You must have good credit and not carry a credit card balance before considering a credit card hack

Whether you are on a journey to financial independence or have achieved freedom, you can benefit from increasing your income. Many chose a side hustle to pull this lever. A credit card hacking strategy is also a very effective technique to help you achieve your goals.

Like any good side hustle, building up a good credit card strategy takes time. The topic is immense, and in this article, we will discuss a basic approach that I recently used to pay for a vacation to New York for two. If you have good credit and do not carry a credit card balance, a strategy like this can supplement your full-time income and side hustle and propel you to your financial goals.

I used a three-card portfolio, referred to as the Chase Trifecta, to fund a spring break trip for two to New York. The total cost for the trip would have been $3,800, and by using credit card rewards and airline points, my total cost was $0.

The rewards put $3,800 back into my pocket since we would have taken this trip even if we didn’t have credit card rewards to offset the cost. My credit card rewards hack wasn’t an overnight success, though. It takes time and discipline to maximize credit card rewards.

If you have credit card debt — Don’t play

You must have good credit and not carry a credit card balance before considering a credit card hack. It doesn’t matter how great the rewards are from your credit card. Rewards cannot compete with 24% and up interest charged on your carried balance. If you are not credit card debt free yet, focus on your debt before trying to pull the credit card reward lever. Keep the benefits of these rewards in mind as further motivation to beat debt.

Chase Trifecta Basics

Several card combinations can be used to create a Chase Trifecta. You need a non-category general-purpose card, a rotating category 5% card, and an Ultimate Rewards card to pool your points and redeem for travel or Pay Yourself Back rewards.

It takes time to build a trifecta, and you need to be aware of Chase restrictions that limit the number of cards you can get in a 24-month period. The policy is commonly referred to as the 5/24 rule. Like a side hustle, building a trifecta will take time.

Cards in my Trifecta

Non-Category Spend — Chase Freedom Unlimited (1.5% back in Chase UR points) This is a no annual fee credit card and provides a sign-up bonus valued at $200 cashback. Note the bonus can be worth $300 or more if you have the Chase Sapphire Reserve.

5% Rotating Category — Chase Freedom Flex (5% back on up to $1500 of spend per quarter in rotating categories) This is a no annual fee credit card and provides a sign-up bonus valued at $200 cashback. Note the bonus can be worth $300 or more if you have the Chase Sapphire Reserve.

Ultimate Rewards Card — Chase Sapphire Reserve (3% back on travel and dining and multiplies UR points by 1.5 when redeemed for travel or Pay Yourself Back on the Chase portal). This card carries an annual fee of $550 with many benefits that you need to evaluate. The Sapphire Preferred is a good alternative with an annual fee of $95 and a reduced rewards multiplier of 1.25. The Sapphire Reserve sign-up bonus of 50,000 points is worth at least $750, and the Sapphire Preferred bonus is 60,000 points, also worth $750.

Simple Rules to Maximize Returns

  1. Never attempt to play the credit card rewards game if you cannot pay off your card balance in full each month.
  2. Pick the right card for the category. Avoid using a card that is only going to pay 1% for the category. This takes discipline, and if you have a partner, they may be less excited to pick the right card. In my case, the fancy metal card (Sapphire Reserve) was used for all the wrong categories because the card looked nice. Fortunately, demonstrating the power of these rewards and some sticky notes on the cards helped clear up that issue for my partner.
  3. Use your credit cards for every purchase possible. Get points for every dollar you spend. Items, like rent, mortgage, and some utilities, can’t be paid with a credit card. That’s ok. If you can use your card without paying a fee for the transaction, put it on your card.
  4. Keep your spending aligned with your budget. It may be tempting to maximize your $1,500 on 5% category spend. If you don’t need to spend $1,500 at Amazon, don’t. Every dollar you spend beyond your budget negates the positive impact of credit card rewards. Use discipline.
  5. Pay off your cards in full every month. There is no benefit to credit card rewards if you cannot do this.
  6. Evaluate your options when it’s time to redeem your rewards. Chase Pay Yourself Back provides rotating categories to apply your rewards to spending you’ve already done on your card. Dining out is currently a category, and you can get 1.5 cents per point multiplier with the Sapphire Reserve. You can go very deep with redemptions to transfer partners but always do the math to ensure you are getting the most for your points. In general terms, Hyatt is the only hotel partner that can compete with the 1.5 cents per point valuation for non-aspirational travel.

Wrapping Up

Credit card hacking is a great way to supplement your income and is an excellent fit for someone on a journey to financial independence. Focus on wiping out your debt before starting a credit card rewards strategy. This strategy will not work for you if you cannot pay off your cards in full every month.

You can use credit card rewards from a Chase Trifecta to pay for travel or strategically wipe out category spending on your Sapphire card. These rewards effectively put money in your pocket, which you can use to further your financial goals.

Strategies for credit card rewards are personal, and not every strategy will be the best fit for you and your spending habits. The Chase Trifecta works very well for me, and it might be a good fit for you. Look closely at your spending habits and use them to help determine the best fit for you.

Consider a credit card rewards strategy if you are credit card debt-free, have good credit and are not currently benefiting from credit card rewards.