In this Masterclass with expert Travel Hacker, Derek Pankaew, we’ll be covering how to literally travel the world for free using airline miles.
Derek is a location-independent entrepreneur who has been using this method to cover all of his flight costs for the past few years and now shares his process in his own course, ‘The Fly Free Academy‘.
In this Masterclass, Derek shares a mini-version of his whole travel hacking process and reveals just how easy it is for anyone with a decent credit score to earn miles and score free flights.
This lesson first appeared as a video on my YouTube channel, which you can watch below.
Otherwise, if you’d like to read along, I’ll be sharing my lesson notes in the following paragraphs.
How Does ‘Travel Hacking’ Work?
Travel Hacking is a term that describes a process in which you can earn frequent flyer points without having to step foot on a plane.
A common misconception about earning frequent flyer points is that you need to actually be a frequent flyer. This might have been the case in the beginning but now, the biggest provider of airline points aren’t the airlines themselves, but the credit card companies in which they affiliate with.
Frequent flyer points used to be a way for airlines to lure you in as a customer but now it’s the credit card companies who use these points to lure you in as a customer.
Credit card companies offer bonuses of up to tens of thousands of airline miles in exchange for signing up for one of their credit cards. They do this because the value of each new customer that signs up is worth much more that they cost of the points over the long-term.
While most new customers will take the points and continue to use the credit card, running up a balance and paying fees each year, we can instead take those points and repeat the process, opening and re-opening credit cards over and over again.
If you’re still a little confused, don’t worry! We’re about to go over the process step-by-step in the following sections. But first! A little warning…
The Golden Rule of Travel Hacking
As you learn more about the process of travel hacking, you might be wondering ‘What’s the catch?’. I mean, it sounds pretty crazy that the credit card companies will let you take advantage of their system right? What am I missing here?
The truth is that it’s the poor financial mistakes of other credit card users that makes this system work for travel hackers. The credit card companies know that even if a few people game the system, they’ll still make more money overall as most people will order only one credit card, they’ll pay their fees and they’ll carry a balance.
You on the other hand, must follow the golden rule of travel hacking and that is to never hold a balance.
If you’re someone who can’t manage your spending and stick to this golden rule then you should not attempt to follow this system.
If you trust yourself to game the system and not let the system game you, then by all means, keep reading but if you have poor financial management skills, you should avoid travel hacking at all costs.
Step 1: Have Good Credit
The only requirement you need to start taking advantage of these credit card rewards programs is to have good credit. You don’t need to have great credit, it just needs to be ‘good enough’. That means that you won’t be able to participate in travel hacking if you have negative items on your credit report such as a bankruptcy or a default. For the rest of you, you should be good to go.
But Won’t Travel Hacking Screw Up my Credit?
To clear up this common misconception, Derek logs into his Credit Karma account (a website for checking your credit score) and shares his credit report with the audience.
Despite following this process for over a year now, you can see on the graph that his credit score has been rising consistently and has peaked at 736, a score that allows him to obtain virtually any credit card he wants.
Credit Karma also presents a table of positive and negative items on your credit report. These include Credit Card Utilization, Payment History and Derogatory Marks.
Perhaps surprising is that having more credit card accounts actually helps your credit score. As long as you’re not holding a balance, having lots of credit without fully using it is a good sign to the credit card companies that you can manage your debt well.
Derek does admit that each time you open a new credit card account, it creates an enquiry on your report and decreases your average age of credit. These are both negative items but are of medium and low impact to your credit score. This is apposed to items mentioned earlier which are all high impact items.
Step 2: Apply for a Card
The only challenging aspect of this step is finding and choosing what cards to apply for.
For beginners, Derek recommends you apply for the Chase Saphire card as the points you earn with this card can transfer into many different air mile programs.
More importantly however, is Chase’s 5 card rule which will deny applications from people with more than 5 credit card applications within a two year period. If you apply for the Chase cards first, you use up all of those spots with Chase cards and can still apply for other non-Chase cards afterwards. Just a little tip!
The Chase Saphire card offers a signup bonus of 50,000 points after you spend $4,000 on purchases in the first 3 months from account opening and has a zero annual fee for the first year.
As a side note, there are a few ways to never have to pay an annual fee and Derek talks more about this in the Fly Free Academy.
A tip that he does give in the Masterclass is to call up the credit card company while you wait for your application to be approved or denied. This will increase the chances of you getting approved as the company is more likely to trust a human voice than a set of answers on a virtual form.
Step 3: Book your Free Flight
Once you’re approved for a credit card, you points should become available after a few weeks. Then, you’re able to use them to redeem flights.
This is a pretty simple process and will differ depending on the airline but should be very similar to booking flights the way you usually would on the airline’s website.
Using Delta for example, you can choose ‘Show Price in Miles‘ on their home page when filling out where you want to go. The next screen will show you a table of dates with it’s respective price in points and they’ll usually be a small cash component that you’ll need to pay as well.
Pro Tip: you can actually avoid the small fee as well with some advanced techniques, but I’ll leave Derek to teach you that in his academy.
Steps 1 to 3 are, in essence the whole Travel Hacking process. It’s definitely not rocket science but it does require a bit of an overview and explanation for newbies to get started.
For advanced techniques such as how to avoid annual fees, how to pay the cash portion of your flight with other airline miles as well as how to book hotels with your credit card miles, you’ll want to check out Derek’s website, Fly Free Academy.
As a special offer to Masterclass students, Derek is offering all the bonuses that usually come as an extra cost to Fly Free Academy at no extra cost to those who sign up for his course. You can check out that offer by clicking this link.
Alright! So I hope this has been useful. Be sure to give a visit to Derek’s website if you’re interested in learning more about travel hacking. Otherwise, check out some of these other free masterclasses (below).
Until next time,
Watch the Full Playlist of Masterclasses here:
Disclosure: Some of the links in this post are ‘affiliate links.’ This means if you click on the link and purchase the item, I will receive an affiliate commission.