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credit & debt

Credit Rewards Secrets of Travel Hackers

"Travel hackers" have learned to game the credit card system without tripping over the rules. Here are their tips.

If you keep a dozen or more credit card accounts open and have the discipline to avoid carrying a balance, you can rack up a ton of points and miles and redeem them for spectacular trips.

Apply for lucrative cards. Chase has some of the most valuable rewards cards, so you’ll probably want to have one in your wallet. The “5/24” rule bars you from opening certain new Chase cards if you have already opened five other credit cards (from any bank) within the past 24 months, so pick a Chase credit card before you apply for other cards.

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That is especially important if you have your eye on the new Chase Sapphire Reserve premium card. Despite an off-putting annual fee of $450, you get 100,000 bonus points when you spend $4,000 in the first three months, as well as three points back for every dollar spent on travel and dining and a $300 annual rebate for travel purchases. The travel credits are more flexible than those from the card’s main competitors, the Citi Prestige and American Express Platinum.

Time it right. Space out your credit card applications to ensure that you can spend enough to comfortably meet the requirement to earn each card’s sign-up bonus. If you’re designating a certain card’s bonus for a trip, apply for the card at least five months in advance so you have enough time to pocket the bonus.

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A NerdWallet study found that the best time to snag limited-time offers (sometimes 50,000 points in addition to the regular sign-up bonus) is in November for general travel and airline cards, and in August for hotel cards. Stay alert for promotions starting at the end of the summer. The end of the year is a great time to apply for premium cards such as the Reserve because you’ll pay the steep annual fee when you sign up, but the annual travel credit applies for each calendar year—so paying one annual fee nets you double the travel credits within a short period of time.

Combine tactics. Concentrate your points in programs such as Chase Ultimate Rewards and American Express Membership Rewards. From there, points can be transferred to various airline and hotel partners. To pad his account, Kyle Zuvella spent strategically on his cards where possible (say, by using cards that earn more miles on dining when eating out) and took advantage of a mileage promotion from Fidelity.

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Points Loyalty Wallet, a digital wallet, lets you swap points between loyalty programs, which can come in handy if, say, some hotel points are expiring before you need to book a stay.

Before buying a product online, check how many bonus miles you can get through various shopping portals with a comparison site such as www.evreward.com or www.cashbackmonitor.com. You can also collect extra rewards for dining out (find programs through www.rewardsnetwork.com) by making deposits into Fidelity brokerage accounts and more. Check for promotions on your airline’s website or skim the travel blogs.

Don’t sweat your credit score. Surprisingly, your score can rise over time because having more unused credit lowers your utilization ratio—a key component of your score.

Closing cards you no longer use, however, can affect your credit score. To minimize the damage, leave no-fee cards open, and try to downgrade fee cards to no-fee versions when you can no longer justify paying yearly charges. Be sure to keep the first credit card you ever owned to maintain the length of your credit history and average age of your accounts.

Finally, keep track of your stash by using a digital wallet, such as Award Wallet or TripIt Pro’s Point Tracker.

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