Although I have publicly questioned the usefulness of “travel hacking” in my own travels, I have always maintained that the people who do it deserve great respect for their tenacity. I’m thinking of people like The Points Guy and Lucky of One Mile at a Time, to name just a few of the most notorious travel hackers.
With this credit, I return to the premise underlying my previously linked blog post, which is that the math of travel piracy requires absolutely enormous scale to produce a substantial return on investment, certainly one large enough to create a mark around him, as the two gentlemen I mentioned have done.
In fact, while I don’t evoke any doubts about the techniques a particular person uses, I’ll go a step further in a general sense: effective travel hacking requires suspicious, at best, and potentially unethical tactics. Case in point, something known colloquially as “manufactured spending.”
Travel Hacking: The Credit Card Method
For most of the time, time travel hacking has been around, credit card points have been just one tip of the overall strategy. Travel hackers would apply for travel credit cards to earn generous sign-up bonuses, then use them to earn points to spend and accumulate a certain percentage of your total miles and points to book free travel, be that first and airline tickets from business class, hotel rooms and suites, or whatever you prefer.
Lately, however, as airline loyalty programs continue to experience unprecedented devaluations, travel credit cards have become the number one and, by some estimates, the only source of valuable points. Desperate times call for desperate measures, both in travel and in life.
An example of a manufactured expense
One of the main ways that travel hackers have learned to oversize your expenses (and therefore your miles / points) is to create expenses out of thin air. Known as “manufactured spending,” this technique involves purchasing instruments that can be exchanged for cash, either free or inexpensive, and then using that cash to pay off the credit card, earning points in the process.
Say, for example, you have 10,000 points on the ground for a flight you want to take, and you don’t have time to wait to spend $ 10,000 organically. According to the manufactured spending theory, you can simply buy a $ 10,000 prepaid Visa or American Express gift card or send money to yourself using (separate) Amazon Payments accounts, among other options. Obviously, if you have a credit card where you earn more than one point for every dollar spent, the amount of “spending” you need to “manufacture” decreases proportionally.
While fabricated spending techniques like these are, for the moment at least, legal, they are ethically questionable, not to mention the tedium that comes with their execution.
Alternatives to manufactured spending
Do you want to earn a lot of points using travel credit cards, but don’t want to act like a total tool to do so? The easiest way to do this is to get used to using your credit card (s) of choice for all the purchases in your life, and then (of course) paying for them in full. That way, you literally earn one point (or more) for every dollar you spend.
To take this to another level, you can strategically make large or large purchases when you know you are going to use a lot of points. For example, if a certain dealer allows it, you can use your travel credit card to buy a new car (earning you tens of thousands of points, depending on the vehicle), to pay your annual tax bill, or even to pay your rent or mortgage every month. The possibilities (and indeed the profit opportunities) are endless, though not nearly as much as if you choose to enjoy the shadow of manufactured spending.