Credit Card Interest Rates Shouldn’t Matter When Travel Hacking. Here’s Why.

Some Good Advice

When I was just starting my journey into travel hacking I received some great insights on two separate occasions from two close friends I consider to be financially savvy. During casual conversation about personal finance and credit cards I asked them what the interest rate was on their cards?

They both had the exact same answer. “Why does that matter?”

The point both of them were making is that it doesn’t matter what your credit card interest rate is if you never pay interest. In other words, pay off your credit card balance in full every month and interest rates are of no concern. Great advice anytime, but especially important if your thinking about getting into travel hacking.

You Don’t Want to be Paying Interest if You’re Travel Hacking

The banking industry goes to great lengths to entice us with competitive interest rates, introductory interest rates, zero introductory rates and low balance transfer rates. These can all be useful if you’re in the process of getting your finances in order and trying to pay off debt.

But in the travel hacking game, interest rates should be of zero importance. The reason for this is that if you’re going to be signing up for credit cards in order to earn points and miles, it will only be advantageous if you do not carry any credit card debt and pay off your balance in full every month, thus paying zero interest.

There are many lucrative opportunities to earn points and miles. These offers seem so enticing that people may want to capitalize on them, even if it means going a little into debt. DO NOT FALL INTO THIS TRAP!

Travel Awards Cards in Particular Have High Interest Rates

Banks have not become so big by giving things away. Travel credit cards with the extremely enticing welcome offers of 50,000, 75,000, or even 100,000 points charge high interest rates, even if you have great credit. A welcome award of 100,000 points can be worth over $1,000 in travel. They must offset the cost of all the services, perks and points these cards offer somehow.

I have yet to find huge welcome bonuses on credit cards that charge no annual fee and have a zero percent interest rate. There is simply no money in it for the banks. Instead, travel credit cards charge interest as high as 17% – 24%+!

If You’re Travel Hacking, Pay Your Bills in Full Each Month

Trust me when I say that no welcome bonus is worth paying 24% interest! Let other people who carry debt on their cards pay the bank while you get a free ride.

So, when you’re shopping for travel credit cards with the awesome welcome offer and ongoing travel perks, don’t be concerned with the interest rate. Because you’re going to pay off that bill in full every month anyway. Right? Right!