Travel hacking is a favorite past time for wanderlust millennials and personal finance aficionados everywhere. Just as Americans love baseball and apple pie, travel hackers love free first-class tickets and remote beaches.
The problem is the COVID-19 pandemic has stripped travel hackers (and, frankly, baseball fans) of the ability to partake in their favorite past time. There are still ways to travel hack during the COVID-19 pandemic, but it’s much more challenging nowadays to do it.
The good news is that travel hacking is not the only way to take advantage of the perks that many personal finance products and services offer.
For those of you who don’t know, travel hacking simply involves using credit card points, miles, and other rewards programs to redeem free or heavily discounted trips. Typically, there is some strategy involved to earn more points than the average person and to get the most value out of them as well.
Below, we’ll walk through some other areas of personal finance that are just waiting for you to “hack” them.
1. Use Cash Back Credit Cards
Travel hacking most commonly involves using premium and travel-focused credit cards to rack up points to be redeemed for luxurious trips.
However, premium credit cards are not the only types of credit cards that offer generous rewards.
Cashback credit cards are another type of credit card worth exploring. They are more straight-forward than premium credit cards, and still offer:
- Sign-up bonuses – They can range from $100-$300 depending on the credit card.
- Rewards – For everyday spending, they usually come out to anywhere between 1% to 2% cashback on every purchase.
There are also quite a few advantages that cashback credit cards have over their premium counterparts, especially during the COVID-19 pandemic:
- Most times, they have no annual fee, which makes them great cards for beginners and anyone looking for a lifelong credit card to help build their credit score.
- They have fewer restrictions, and their cash back rewards can be redeemed in a wide variety of ways. Instead of being stuck with a bunch of airline miles, you can use your cashback to buy gift cards or as a statement credit!
2. Hack Your Bank Account
Credit cards are not the only personal finance products that can be “hacked.”
One overlooked segment of personal finance is banks.
A lot of people haven’t changed banks since they were a kid and could be missing out on the perks and benefits that new and online banks offer today. In fact, according to a survey by Bankrate, the average American has had the same checking account for about 16 years!
If you’ve been loyal for your bank for a while, it’s worth looking into two areas to see if you could improve your banking situation:
- Sign-up bonuses: many banks offer sign-up bonuses for both checking and savings accounts. It could be a quick way to earn a couple of hundred bucks with minimal effort.
- Interest rates: they may be low right now across the board, but there are still high yield savings accounts that are offering 1% or higher in APR. That beats the big banks that are offering a paltry 0.01% by a landslide.
3. Cut Your Monthly Bills
Instead of earning extra cash through hacking a bank or credit card, you could also cut down on expenses.
Minimizing expenses has the same outcome of increasing income: more money in your pocket at the end of the month.
Usually, the first place to start to minimize your expenses is to build a detailed budget. That can help you identify areas where you could potentially save some money. After all, it’s hard to make a change if you don’t fully understand your current situation.
Once you have a budget, there are two personal finance tools that I love that can help you take your savings to the next level:
Trim is a personal finance assistant that can help you minimize your monthly expenses.
Two of their most popular free services are:
- Subscription Monitoring: Trim helps you identify unused recurring expenses so that you can unsubscribe and save money.
- Bill Negotiation: Trim will negotiate your cable, internet, and phone bills for free, only taking a cut of the money that they save you (if they save you money).
Gabi is another personal finance tool that offers one specific service vs. Trim’s broad line of services.
Gabi’s mission is to find the cheapest car insurance (or another type of insurance) for you to save money.
You simply input your current insurance for them to review, and they see if they can find the same protection through another company for less money.
Again, this is a free service that could help you save a lot of money.
4. Open a New Brokerage Account
Another often overlooked area of personal finance is your online broker.
Many new online brokerage accounts today are offering sign-up bonuses and even free stock to entice new users to join .
While one free stock or a few hundred bucks shouldn’t necessarily be a reason to upend your investment portfolio and move it, there are two good reasons to consider opening a new brokerage:
- Most brokerages are insured up to $500,000 by the SIPC. If you are approaching that number or already above it, you could consider diversifying your brokerages, even though the odds of your brokerage going under AND you somehow losing your money are extremely small.
- You want to consider investing 0-5% of your cash in stocks, art, cryptocurrency, or some alternative asset outside of your traditional index funds and ETF (or whatever you currently invest in). Having a second brokerage account to help manage this small piece of your portfolio could be helpful.
Robinhood, Webull, and M1 Finance are all newer brokers that are worth checking out.
5. Use General Rewards Credit Cards
Starting and ending with credit cards, you have additional options outside of premium and travel rewards cards and cashback credit cards.
You could consider other types of credit cards, such as grocery rewards cards and gas rewards cards.
“Hacking your groceries” doesn’t sound as fun as “hacking your travel,” but it can be just as effective. For example, the Blue Cash Everyday Card from American Express offers 3% back at supermarkets, 2% back at gas stations, and 1% back on everything else.
If you are someone who has shifted spending from dining and travel to other categories over the past few months, it could be worth checking out which cards would better reward your new spending habits.
Not to mention, the Blue Cash card is offering a chance to earn an additional $300 for new cardholders.
That is not your only option when it comes to alternative rewards credit cards, but it is a good one and an example of why you should see what else is out there.
Summary: 5 Alternatives to Travel Hacking Given COVID-19
Travel hacking is hard to do right now, but that doesn’t mean you can’t optimize your finances in other ways.
Between banking, investing, and even cash back credit cards, there are plenty of ways to take advantage of all of the bonus offers and incentives that personal finance companies are offering. It just takes a little bit of research and effort to act on them.
And remember, with everything regarding personal finance, you shouldn’t sacrifice your long term plans for short term gains. For example, don’t go ruining your credit score by applying for every card ever created.
You should ensure any “hacking” you do fits within your long term goals