Have you ever wondered what it would take to get enough credit card points for a round-the-world trip?
Lillian Karabaic, personal finance expert and founder of Oh My Dollar!, shared with Bankrate how it’s possible to travel the world on credit card rewards. In 2017, Karabaic used over 100,000 Chase Ultimate Rewards points to help fund a monthlong, 13-country train trip from Dublin, Ireland to Shanghai, China.
“I really enjoy travel,” Karabaic told us. “It’s one of the core things I spend my discretionary income on.” Karabaic also enjoys spreadsheets and project management, which is one of the reasons she’s been so successful at turning credit card points into flights, hotels and train tickets.
“If you want to do big trips, being someone that is very organized, can stay on top of deadlines, track their spending and keep an eye on their credit score is crucial,” Karabaic says.
What else do you need to know about traveling the world on credit card points? We asked Karabaic for her tips on earning big to help you plan your next big adventure.
Travel hacking takes time—but it’s well worth the investment
A lot of people are interested in using today’s best travel credit cards for travel hacking—but, as Karabaic reminds us, the people who get the most out of their travel credit card rewards have to be ready to turn that interest into a serious hobby.
“I see a lot of people who think that they’re going to get the kind of flights that I get by signing up for one credit card and putting all of their groceries on it,” says Karabaic. While using an everyday spending card to earn credit card rewards can help you save money over time, you have to be a little more strategic if you want to turn your points, miles and cash back into round-the-world plane tickets.
“I calculated all of the flights and travel I got from my Chase points, and it was about $20,000 of plane tickets,” Karabaic told us. That kind of travel hacking takes time, especially if you want to do something big like redeem your travel rewards for a first-class suite on Korean Air (a ticket that could have cost Karabaic over $10,000 out of pocket).
Know where you want to travel and which credit cards can help you get there
Some people assume that traveling the world on credit card points is as easy as applying for multiple credit cards, earning as many points as possible and then deciding how to redeem them.
Karabaic suggests approaching it the other way around.
“Knowing where you want to go before you start applying for cards is very helpful,” Karabaic told us. When she planned her 13-country train trip, for example, she knew that she wanted to take the Trans-Siberian Railway from Moscow to Beijing. Before Karabaic applied for a single travel credit card, she began researching which airlines served Moscow, which of those airlines offered good mileage deals and which travel credit cards offered transfer partnerships with those airlines.
“I wanted to do a first-class suite on a plane,” Karabaic explained, “so I researched what the best transfer availability was for credit cards that I could qualify for so that I could fly back from Asia in a first-class suite.”
After doing the research, Karabaic decided that the Chase Sapphire Reserve® was the best travel credit card for this particular trip—not only because of its airline transfer partnerships but also because the card had recently announced an unusually high sign-up bonus: 100,000 points.
What does it mean to pick the right cards? Here’s a good example: the Chase Sapphire Reserve is currently offering 60,000 bonus points to cardholders who spend $4,000 in the first three months of card ownership. Since Chase Sapphire Reserve points are worth 50 percent more when redeemed for travel through Chase Ultimate Rewards, this bonus can be worth as much as $900 if you redeem it for its maximum value.
However, the Chase Sapphire Reserve card also comes with a $550 annual fee—which is why Karabaic recommends considering the sign-up bonus offered by the Chase Sapphire Preferred® Card instead. This card has a $95 annual fee and just announced a sign-up bonus of 100,000 points for cardholders who spend $4,000 in the first three months. Since Chase Sapphire Preferred points are worth 25 percent more when redeemed for travel through Chase Ultimate Rewards, this bonus can be worth $1,250 if you redeem it the right way.
Yes, the Chase Sapphire Rewards card offers a few extra travel perks in exchange for its higher annual fee—but if you’re primarily interested in earning the sign-up bonus, it’s worth noting that the Chase Sapphire Preferred’s bonus has a potentially higher value. And you can always upgrade to the Reserve after a year of card ownership if you realize that card is a better fit for your travel needs.
Since credit cards change their sign-up bonuses on a regular basis, it’s important to know which cards are offering which rewards, whether those welcome bonuses are actually a good deal and whether you’ll be able to cover the minimum spend required to earn the bonus.
Make sure you hit the minimum spend to earn the sign-up bonus
In addition to planning your itinerary, looking up mileage rates and checking airline transfer partners, there’s one more thing you need to do before applying for the travel credit cards that will fund your next big trip—know how you’re going to earn those lucrative sign-up bonuses.
“I always know how I’m going to hit my sign up bonus before I apply for the card,” says Karabaic, noting that credit card welcome bonuses are some of the best ways to earn points and miles for your next big trip—but only if you pick the right cards and hit the minimum spend required to earn the bonuses.
Once you’ve decided which travel rewards card offers the best welcome bonus for your needs, how can you make sure you hit the minimum spend required to earn it? Karabaic suggests putting as many big expenses on your card as possible—especially if those expenses are already built into your budget.
“I pay my taxes on credit cards,” Karabaic says, even though there’s a small fee to pay taxes on credit. “I also pay my rent. If your landlord doesn’t allow you to pay your rent on credit, you can use various services that will let you pay your rent on a credit card if you’re willing to pay a small percentage on top. They’ll send your landlord a check. I choose to do that because it makes the most sense to hit those minimum spends.”
If you want another tip to help you hit your minimum spend and earn your sign-up bonus, Karabaic suggests dividing the minimum dollar amount by the time limit and making sure your spending stays on track. Since both the Chase Sapphire Preferred and Chase Sapphire Reserve cards require you to spend $4,000 in three months to earn your welcome bonus, you need to spend at least $1,334 per month—or around $45 per day—to get those points.
“Don’t miss your minimum spend by even a dollar per day,” Karabaic says, “or you won’t get those points.”
Travel hacking can improve your credit score if you do it right
If you’re still interested in using travel credit cards to improve your next travel experience, Karabaic has one more piece of advice: Make sure you’re using those cards to improve your credit score as well.
“Since I started travel hacking, my credit score has only gone up—because of the increased number of accounts, the fact that I have a longer credit history, and the fact that my credit card utilization is very, very low.”
Karabaic, like many people, was initially worried about what multiple credit card applications might do to her credit. While each hard credit card inquiry can temporarily lower your credit score, using your new lines of credit responsibly can have an even stronger impact on your credit and could raise your score far beyond the temporary drop.
Think of the potential credit boost as one more perk—along with the points, miles, statement credits, annual flight credits, TSA PreCheck and Global Entry application fee credits, complimentary airport lounge access and travel insurance benefits associated with today’s best travel cards.
That, and the possibility of using your travel rewards to see the world.