictures to Facebook and Instagram and give out all your omiyage. And then PAY OFF YOUR TRAVEL (NO FOREIGN TRANSACTION FEES) card in total using the money you saved up.
- As you bask in your after vacation glow, pay off your NO INTEREST INTRODUCTORY PERIOD card, either monthly or with your upcoming boosts to income (see 3 above) before the 12-21 interest free months are up. Note: don’t wait around; pay your card up as soon as possible.
- Pay off your vacation in its entirety without PAYING INTEREST. Booyah.
There are quite a few NO INTEREST INTRODUCTORY PERIOD cards out there. This is a partial list:
- Amex Everyday Credit Card (review of Preferred version) – 0% 12 month introductory APR, no annual fee, 10,000 American Express Membership Rewards points, earn 1-2.4% Amex MR points
- BankAmericard Cash Rewards (VISA Signature) Credit Card – 0% 12 month introductory APR, no annual fee, $100 spending bonus, earn 1-3% cash back
- Barclaycard CashForward World MasterCard – 0% 15 month introductory APR, no annual fee, $150 spending bonus, earn 1.5% cash back
- Chase Freedom (VISA) Card – 0% 15 month introductory APR, no annual fee, $150 spending bonus, earn 1-5% cash back (or travel points in combination with other Chase cards)
- Chase Freedom Unlimited (VISA) Card – 0% 15 month introductory APR, no annual fee, $150 spending bonus, earn 1.5% cash back (or travel points in combination with other Chase cards)
- Chase Slate (VISA) Card – 0% 15 month introductory APR, 0% transfer balance for the first 60 days, no annual fee
- Citi Diamond Preferred (World MasterCard) Card – 0% 21 month introductory APR, no annual fee
- Citi Double Cash (World MasterCard) Card – 0% 18 month introductory APR, no annual fee, earn 1-2% cash back
- Citi Simplicity (MasterCard) Card – 0% 21 month introductory APR, no annual fee